Google's 2nd-quarter earnings jump as clicks on ads take off
By Michael Liedtke ,AP
July 21, 2012, 12:05 am TWN
SAN FRANCISCO -- Google is getting even better at showing online ads to the right people at the right time. That enabled the Internet search leader to hit analysts' earnings target for the second quarter and reassure investors about the company's moneymaking prowess.
The results announced Thursday were muddled by Google's recently completed US$12.5 billion acquisition of cellphone maker Motorola Mobility Holdings and a dramatic swing in currency exchange rates that resulted in European sales converting into fewer U.S. dollars than at the same time last year.
This much is clear though: Google Inc. has refined its selection and presentation of its Internet ads in a way that is more appealing to its users.
The company, based in Mountain View, California, has accomplished it by analyzing the data that its search engine gathers about people's interests to determine how and when to present an ad. Ideally, Google wants to show more ads when a user's request appears driven by a desire to buy a product, book a vacation or engage in some other kind of commercial transaction.
"We're serious about providing more intelligent results," Susan Wojcicki, Google's senior vice president of advertising, said Thursday during a conference call to discuss the second-quarter earnings. "We're moving beyond a search engine that just matches strings of words to one that understands people, the world, the way people do."
As expected, Google CEO Larry Page skipped the conference call while he recovered from an unspecified throat problem that the company revealed at its annual stockholders' meeting last month.
Google's search improvements appeared to pay off during the three months ending in June as the total number of clicks on Google's ads surged 42 percent from the same time last year. That's the highest increase since Google began to report the clicking volume on its ads four years ago.
The clicks are crucial to Google because they trigger the advertising payments that account for most of its revenue.
Investors evidently liked what they saw in the second-quarter numbers. Google shares gained US$15.94, or 2.7 percent, to US$609 in Thursday's extended trading. The stock closed Thursday's regular session at US$593.06, leaving the shares down by 8 percent so far this year. In contrast, the Dow Jones Industrial average has risen by 6 percent and the technology-driven Nasdaq composite index has climbed by 13 percent.