In a conference call which sent out waves of optimism across the Internet industry, Google CEO Eric Schmidt announced that the company believes that the worst is over, and despite uncertainty of the pace of recovery, Google now has the business confidence to invest, hire and acquire. This is at the end of a quarter when Google reported gross revenues of $5.94 billion, and net income also increased to $1.64 billion?both numbers higher than what the company reported last year, as well as last quarter. Google is an economy unto itself, servicing both some of the biggest and the smallest online advertisers in the world, and probably has the largest advertiser base on the web by some distance. The positive sounds out of Mountain View are being seen as an indication of better times to come.
Apart from this, the monetisation of Google-owned YouTube, easily the largest video platform on the Web, is on track?Nikesh Arora, president (Global Sales Operations & Business Development) said that the company has been able to sell display advertising on the YouTube homepage?selling out 90% of its US inventory, and increasing monetisable views to over three times the number last year. Google?s display advertising ad-exchange Doubleclick has over half the largest 25 advertising networks in the US participating.
It is not by accident that Google achieved such growth: the company rolled out some interesting products and made some key changes during the quarter?they launched a new interface for their AdWords programme that gave advertisers better access to data, made 121 changes to their search, optimised the way search results are displayed for wide screen computer monitors, and also rolled out ?Place Pages?, a local listing advertising format, which gives small advertisers an online presence, and allows Google to eventually introduce the advertiser to more advanced formats. Google has already launched 50 million place pages, and integration with Google Voice (currently deployed in San Diego and San Francisco) connects consumers to businesses. These solutions will take a long time to become ubiquitous, but it is the correct route: making businesses discoverable, and connecting interested consumers directly with businesses.
But Google is still feeling its way around the mobile space: while the company witnessed a 30% quarter-on-quarter growth in mobile searches, helped largely by the growth of smart phones, monetisation is still an issue. The mobile screen is smaller, so consumer behaviour differs from that on the PC: display advertisements are more noticeable on the mobile, but consumers are less likely to click on them, and move away from the page that they are on. In case of local business advertisements, it is sometimes difficult to convince advertisers that it resulted in a prospective lead. For example, I often search for a specific address of a business when I feel I?m close to it. When I get the result, I just go there, instead of visiting a storefront online. The search engine or local business listing gets little credit for generating that lead.
Another problem is the integration of advertising on mobile products?users, when limited to a small screen, or with detailed location data, might seem either too intrusive, or just taking up too much screen space.
However, Google is continuing to invest in its mobile initiatives?increased usage of mobile search will help the company refine its search better, apart from adding the location based component to it. In order to help increase search from mobile, which tends to add on to its web search usage, Google is also investing in its mobile platform Android, which competes, at least in the smart phone category, with Windows Mobile, the soon-to-be-launched Maemo platform from Nokia, and the iPhone platform used by Apple. The Android is deployed on 12 devices, in 26 countries, and with 32 carriers, and has over 10,000 applications.
Above all, the most positive sign, particularly for startup entrepreneurs, is that Google is ready to acquire again, and appears to be particularly keen on the display advertising business. There was a time when Google was acquiring a small company a month, adding new technology and services to its pool?killing some products and integrating their technology, or even making them free to users in order to increase usage of the Internet, and adding to its massive index of the world we see on the Internet.
Through investment and acquisitions, Google is getting ready to invent the future of the Internet.
?The author is the editor of MediaNama.com