Google’s Profit Soars; Credits Popularity of Search Ads
Bloomberg.com reported that Google’s third quarter was extremely profitable. Google’s net income rose to $1.35 billion or $4.24 a share which is up from $1.07 billion or $3.38 a share from last year.
Google is crediting the popularity of paid search ads for their recent increase in revenue. Advertisers are moving away from more traditional methods of advertising on TV and print media, and focusing their efforts on search ads.
Because Google receives most of its revenue through search ads, they are planning to start implementing ads with images and videos available for advertisers in the near future. This is the result of a deal Google landed earlier this month with CBS Corp. on its wildly popular YouTube site. Google will split the ad revenue with the network.
Google and the Economy
“We are realistic about the poor state of the global economy, but it is Google, so we’ll manage accordingly,” Chief Financial Officer Patrick Pichette stated in an interview with Bloomberg. “We had a good third quarter, with strong traffic and revenue growth.”
In the U.S., 63% of all searches were conducted through Google for the month of August, which is almost double the market share of Yahoo! and MSN Corp. combined. Sales outside of the U.S. are responsible for 51% of Google’s revenue, which is up 3% since last year.
Though Google is continuing to experience massive growth, it is seeing a slowdown in spending from certain customers due to the current unstable and worrisome economy. Both US auto and home-finance companies have cut back their online ad spending, claimed Pinchette. Google has also reportedly cut back spending by decelerating its hiring rate and spending conservatively on travel and events.
“We don’t know exactly what the future holds. We’ve taken a conservative approach,” Sergey Brin, one of the founders of Google stated in an interview with Bloomberg. “We view this as an opportunity to refine our company and sharpen it.”
