More NewsGoogle: Ad Revenues Drive Record Quarter

Google: Ad Revenues Drive Record Quarter

The company reports revenue of $1.4 billion for the second quarter. Brin says wide release of Google's site-targeting program is imminent.

Google reported record revenue of nearly $1.4 billion for the second quarter of 2005. Net income was $343 million, or $1.19 per share.

Revenue from sites owned by Google grew at a faster rate than that coming in from its AdSense contextual advertising network. From its own properties, the company generated $737 million, a 115 percent increase over the same period last year.

AdSense publishers, meanwhile, brought in $630 million, an 82 percent year-over-year increase. The network’s share of Google’s total revenue was 46 percent, down from 47 percent for the previous quarter.

“The online advertising market continues to grow and we continue to attract advertisers based on the ROI [and] scalability… of our network,” said Co-Founder and President of Technology Sergey Brin.

Brin discussed Google’s introduction in April of site-targeted advertising, in which marketers can place display ads on a CPM basis and specify the sites where they appear. He said only approximately 12 of the company’s largest advertisers are now using the beta program, but that advertisers should expect a wider release in the near future.

“Unlike some of our end user products, products which… generate revenue, we tend to ramp quickly. I would expect it to be available very soon to all advertisers.”

He added, “We’ve started to support richer media types than we have in the past, for example some degree of animation in our image ads.”

Executives added the company is focusing a great deal of research and development on local search.

“A large percentage of local-related searches… happen on our main site, in addition to those that happen on local.google.com or maps.google.com,” said Brin. “Even with national advertisers, we are making progress on directing people to their local sites. More and more of our searches on the main site either naturally or with user [knowledge] gravitate to our local properties.”

On Orkut, he said the company intends to leverage the popularity of the social networking service in Brazil in order to drive usage of its other products.

Speaking about mobile services, Co-Founder and President of Products Larry Page reported significant use of many of Google’s wireless products and “couldn’t be more excited” about the channel’s promise “in the relatively short term.”

Execs said Google’s international operations accounted for approximately 39 percent of its revenue, while domestic revenue was 61 percent.

Revenue for rival Microsoft’s MSN division was flat, at $582 million this year compared with $588 million for the year-ago quarter. Operating income rose sharply to $104 million for the quarter, from $29 million for the same quarter last year.

Overall, Microsoft reported revenue of $10.16 billion for the quarter ended June 30, 2005, a 9-percent increase over the results in the same period of the prior year. Operating income for the fourth quarter was $2.99 billion, compared to $3.13 billion in the prior year.

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