Google revenues in the third quarter rose 70 percent, and profits were up 92 percent over last year.
Google reported strong revenues for the third quarter, led by search, and expects its recent video content deals to bring more success in the future.
"Business is very, very good here. We had an excellent quarter in all respects, especially international," said Google CEO Eric Schmidt.
Google revenues reached $2.69 billion for the third quarter, up 70 percent over last year's $1.6 billion in the third quarter, and up 10 percent over last quarter's $2.46 billion. Net income for the quarter rose 92 percent from the same period last year to $733 million, or $2.36 per share; a slight increase over last quarter's $721 million, or $2.33 per share.
Revenues from outside of the United States contributed 44 percent of total revenues in the third quarter of 2006, compared to 42 percent in the second quarter of 2006 and 39 percent in the third quarter of 2005.
Google-owned sites generated 60 percent of total revenues in the quarter, or $1.63 billion, while AdSense partner sites brought in 39 percent of total revenues, or $1.04 billion. In the same period last year, Google-owned sites brought in 56 percent of revenues.
Traffic acquisition costs (TAC), or the revenues shared with Google's AdSense sites and distribution partners, increased to $825 million in the third quarter, up 56 percent from $530 million a year ago, and up 5 percent from $785 million in the second quarter. TAC as a percentage of advertising revenues fell to 31 percent in the third quarter from 34 percent a year ago, a slight dip from 32 percent in the second quarter. That number shows more of Google's revenue coming from sites it owns.
Schmidt outlined five main drivers of success in the quarter: strong user growth and improved search quality; better ad quality; diversity of Google's business; a "blizzard" of new product launches; and Google's partnerships.
Google struck several partnership deals, notably several distribution deals with major studios made right before the YouTube acquisition was announced. Many of those deals include provisions for some form of revenue sharing, according to Schmidt.
"The best partnership comes when both partners have a share in the success of those deals," Schmidt said.
Applying Google's monetization engine to quality video content from top publishers will bring success for both, Brin said. Improved ad targeting, and a growing advertiser and user base, will allow Google to come up with new ways to monetize that content, he said.
To address the confusion that began to result from so many product launches, Sergei Brin, Google's co-founder and president of technology, has begun a push inside the company to build horizontal "features" integrated into existing products instead of separate new products, he said.
"I'm concerned that if we continue to develop individual products in silos, users will have to search for the features first before they can do a search," Brin said. To that end, Google is beginning to integrate more of its search products into its general search results, he said.
Earlier this week, Yahoo reported disappointing results, and chairman and CEO Terry Semel immediately went on the offensive, accelerating the launch of its Project Panama search marketing platform, and touting Yahoo's video prowess in a clear response to Google's YouTube acquisition.
On the heels of a fantastic event in New York City, ClickZ Live is taking the fun and learning to Toronto, June 23-25. With over 15 years' experience delivering industry-leading events, ClickZ Live offers an action-packed, educationally-focused agenda covering all aspects of digital marketing. Register today!
Want to learn more? Join us at ClickZ Live San Francisco, Aug 10-12!
Educating marketers for over 15 years, ClickZ Live brings together industry thought leaders from the largest brands and agencies to deliver the most advanced, educational digital marketing agenda. Register today and save $500!
Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.
Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.
With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.
Gartner Magic Quadrant for Digital Commerce
This Magic Quadrant examines leading digital commerce platforms that enable organizations to build digital commerce sites. These commerce platforms facilitate purchasing transactions over the Web, and support the creation and continuing development of an online relationship with a consumer.
Paid Search in the Mobile Era
Google reports that paid search ads are currently driving 40+ million calls per month. Cost per click is increasing, paid search budgets are growing, and mobile continues to dominate. It's time to revamp old search strategies, reimagine stale best practices, and add new layers data to your analytics.
June 10, 2015
12:00pm ET/9:00am PT