After reporting better than expected earnings for Q1 2008, Google stock surged more than 20% last Friday, or almost $90/share. Revenues for Q1 were $5.19 billion, up 42% from Q1 2007. International revenues grew to 51% of Google's total revenue. Significantly, revenue from paid clicks grew 20% over Q1 2007, and continued strong both in the U.S. and internationally. With the acquisition of DoubleClick, the phenomenal popularity of YouTube, and the largely untapped growth potential of emerging markets, Google's future looks as bright as its first quarter numbers.
This is all exceedingly good news for Google stockholders, the stock market, and the search engine marketing industry. Google''s results signal online enterprise has remained strong in the face of a slumping U.S. economy. The growth in paid clicks is particularly encouraging. Normally, when business slows, marketing expenses are among the first to be cut. But the U.S. spend on online marketing continues to grow, as reported by Google and as we also saw in SEMPO's recently released
State of the Market Survey.
Being enormous, Google is a popular target for criticism. Some deplore Google's perceived abuse of privacy rights; others, its heavy handed tactics; and a few simply don't like the company because of its size and dominance. But clearly, a strong Google is good for search engine marketing sellers and buyers alike. During the tech bubble, every tech related firm made money hand over fist. But during our current slump, it takes true leadership and a rock solid business model to achieve growth and profitability. Google is providing the leadership and a business model that delivers a satisfying user experience. Google products are fun, easy to use, reasonably priced or free, and get the job done. They innovate, test, and roll out user-friendly versions of new products and services with amazing rapidity. And oh, yes - they make money, and lots of it. Many of Google's competitors can lay claim to one or more of those characteristics, but how many can claim them all?
In a Google free world, I doubt advertisers would pour money into search engine marketing to the extent they do today. Why? Because the overall value of SEM would decline. By setting a high standard and providing leadership, Google makes its competitors stronger and encourages new players to get in the game, giving advertisers more choice and quality options.
