GOOGL - Google

[Guest valueInv]

This explains so much  ;D:

 

[Guest valueInv]

Now they just need 470 more guys like this:

 

http://www.sfgate.com/technology/businessinsider/article/Google-Paid-This-Man-100-Million-Here-s-His-4414507.php

[Guest valueInv]

Mr. Schmidt showing us again how much he cares about privacy:

 

http://www.theregister.co.uk/2013/04/15/google_schmidt_civilian_drones_nimby/

 

http://www.huffingtonpost.com/2010/10/04/eric-schmidt-google-creepy_n_748915.html

[Guest valueInv]

1, iPad mini cannibalizes the iPad, not the iPhone which is Apple's biggest product. Mobile cannibalizes desktop search which is still Google's biest product by far. Take a look at PC sales numbers. Over time, there will be no dekstop searches.

That's going to be tough for you given that you claim you only ever search on your desktop...  I guess you will be the last hold-out.

 

Actually, cannibalization doesn't even matter.  Google's recent changes to their search advertising system have grouped tablets and desktops together.  Even as desktops are replaced by tablets, the economics for this segment will continue to default to today's desktop CPCs.

 

CPCs resume their decline:

 

http://investor.google.com/earnings/2013/Q1_google_earnings.html

 

 

[Guest wellmont]

maybe this is why the stock is up after the report?

 

“We had a very strong start to 2013, with $14.0 billion in revenue, up 31% year-on-year,” said Larry Page, CEO of Google. “We are working hard and investing in our products that aim to improve billions of people's lives all around the world.”

[VAL9000]

 

CPCs resume their decline:

 

http://investor.google.com/earnings/2013/Q1_google_earnings.html

 

The Q/Q number is seasonal.  Based on the low decline %, I think we're seeing normalization of the CPCs.  Q4 2013 Y/Y numbers will be the true test (new rules on bidding were implemented in Q4 2012).  I think that as the growth of new mobile users slows in a given market (USA), the advertising demand will catch up to the new supply, and CPCs will rise again.

 

[Guest valueInv]

 

CPCs resume their decline:

 

http://investor.google.com/earnings/2013/Q1_google_earnings.html

 

The Q/Q number is seasonal.  Based on the low decline %, I think we're seeing normalization of the CPCs.  Q4 2013 Y/Y numbers will be the true test (new rules on bidding were implemented in Q4 2012).  I think that as the growth of new mobile users slows in a given market (USA), the advertising demand will catch up to the new supply, and CPCs will rise again.

  It's a 4% YoY decline also

[no_free_lunch]

Other revenues from Google were $1.05 billion, or 8% of total Google revenues, in the first quarter of 2013.  This represents a 150% increase over first quarter 2012 other revenues of $420 million.

 

The other revenue is a variety of things including google compute engine, google play, google app engine and more.  $1B per qtr, $4B per year is big but it still doesn't really move the needle.. yet.  Nevertheless the opportunity in selling software and running software portals is substantial.

[Guest valueInv]

maybe this is why the stock is up after the report?

 

“We had a very strong start to 2013, with $14.0 billion in revenue, up 31% year-on-year,” said Larry Page, CEO of Google. “We are working hard and investing in our products that aim to improve billions of people's lives all around the world.”

Operating income was more or less flat.

[Guest valueInv]

Other revenues from Google were $1.05 billion, or 8% of total Google revenues, in the first quarter of 2013.  This represents a 150% increase over first quarter 2012 other revenues of $420 million.

 

The other revenue is a variety of things including google compute engine, google play, google app engine and more.  $1B per qtr, $4B per year is big but it still doesn't really move the needle.. yet.  Nevertheless the opportunity in selling software and running software portals is substantial.

 

Could this be the Nexus devices they are selling?

[DCG]

Other revenues from Google were $1.05 billion, or 8% of total Google revenues, in the first quarter of 2013.  This represents a 150% increase over first quarter 2012 other revenues of $420 million.

 

The other revenue is a variety of things including google compute engine, google play, google app engine and more.  $1B per qtr, $4B per year is big but it still doesn't really move the needle.. yet.  Nevertheless the opportunity in selling software and running software portals is substantial.

 

Could this be the Nexus devices they are selling?

 

What's Google's cut on the nexus devices? I'd think a good amount of it goes to Asus.

[Guest valueInv]

Other revenues from Google were $1.05 billion, or 8% of total Google revenues, in the first quarter of 2013.  This represents a 150% increase over first quarter 2012 other revenues of $420 million.

 

The other revenue is a variety of things including google compute engine, google play, google app engine and more.  $1B per qtr, $4B per year is big but it still doesn't really move the needle.. yet.  Nevertheless the opportunity in selling software and running software portals is substantial.

 

Could this be the Nexus devices they are selling?

 

What's Google's cut on the nexus devices? I'd think a good amount of it goes to Asus.

They're supposedly selling it at cost.

[no_free_lunch]

Valueinv,

 

I think you are correct on Nexus being included in other revenue.  I found a snippet in the conference call where the CFO talks about the category, he says it includes hardware and software from google play and that the increase is partially related to a change in the  way they account for revenue.  It was pretty vague but yeah probably not worth getting excited about this category yet.

[Guest valueInv]

Valueinv,

 

I think you are correct on Nexus being included in other revenue.  I found a snippet in the conference call where the CFO talks about the category, he says it includes hardware and software from google play and that the increase is partially related to a change in the  way they account for revenue.  It was pretty vague but yeah probably not worth getting excited about this category yet.

 

If they are selling these devices at cost or even worse, subsidizing them, this category will produce no profits. This would explain why revenue increased 31% but operating earnings remained flat. Read the first line of the press release - it focuses on the revenue gain, but says little about anything else.

[VAL9000]

 

CPCs resume their decline:

 

http://investor.google.com/earnings/2013/Q1_google_earnings.html

 

The Q/Q number is seasonal.  Based on the low decline %, I think we're seeing normalization of the CPCs.  Q4 2013 Y/Y numbers will be the true test (new rules on bidding were implemented in Q4 2012).  I think that as the growth of new mobile users slows in a given market (USA), the advertising demand will catch up to the new supply, and CPCs will rise again.

  It's a 4% YoY decline also

 

I'm holding out until Q4 2013 to see what happens with CPC.  Google made a lot of changes to their advertising platform in Q4 with respect to mobile / tablets.  Until the year wraps it's tough to compare apples to apples.

 

[ItsAValueTrap]

Why do you people care about CPC?

 

You know if Google only allowed ads for searches related to mesothelioma, their CPC would be several dollars per click.

[Palantir]

I love how ValueInv can spin absolutely any data point into "Google bad, Apple good".

[txlaw]

I love how ValueInv can spin absolutely any data point into "Google bad, Apple good".

 

ROTFL.

[VAL9000]

Why do you people care about CPC?

There's a highly plausible theory that phone / tablet form factors aren't well suited to the traditional Google Advertising model.  CPC is the most relevant metric for measuring this impact.  If CPC continues to slide then it could be detrimental to Google's model long term.

 

I believe that this decline will stem and we'll see steady gains in CPC as the demand begins to catch up with supply, and new advertising tools are developed that better suit the smartphone form factor and capabilities (GPS, phone, compass, payment). 

 

You know if Google only allowed ads for searches related to mesothelioma, their CPC would be several dollars per click.

Then they would only bring in a couple million bucks a year.  This data point on its own is interesting, but not particularly helpful at scale.

 

[ItsAValueTrap]

I don't think it will boil down to a simple metric.

 

People use smartphones, tablets, and notebooks/desktops for different purposes.  This might fundamentally affect the type of searches, click-through rates, and conversion rates.  I'm not sure if CPC will necessarily be a good metric for overall monetization per person.

 

Fundamentally, you can look at reasons why monetization would be different between smartphones and desktop:

a- If somebody searches for mesothelioma on a smartphone, they may be less likely to be looking for a lawyer than a desktop search.  So for that particular search, desktop might monetize better and have higher CPC.  This doesn't hurt Google as that person will still go back to a desktop to do their search.

b- Maybe Google can't get the interface right for ads on mobile.

c- If volume is very low, the ads just won't monetize as well.  Advertisers won't put as much effort into their advertising campaigns and won't bid as much.  CPC would be misleading here.  If mobile becomes bigger than desktop, then advertisers will put more effort into mobile than desktop (therefore mobile's CPC would go up a lot over time).

 

A good metric would be overall monetization per Google user.  If monetization per person went down, then that could/would be a problem for Google.

[ItsAValueTrap]

In case you haven't realized, I'm incredibly bullish on any Internet advertiser's ability to monetize its users.

a- Growth in online shopping will drive up competition for ads.  There are still some things that I'd like to buy online but can't (e.g. video games that you can't buy via digital download)... it's pretty obvious to me that there is still a lot of growth ahead for online shopping.

b- Better ad targeting.  Ad retargeting for example is an innovation that many companies will copy and benefit from.

 

I see higher usage of smartphones/tablets as being pretty unimportant.  The biggest threat to Google is another company taking away its search dominance, like what Google did to Yahoo and what Yahoo did to its predecessors.  That's what the big picture looks like to me.  Smartphones/tablets are mostly noise to me.

[Guest valueInv]

I love how ValueInv can spin absolutely any data point into "Google bad, Apple good".

 

I'll leave it to you to rationalize how flat operating earnings are the mark of an excellent business.

[Guest valueInv]

Why do you people care about CPC?

 

You know if Google only allowed ads for searches related to mesothelioma, their CPC would be several dollars per click.

 

For two reasons:

 

1, As people diversify their online ad spending and add new channels such as FB, Twitter, Pinterest, etc. they bid less on search ads. You'll notice the trend first in the CPC.

2, As CPC declines, Google needs to serve more pages, perform more searches to generate the same amount of dollars. They will need to spend more on resources to generate the same revenue i.e. declining margins.

[Guest valueInv]

In case you haven't realized, I'm incredibly bullish on any Internet advertiser's ability to monetize its users.

a- Growth in online shopping will drive up competition for ads.  There are still some things that I'd like to buy online but can't (e.g. video games that you can't buy via digital download)... it's pretty obvious to me that there is still a lot of growth ahead for online shopping.

b- Better ad targeting.  Ad retargeting for example is an innovation that many companies will copy and benefit from.

 

I see higher usage of smartphones/tablets as being pretty unimportant.  The biggest threat to Google is another company taking away its search dominance, like what Google did to Yahoo and what Yahoo did to its predecessors.  That's what the big picture looks like to me.  Smartphones/tablets are mostly noise to me.

 

Apparently, mobile is very important to Google as evidenced by its spend on Android, Motorola, etc.

[VAL9000]

People use smartphones, tablets, and notebooks/desktops for different purposes.  This might fundamentally affect the type of searches, click-through rates, and conversion rates.  I'm not sure if CPC will necessarily be a good metric for overall monetization per person.

 

Don't get me wrong, CPC isn't a great measure for the debate at hand.  It's just the best measure available.  Google doesn't publish monetization per user, so guessing on where it is and where it's going is kind of pointless.  You have no data available to support your claim.  Of the metrics that Google publishes, CPC is the best one to proxy the impact of mobile.

 

I agree with you that the advertising dynamic is shifting very rapidly and that the true potential of mobile hasn't yet been reached.

 

I see higher usage of smartphones/tablets as being pretty unimportant.  The biggest threat to Google is another company taking away its search dominance, like what Google did to Yahoo and what Yahoo did to its predecessors.  That's what the big picture looks like to me.  Smartphones/tablets are mostly noise to me.

 

Smartphones do present evidence of search erosion for Google.  A good example is local retail:

Desktop scenario: You will probably Google "chinese food toronto" if that's what you're looking for.

Mobile scenario: You will probably hit your Yelp (or equivalent) app and choose "chinese food" from the menuing system.

 

That's one less search and one more bypass.  That's a real challenge for Google and lends credibility to the idea of Apple developing Siri.  One major reason why using Yelp is better than search is because typing out "chinese food" and digging through web links to get to a Yelp page is much more challenging than setting your context first (Yelp) and then choosing "chinese food".  Saying "chinese food" closes the gap quite a bit, which makes Siri interesting.  Too bad for Apple they are completely ham-handed when it comes to web services, or they could have had a winner. 

 

I have been noodling a theory that Apps are highly analogous to the early web concept of "bookmarks".  Back in the dark ages of search, when Angel Fire and Geocities were prominent web properties, "bookmarking" was a prized call-to-action for web visitors.  Bookmarks were really valuable because search completely sucked.  The only way to get back to where you were was to bookmark the location.  Now that web search is amazing, bookmarks are seldom  used.  Apps share a lot of the same characteristics with bookmarks.  Getting people to download your App is like asking them to bookmark your site - they can get back to your service more quickly.  Where the analogy falls apart is that Apps have a richer experience than the equivalent website, so that's a really good reason to download them, too.  But the part that's interesting is how people prefer Apps to search, and why.

 

Google Now is apparently amazing.