Google's Q2: Proving YouTube ROI, Mobile Mania, Enter Motorola

Google offered very little that was new on the display business during its second quarter earnings call, and analysts didn't press for details. Instead they hammered execs with questions on the newly acquired Motorola business and mobile search monetization.

But a handful of details do jump out with links to display and video ads…

During Q&A, Sanford Bernstein analyst Carlos Kirjner asked how Google plans to give brand marketers visibility into ROI for YouTube campaigns.

Nikesh Arora, chief business officer, told him, "Brand is not just about the online space. It's also about the television space. We've done some exciting things with single-source panels in Germany, looking at efficacy not just on YouTube but on television. We've incorporated that into our sales pitch. You get higher ROI, higher reach, higher frequency on YouTube."

Then on mobile, Arora noted more than a million advertisers are now advertising through 300,000 mobile apps. He said AdMob has begun to permeate Google's sales culture. And he compared the state of mobile to desktop search in 1999. At that time, "Susan's team was doing phenomenal product innovation. We were working with advertisers to get better landing pages, better sites."

Mobile search was a recurring theme, as analysts peppered Google execs with questions meant to extract information on mobile search monetization. Are queries incremental to the existing search business? Are devices cannibalizing desktop search? If the latter, are advertisers migrating fast enough? What's the average cost-per-click for mobile? We need answers!

Google execs offered reassurances but few numbers to back them up.

Here's SVP of Ads Susan Wojcicki: "We believe mobile searches are mostly incremental. When users are out and about on weekends, we see a rise in activity." And Aurora: "Mobile CPCs are healthy and we expect for the long term they'll be continue to be healthy and follow this trajectory – more ROI."

Another tidbit worth mentioning related to Google Shopping, which introduced a new commercial model for product listings. Companies will pay for listings, a practice reminiscent of the old days of paid search inclusion, but since Google is labeling them as paid it's not using the term.  "By having a commercial relationship with merchants we believe merchants should see higher traffic," she said. "We are working hard with all merchants to get them on board."

Google+, meanwhile, has grown to 250 million accounts, a number without much meaning until engagement stats are appended to it.

Wojcicki called for patience: "It's really important to remember google+ just celebrated its one year anniversary. We see the Google+ account growth as going really well…  We've talked about its ability to make all the products better. We have many use cases where we think being part of Google+ will be a better experience."

And finally (it had to be asked), what's up with Larry Page's health? The answer: there are no changes to report. He'll not be doing public speaking but is still running the business. Said Arora, "He's lost his voice."

On financials, Google brought in a boatload of cash. Revenues were nearly $11 billion, a 21% increase over Q2 2011. "GAAP operating income in the second quarter of 2012 was $3.20 billion, or 26% of revenues. This compares to GAAP operating income of $2.88 billion, or 32% of revenues, in the second quarter of 2011."

And Google's headcount grew by 20,000 during the quarter, as it closed on Motorola. The world now has 54,000 Googlers.

Read the earnings release here.

 

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