Google turned in another reliably solid quarter at the end of 2013, as the only blemish on its Q4 performance was weaker-than-expected results for its Motorola unit.
But with that problem largely rectified by the previous day’s news that Google was selling Motorola Mobility smartphone business to Lenovo for $2.91 billion, the earnings results were business as usual for the search giant. Read the release.
One of the key themes for online advertising that kept coming up during the earnings conference call was measurement in general and Google’s November 2013 partnership with Nielsen on its Online Campaign Ratings (OCR) brand metrics tool. OCR is essentially the online equivalent of Nielsen’s Gross Ratings Point, which is the standard metric for TV and something that brand advertisers favor and understand when extending their major media campaigns to digital.
“We are seeing measurement as table stakes for brand marketers using the Web,” said Nikesh Arora, SVP and chief business officer. “Measurement online is vastly easier for performance marketing, since you can measure clicks or see how many people are walking into your store.
“Branding campaigns are different. Advertisers want a third party to endorse their media and help determine how effective their spending is across other sites. We’re proud of our internal products, and we’ll continue to develop what we have. Ultimately, we hope this market will evolve more sophisticated metrics to better understand the impact on the brand.”
- Revenues were up a healthy 17% to $16.86 billion year-over-year.
- Google sites’ revenues gained 22% with $10.55 billion generated in Q4, which amounted to 67% of total the company’s total segment revenues.
- Google network revenues, which cover its publisher partner sites, produced $3.52 billion, or 23% of total Google segment revenues. Still, network revenues rose a mere 3% over last year’s same period.
- Paid clicks, which include clicks related to ads served on Google’s owned and operated sites and those of its network partners, increased by 31% during Q4.
- Cost per click continued its steady decline, dropping about 11% over Q4.
Looking ahead to the the start of 2014 and beyond, Arora said that Google expected to count on three particular areas of growth to remain stable: performance marketing, banner sales and ad-tech platforms.
“Performance is a mainstay, thanks to increased search activity and the alignment of search and display strategies by marketers,” he said. He also pointed to the branding possibilities of display, citing work with Kraft Foods on engagement metrics and a campaign that brought what Arora called an “impressive” 2.9% engagement, though he didn’t elaborate much on what was behind that number.
Meanwhile, he added the mainstreaming of ad exchanges and other programmatic tools would surely mean one thing for Google: greater benefits for the DoubleClick Ad Exchange and its related offerings to the buy and sell sides. Still, when asked about lingering issues concerning the ad-tech industry, such as the continued use of cookies as consumers and marketers shift more focus to mobile, Arora was more circumspect.
“Our teams are working on the issue of cookies, and there are some early concepts that look promising,” Arora said, much as he has on such calls over the past few quarters. “But it’s too early to talk about what those precise solutions are going to be.”
