Google Reports Growth in Mobile and Display Businesses

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Google's display and mobile ad businesses are generating $2.5 billion and $1 billion in revenues, respectively, on an annualized basis, the company said during its quarterly earnings call today.

SVP of product management Jonathan Rosenberg said, "People ask us what the next multi-billion business is after search, and the answer is display," he said. Despite the strong growth, he said search is "still the most monetizable side of the Internet.

According to Nikesh Arora, Google's president of global sales operations and business development, the company's display ad network its now among the top three in the world. He added the company expects much of that display inventory to migrate to rich media or video formats over the next few years. "We're very excited about display," he said.

In announcing its third quarter earnings today, the company reported substantial growth in revenues and profits. The strong results reinforced the IAB's assertion earlier in the week that the online advertising market has returned to health following the economic turmoil of 2009.

Google's revenues reached $7.3 billion in the three months ending September 30th, representing 23 percent growth over the same period last year. The company said its net income for the quarter reached $2.2 billion, representing 32 percent growth. Revenues from Google's owned and operated sites grew 22 percent during the quarter, as did those from its network of ad partners. Paid clicks increased 16 percent year-over-year, while average cost-per-click increased three percent in the same period.

In reference to the Instant search product the company released last month, Rosenberg insisted the introduction was driven by user experience, and not financially motivated. "We didn’t launch instant to make more money. From a revenue standpoint its impact has been minimal, and from a resource standpoint it's actually quite expensive... Instant wasn’t introduced based on a narrow financial calculation," he said.

Although Google enjoyed substantial growth in the U.S. market, its performance lagged slightly elsewhere, with international revenues totaling 52 percent in the third quarter, compared with 53 percent in the same period in 2009. CFO Patrick Pichette said that fact pointed to a slower economic recovery in markets such as the U.K., which contributed 12 percent of its revenues over the quarter.