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Google Profits Surge on Strong Ad Demand
- vasaulys 10y agoIts so bizarre to me. You'd think there would be a finite appetite for advertising, but apparently not.
- chillydawg 10y agoStill a lot of print magazines to kill and ad dollars to move from TV to online.
- mschuster91 10y agoYeah but TV ads have the nice advantage that you can't easily block them - unless you're timeshifting, that is. And muting, well, it blocks the audio, but you still see the video that can get a message across. Also, print ads, given a sufficient niche-ness of the magazine, are way better targeted to actual customers than web ads.
- deelowe 10y agoIs TV not a shrinking market? I thought subscriptions to cable and satellite were down.
- mschuster91 10y agoFor a small part of the population, yes, but it's still mass media.
- shostack 10y agoBloomberg actually did a decent writeup on this.[1] [1] http://www.bloomberg.com/news/articles/2014-03-03/advertisings-century-of-flat-line-growth http://www.bloomberg.com/news/articles/2014-03-03/advertisin...
- mschuster91 10y agoYeah but TV ads have the nice advantage that you can't easily block them - unless you're timeshifting, that is. And muting, well, it blocks the audio, but you still see the video that can get a message across. Also, print ads, given a sufficient niche-ness of the magazine, are way better targeted to actual customers than web ads.
- ariwilson 10y agoThere can be both a finite appetite for advertising and increasing Google revenue as long as Google is either making advertising more effective (expanding the market), taking revenue from other publishers (controlling the market), or making money outside of advertising. Some random stats I found estimate that advertising is currently a $500B yearly industry, which means Google is only 15% of the industry.
- em500 10y agoRight, I found estimates of $600B yearly ad spend. To put that into context, total annual spending (aka world GDP) is over $70T, meaning that less that 1% of all spending in the world is on advertising.
- adventured 10y agoAnd you can probably slap another one or two dozen trillion dollars onto that surface GDP figure. The underground / black market economy is very, very substantial.
- semi-extrinsic 10y agoOnly 15%, but then they don't do TV, radio, magazine, newspaper or billboard ads.
- runeks 10y agoYou forgot the most important part: making ads more targeted. More more targeted an ad is, the more you can charge for it. So Google can sell the same number of ads to the same number of advertisers and yet make more money, while advertisers get more bang for their buck.
- MarkMc 10y agoIn addition, the online advertising market is growing naturally as more people get connected to the internet and already-connected people get wealthier. This is why Facebook is so keen to dominate the Indian market that they are willing to offer free (but not net neutral) internet access.
- ethanbond 10y agoI think we'd see a surge in ad purchasing right before the death of it. Why does no one see this uptick in ad spending a potential indicator that advertisers are getting less of their money's worth?
- encoderer 10y agoPossibly because that's not how advertising budgets are really set? Nobody says "lets throw more cash at the thing that isn't working anymore". Certainly people will accept slimmer margins if they're still making money but every ad campaign has KPIs that are optimized for and no VP of Marketing is going to keep their job by accepting a status-quo of less effective, more costly advertising.
- ethanbond 10y agoExcept that's the fundamental issue of advertising? Attribution has always been wickedly difficult. It was supposed to be easy with Google/FB (click -> sale, duh), but now people are clicking on fewer and fewer ads, so Google/Facebook et al. are repositioning as "oh no, they saw our ads for x seconds, we definitely swayed them."
- disgruntledphd2 10y agoThe issue is that views definitely have an impact. However, especially on mobile, this impact is very difficult to measure. So most of the DR industry uses last click, even though they know its incorrect, because there is nothing better.
- ethanbond 10y agoThe impact is difficult to measure everywhere all the time. How do you think they measure impact of billboards? Radio ads? TV ads? All by the same hand-wavy "there is nothing better" types of metrics. I didn't say they don't have an impact, I said it's obscenely difficult to gauge attribution and online ads weren't the panacea they were supposed to be because it turns out people don't click ads. Despite this, advertisers are still advertising. An increase in ad spending is not any indicator that ads are working well because no one has ever known how well they worked.
- encoderer 10y agoThere is. Advertising as a share of GDP has been flat for like 75 years. But what we see here is a platform shift away from TV and print and to the interwebs. There are a lot of convergent trends happening to drive this. Older TV watchers dying off, explosion of pocket computers, fragmentation of TV ad market by rise of cable channels, etc.
- choosername 10y agoThat appetite is proportional to the careless feeding of stats and the affinity to fall for the ads.
- Buge 10y agoMore and more people are still coming online in third world countries.
- dredmorbius 10y agoAbout $500 billion globally, with ~$100 billion online, last I'd checked. Based on a global world product (GWP) of $75 trillion. Or 1.5% of the global total. If that were to be split 3 ways between Google, Facebook, and Everyone Else, Google might get $167 billion in revenue, or (at 20x PE) $3.3 trillion market cap.
- seibelj 10y agoMobile app ads keep paying more and more. I'm regularly getting $1 per click, and sometimes as high as $5 (finance category). I can't remember ever getting this much for websites. I'm using google admob
- mpg33 10y agoWhat? That's seems absurdly high..
- adventured 10y agoIt's pretty steep compared to the last decade. For a while during the dotcom bubble GoTo.com used to list how much a text ad click cost when it was clicked. I remember Dell running ads on there that were paying $5+ per click at the time, and that wasn't uncommon. I really haven't seen anything quite that crazy since those days, when it comes to general / broad-based CPC advertising.
- imaginenore 10y agoIt's not. "Insurance", "loans", "mortgage" are all $44+ per click. Some very specialized one like "mesothelioma suit" are $800+. Even misspellings like "mesotheliama" are $600+.
- zaroth 10y agoI try to remember searching on that term and clicking the ads from time to time, for no other reason than to line Google's pockets. It seems like the quickest way for me to pay them back for the various free (and ad free) services that I use from them. Probably there is something terribly wrong with this, but I'm not entirely convinced. I am a human typing a search, and physically clicking a link in the results. I just don't have or happen to know anyone who has mesothelioma.
- pcurve 10y agohttps://www.adgooroo.com/resources/blog/the-most-expensive-keywords-in-paid-search-by-cost-per-click-and-ad-spend/ https://www.adgooroo.com/resources/blog/the-most-expensive-k... https://searchenginewatch.com/2016/05/31/the-most-expensive-100-google-adwords-keywords-in-the-us/ https://searchenginewatch.com/2016/05/31/the-most-expensive-... mesothelioma cases must be quite lucrative for them to spend this kind of money. This is the one of the saddest data table I've seen in awhile.
- api 10y agoThis is all good news for our industry. Soft numbers among the top players trickle down in the form of reduced demand and investor interest for earlier stage companies. Good numbers send a signal that the industry is healthy. Edit: wow stepped on a mysterious hater button. :P
- w1ntermute 10y agoOr it could be a sign that the industry is consolidating and that there's no point in investing in non-FANGAM companies.
- lucb1e 10y ago> our industry Who does 'our' refer to here? Clicking your profile, it's not clear whom you work for, so I sure hope it doesn't refer to hackers of hacker news in general.
- vonnik 10y agoIn other words, Google profits surge because it is using TensorFlow to accurately predict how to price ads to maximize revenue.
- theDoug 10y agoAny source for this assertion?
- connoredel 10y agoThat's not how it works at all. It's a market: there is a limited supply of impressions/clicks, and it is _buyers_ who decide the price. Buyers are rational -- I like to take that charitable view at least -- and are bidding less than the value to their businesses of those clicks. CPCs are actually down on average. If that's true, then it must be simply inventory growth: mobile is providing ever more interaction points with consumers.
- vonnik 10y agoMarket prices are determined by the intersection of supply and demand, so it is not just the buyers who choose. Google has some say over the supply. They may increase or decrease the supply based on behavior they sense more broadly in search. It's amazing to see on HN that some of the times I am most right, I am also most downvoted. Life lessons...
- soared 10y agoWell Google is the intermediary. They can (and undoubtedly do) directly affect supply, demand, and price. They can purchase ad space from a publisher for $0.45, mark it up x, and sell it. They can slow demand by temporarily (even for seconds at a time) by increasing cpc. They can lower supply by lower bids. They could in theory even pre-sell ads when supply is in excess.
- sievebrain 10y agoGoogle has routinely increased profits by a huge amount through better machine learning. It's been using statistical optimisation for years. Such a massive jump almost makes me think it must be something like that, because the timing would be about right for a major rollout of a new ads optimisation engine based on their latest AI research, and 25% increase doesn't seem possible to occur naturally just through shifts in supply/demand. Only radically better ad targeting could do that.
- em3rgent0rdr 10y agopaywall;dr Could major election year be a significant contributor?
- kyrra 10y agouse the "web" link under the article link. Does a search for the title. Getting to WSJ from Google's search page bypasses the paywall.
- LeonM 10y agoIn chrome, just prepend a question mark before the URL, which will send you to google with the article as the first hit. Click it and you can read the whole article.
- malchow 10y agoCofounder/owner of large political ad exchange here. Yes, the election is a major contributor. But not in the quarter Google is reporting on now.
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- asakurasol 10y agoPokemonGo just got a callout in the earnings call.
- lucb1e 10y agoI don't understand your comment. It got a "callout in the earnings call", what does that mean? Does the "earnings call" refer to a part of the article I can't read (paywall) or are you making an assumption about this being because of PokemonGo and Google/Alphabet internally mentioning PokemonGo in a conference call?
- jvolkman 10y agoAlphabet 2016 Q2 Earnings Call: https://www.youtube.com/watch?v=EVpWjo023cE https://www.youtube.com/watch?v=EVpWjo023cE
- lucb1e 10y agoAnother comment linked the Wikipedia, I understand now. Thanks for responding!
- chillydawg 10y agoLiterally the phone call (conference) the CFO + auditors will do with analysts to share earnings data and background info.
- ma2rten 10y agohttps://en.wikipedia.org/wiki/Earnings_call https://en.wikipedia.org/wiki/Earnings_call
- lucb1e 10y agoAh I should just have googled it. Thanks!
- deleted 10y ago[deleted]
- paulpauper 10y agoAmazon, Facebook , Google - three stocks to rule the world. They cannot do any wrong, and I don't mean that sarcastically. Buying these stocks is like investing in the companies that are building the matrix, but it's real life. It's just nuts..even Microsoft and Cisco in the 90's..the growth was finite, but there is no limit to Facebook, Google and Amazon. Every quarter is a crusher..over and over, year after year. Just when you think their growth is 'stalled out', something new comes along. Now it's mobile. The small mobile screen is perfect for advertising. Adsense ads are everywhere. Sometimes major brands try adsense alternatives but always go back because adsense pays the most and has the most advertisers.
- akavi 10y ago> in the 90's..the growth was finite, but there is no limit to Facebook, Google and Amazon. "This time, it's different."
- MicroBerto 10y agoReminds me of the phrase, "When your barber starts giving you stock tips, it's time to sell"
- RileyKyeden 10y agoWhat if the barber is the one who said this?
- mannykannot 10y agoRussell's lesser-known paradox.
- mindcrime 10y agoDoes the barber shave himself or not?
- bduerst 10y agoSell the barber.
- rebelidealist 10y agoSerious question: How does Google's ad revenue increase when Google themselves were saying people aren't clicking on adwords as much when searching in mobile? Also when people are using voice search such as Siri or Google Now, they are not even seeing the ad results.
- redwood 10y agoThey definitely seem to have a way to get you to accidentally click on their mobile display ads while your scrolling through the page. I always get stuck with that and have to go back.
- dragonwriter 10y ago> How does Google's ad revenue increase when Google themselves were saying people aren't clicking on adwords as much when searching in mobile? Google sells ads besides search ads, so a lower per-search rate of clicks on search ads on mobile doesn't mean lower number of total clicks. (They sell both in-app mobile ads, and web ads that are not search ads.) Also, a lower per-search click rate doesn't mean lower per-search revenue if the value advertisers are willing to pay per click goes up more than the decline in per-search clicks.
- shostack 10y agoAdWords has been making several big pushes over the last few years that contribute to this. Among them: - Pushing advertisers to advertise higher up in the funnel with additional clicks. Things like the push for "ZMOT" (Zero Moment of Truth) and such focus on the branding side of things before people are ready to convert. Google has long had advertisers focus primarily on last click conversions which does not play nicely with tracking for brand efforts. - Video ad pushes by reps have been pretty big. Video CPMs are much higher than static display images, and that is also why you see every publisher under the sun having a a video for every article that autoplays even if it is a useless annoying video. And why they are looking into auto-generated videos. - Turning previously free resources into paid plays (Google Product Search) My gut right now in terms of their future monetization is the continued transition of Gmail from a "regular" mail platform into an algorithmic feed where advertisers have to pay a dynamic, auction-based payment model to get into the inbox. The Promotions tab is the first step in that direction. Gmail ads have been the next step. I would expect them to start adding them spread out through your inbox feed in the not too distant future, and then start drastically tapering brand reach unless you pay up like FB has done. Additionally, their push for bots and voice search is to have people ask questions and just provide the answer and not give a list of choices. They want to know you well enough where they can guess right, but the options they provide are all paid placements, so you get the most relevant paid placement. It won't happen now, but once voice assistants are an integral part of the mobile experience that people can't live without and Google succeeds in owning the space.
- Fiahil 10y agoAh. Yes. "Thank you" for enriching so much my life. http://imgur.com/MpO82Ta http://imgur.com/MpO82Ta
- advisedwang 10y agoI don't think those are actually Google ads. I went to techcrunch and clicked on the AdChoices icon and they all popped up non-google info.
- kyrra 10y agoYup. Looks like I got linked to adinfo.aol.com on both mobile and desktop. The AdChoices icon is common across many platforms (it's from the Digital Advertising Alliance), their list of members is pretty huge[0]. [0] http://www.aboutads.info/participating http://www.aboutads.info/participating
- pseudometa 10y agoSometimes I click ads just to give money to Google.
- cpeterso 10y agoSometimes I click ads just to make advertisers pay.
- soared 10y agoSometimes you both help pay my salary.
- infinityplus1 10y agoI copy the URL of the web page in ads and then go directly to that website instead of clicking the ad.
- bitmapbrother 10y agoAfter hours is through the roof. It's currently at $808 as of this time. I wouldn't be surprised if Google is the world's most valuable company tomorrow.
- MarkMc 10y agoApple still beats them, I think. At $808 Google's market cap would be around $550 billion, while Apple's is currently around $600 billion.
- EGreg 10y agoFacebook, Google, Amazon all surge! Why?
- mrtron 10y agoThey made more money than the markets expected.
- MarkMc 10y agoAs a Google shareholder this is great news, but now I'm starting to feel that the market is underestimating the chance that someone simply builds a better search engine. For example, here are 3 search queries I recently performed where I found Google's results lacking: 1. What is the best Thai restaurant within 10 kilometres? 2. What companies have a market cap greater than Microsoft? 3. Does Android track my location by default? In each case I don't want to see a list of web pages - I want a single one-sentence answer (like I would get for "what is the height of the Eiffel Tower?"). Something like Wolfram Alpha on steroids. No doubt Google is working on this problem, but what is the chance someone else beats them to it? And how much damage would it cause Google if they do?
- Gustomaximus 10y agoAlso consider ads. If you look at the progression of Google search page, it's not uncommon for a laptop/mobile screen to be entirely ads. Basically they have trained us to search for ads. It's possible one day they'll take this too far and there will be a better alternative. While I dont think it is likely , if these things aligned Google could realistically lose a big proportion of their business in a few years. It would be brutal.
- killerdhmo 10y agoHeyo, I tried the "Best Thai Restaurant near me" and got a result with a list, pins on a map, etc. So, it could be a query thing. (screenshot) https://www.dropbox.com/s/lr01wno3aqskoan/Screen%20Shot%202016-07-28%20at%206.13.04%20PM.png?dl=0 https://www.dropbox.com/s/lr01wno3aqskoan/Screen%20Shot%2020... This worked across desktop and mobile. You're right, that it doesn't handle specifically within 10km, but I thought I would mention it if it was an acute need!
- killerdhmo 10y agoHeyo, I tried the "Best Thai Restaurant near me" and got a result with a list, pins on a map, etc. So, it could be a query thing. (screenshot) https://www.dropbox.com/s/lr01wno3aqskoan/Screen%20Shot%202016-07-28%20at%206.13.04%20PM.png?dl=0 https://www.dropbox.com/s/lr01wno3aqskoan/Screen%20Shot%2020... This worked across desktop and mobile. You're right, that it doesn't handle specifically within 10km, but I thought I would mention it if it was an acute need!
- perseusprime11 10y agoIt is time for them to go for the big kill and aquire Twitter. Twitter can benefit from Google's Machine Learning competency and Google can benefit from Twitter's social network competency. They should do this before Mark Zuckerberg's offer they cant refuse.
- bduerst 10y agoHow? Twitter's data is already publicly available.
- zump 10y agoWish I could get a job at Google :(
- mannykannot 10y agoDoes internet advertising work, or is it possible that companies are buying more in desperation? If the latter, it will peak just before it crashes.
- angry-hacker 10y agoMajority of people pay for ads if they earn more doing so. The cost of ads tells us it works for a lot of people and companies. Maybe big brands pay over, or pay for just to be everywhere, but I wouldn't call it desperation. Yes, Internet advertising works surprisingly well.
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