On the eve of Google’s first quarterly report to investors, news has emerged the company expects to add 372,000 new advertiser accounts over the next four years. That’s according to a report in the San Francisco Chronicle based on internal documents the paper obtained.
Google, a notoriously secret company, has studiously tried to avoid Wall Street-as-usual practices, including the custom of providing analysts with growth projections.
“Although we may discuss long-term trends in our business, we do not plan to give earnings guidance in the traditional sense. We are not able to predict our business within a narrow range for each quarter,” the company’s founders said in a letter to potential investors when it filed for its IPO. “We recognize that our duty is to advance our shareholders’ interests, and we believe that artificially creating short term target numbers serves our shareholders poorly. We would prefer not to be asked to make such predictions, and if asked we will respectfully decline. A management team distracted by a series of short term targets is as pointless as a dieter stepping on a scale every half hour.”
The Google documents obtained by the Chronicle were part of its specifications for a new billing system, and apparently meant to help its vendor, BFS Finance, design the system, the Chronicle said.
The documents show Google ending 2004 with 280,000 advertiser accounts. That number jumps 35 percent to 378,000 in 2005. After that, the year-over-year growth rate slows to 25 percent, or 472,500 advertiser accounts, in 2006. The documents show projected accounts reaching 567,000 in 2007, a 20 percent annual growth rate. In 2008, the last year covered by the documents, the company expects growth to slow to 15 percent, when it will have a projected 652,000 accounts.
It’s difficult to tell how the account numbers might translate into revenues. Many expect traditional and online agencies, each of which could be considered a single account, to make up an increasing share of Google’s business. The numbers also fail to account for potential greater spending, perhaps driven in part by higher bid prices, or by individual account holders. Google’s ability to get distribution for its ads are also a factor in its financial well-being.
Google has recently worked to add new products, at least some of which are expected to carry AdWords advertising. Last week, the company added a Desktop Search application which searches files on users’ personal computers. So far, Desktop Search results don’t carry ads.
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