Google surprised the market, beating both revenue and
earnings estimates on the back of strong paid-click growth and
international revenue growth, Craigs Investment Partners broker
Peter McIntyre said yesterday.
The internet giant's sales revenue from its stand-alone
advertising business increased 19% to $US13.8 billion
($NZ16.24 billion), beating consensus estimates, on the back
of strong mobile and international revenue growth.
On a consolidated basis, Google revenue was up 12%
year-on-year to $US14.9 billion.
Motorola contributed $US1.2 billion in revenue.
Google's international business continued to record the
strongest growth, up 22% on constant exchange rates, Mr
Over the past few quarters, Enhanced Campaigns - Google's new
AdWords platform - had been the main topic of discussion due
to the significant changes and improvements made to the
overall advertising platform.
Also, the new platform provided opportunities for advertisers
in gaining access to the ever-increasing mobile market, he
Enhanced Campaigns became mandatory for all advertisers on
At the end of June, Google said 75% of advertisers had made
the transition to Enhanced Campaigns, with the remaining
advertisers expected to have made the shift in July.
Last quarter, Google made it clear because Enhanced Campaigns
was an entirely new platform, the largest upgrade since the
start of the AdWords platform, there was expected to be a
slowing in revenue as advertisers spent time making the
transition which involved developing advertisements
specifically for customers on multi devices, Mr McIntyre
''Judging by the solid quarterly result, it looks like
Enhanced Campaigns didn't impact revenue as much as
management and the market thought. As a result, Google's
share price was very strong after market - up 8.2%.''
Many advertisers discovered after moving to Enhanced
Campaigns they were not addressing the mobile opportunity
appropriately and had now discovered new opportunities and
better paid-click volumes, he said.
Google noted several positive results from mobile in the
They included 40% of YouTube's traffic now coming from
mobile, up from 6% two years ago; mobile was generating
stronger online advertisement conversations (paid-click
growth) versus the PC; it was driving more phone calls
because of easy access to phone numbers on the advertisement;
mobile was also driving more in-store traffic.
Mobile phones were becoming a larger and more integral part
of day-to-day lives and users now depended on the devices for
a greater number of tasks, Mr McIntyre said.
According to Google, mobile devices had ''always on''
characteristics, regardless of the region the user was from.
''This means mobile devices provide consumers new ways of
searching and discovering information and gives advertisers
and businesses new ways of reaching consumers. What's more,
location-aware devices make the search and discovery process
Studies had shown the time spent online on mobile devices had
grown exponentially, meaning not only a lot of new services
and apps were available for users but there was also a huge
opportunity existing for businesses looking to reach mobile
users at the right time and location, he said.
From a long-term perspective, Craigs remained supporters of
Google and liked the company for its large exposure to the
ever-increasing global internet usage from shopping, search,
media and video consumption, and media.