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The search engine giant and its interminable battles

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From ad business to mobile payments, the search engine gaint has many fights to win

Recently Google Inc (NASDAQ:GOOGL), through its executive chairman Eric Schmidt, responded to Tim Cook’s, Apple Inc. (NASDAQ:AAPL) CEO, letter on privacy.  The letter distanced Apple from use of consumer data, a practice common with data mining companies such as those engaged in ad businesses.

The response could open a war of words on privacy between these two tech giants, but this not the only war that the search engine giant is fighting. Since the company is engaged in different business niches, the company has made so many rivals and thus receiving blows from all directions. Here are Google’s current battles and how it is handling each an every one of them:

Google vs. Facebook –ad business

Over one and a half years ago, Facebook Inc (NASDAQ: FB) bought Microsoft Corp’s (NASADQ: MSFT) Atlas ad measurement and serving platform. The social media network has now revamped this app and is soon launching it to help its advertisers measure the performance of the ads they post on the social network, its apps or third party sites. And with Facebook’s mobile ads performing exceptionally well, Google has every reason to worry of its DoubleClick display ad unit.

Google is not sleeping on the job, however. The company acquired ad measurement platform Adometry and has been upgrading its system to perform better by being able to track offline and cross-device activity. Besides this, the company launched an app install ad service for AdWords search ad. This will definitely help it secure its position as the number one online advertiser.

Google vs. Samsung: the entry of Tizen OS

The South Korean electronincs company Samsung has been gradually developing its OS known as Tizen. The system is not only meant for smartphones, but also tablets and home appliances. This bad news to Google as Samsung has been the real force behind Android dominance in the smartphone market.

To replace Samsung, Google has partnered with HTC to make its next 9-inch Nexus tablets. Both Google and HTC are poised to benefit from this deal. The search engine giant will be reducing reliance on Samsung through supplier diversification, while the Chinese gadget maker will benefit from the Nexus effect.

Payment Service: Google VS. Apple

On Sept 9 Apple unveiled its iPhone 6, and also making its debut was Apple Pay, a mobile payment solution. While Google was a first mover in the mobile payment market, the search giant failed to make any impact. But Apple has been able to convince financial industry players such as merchants, banks and insurers to accept its mobile payment service. Already some top-tier merchants are on-board including McDonald’s, Whole Foods, Duane Reade, Subway, Macy’s, Bloomingdale’s, Staples and Disney.

In response to Apple’s onslaught on e-Payments solutions, Google is rumoured to be working with eBay Inc’s (NASDAQ: EBAY) subsidiary PayPal. This has even prompted rumours that Google might as well acquire eBay or its subsidiary.  Whatever the case, partnership with PayPal, which has gained global traction as an online payment network, will be a perfect response. Also the availability of iOS 8 mobile payment solution has created a gap for a similar solution for android. Actually, industry players will be quick to embrace an android mobile payment solution as it the largest mobile community.

Conclusion

Google has ventured in virtually every business that relates to the internet. This has created different angles for competition as each player scramble for the open market. While the search giant has many battles to fight, it has nothing to fear as it has a formidable defence thanks to huge amount of money on its coffers.

Facebook capture of mobile ad disturbs Google

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Is Facebook a Daunting Threat to Google?

Facebook Inc (NASDAQ: FB) and Google Inc. (NASDAQ: GOOG, GOOGL) lead in ad revenue. Google is way ahead of Facebook; but the world’s number social network has been making impressive progress in the mobile space. The search engine giant this year landed ad revenue of $14.3 billion in the second quarter compared to Facebook’s $2.68 billion. Ad revenue covers 90% of the companies’ overall revenue.

Facebook seems to have captured the mobile scene as Google remains struggling.  Facebook’s mobile ads hit 60% of its total ad revenues while Google reaches only 12%.   Chances are the social networking company is becoming the world king of mobile ads in two to three years.

Facebook mobile ad kit

Facebook has pinched a few plays from Google, such as the self-service tool, a clear knock-off from Google AdWords. In October 2012, Facebook also launched Mobile app-install ads. App-installs drive more traffic to Facebook ads and lure users to download them. Since the introduction, Facebook has had more than 350 million apps downloaded. With $2 to $4 paid per download, Facebook is reaping big, according to Macquarie Equities Research. Facebook has also added lots of tools to drive traffic too mobile ads such as Use App, Watch Video, Listen Now, Shop Now, Play Game and Open Link.

The “cross-platform platform” mobile development tool announced by Facebook during this year’s f8 developer conference, among others, is set to be mobile developer friendly as it cuts across Android, iOS, and Windows devices. This is bound to lure many mobile developers. Facebook is additionally offering the mega SDK (software developer kit) to mobile app developers that will be created around app marketing services.

Google’s Key Vantage Points

There is no gainsaying Google is facing a tight competition from Facebook as far as monetizing ads is concerned, especially mobile ads. However, Facebook can’t touch the paid search Google’s money pot, and has no product to compete with that.

For now marketers still prefer Google to Facebook as a digital marketing platform. Forrester Research’s last year survey confirmed that people still prefer search marketing, which is Google main forte.

Forrester Researcher’s Nate Elliot, in an open letter, questioned Facebook chief executive Mark Zuckerberg for failing marketers. Only 16% of Facebook users ever see a brand post. Worse, only 15% of the ads ever hit the target of audience. In short, Facebook reaps big but hardly get marketers reaching their intended target audience.

This is not Facebook’s fault since they face the dilemma of satisfying the marketers and making itself unpopular to users by serving unsolicited ads or service less ads to retain a happier traffic.

Google however has a free way here as their ads responds to certain keywords users place in their search queries, making them more helpful to users.

Google has faced a decline in CPC due to two main reasons. One: more clicks come form emerging markets outside North America and secondly, the growth of mobile ads pulls down the CPC, given Mobile CPC is typically lower than desktop CPC.

Bottom line

Facebook is rapidly rising as one of the most dominant players in online ad scene, but this is in no way impacting negatively on Google’s growth. With the two giants running roughly distinctive paths in a fast growing market, there is sufficient space for co-existence without a cause of brawl.

Android Wear takes on the Apple iWatch

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Google to launch Moto 360 smartwatch

Google (NASDAQ:GOOG, GOOGL) is expected to release its Moto 360 smartwatch ahead of Apple’s (NASDAQ:AAPL) September 9th event. The android wear version has notable upgrades, including its ability to perform a number of functions independently, without necessarily being linked to an Android smartphone. The search company will be seeking to seize the moment in the lucrative wearable market with huge growth potential.

About Android Wear

Android wear is a modified version of Android operating system designed for the wearable, such as the smartwatch. The platform was launched at Google’s June I/O developer conference.

Earlier, the wearable market had problems with apps as developers had lacked a common platform to build them on. But now with Google’s android wear, apps in Google Play can be upgrade to support Android wear. According to the company’s engineering director for Android Wear David Singleton already thousands of apps on Google Play support Android Wear.

The wearable market has become the next battle ground for tech giants, with Apple rumoured to launch its iWatch perhaps in its next week’s event. The iPhone maker is known for its exquisite and elegant products, and its wearable will definitely be well received.

Banking on the first mover advantage

The iPhone maker is expected to unveil its iPhone 6 in a much waited event that might also see it unveil its first wearable product, the iWatch. However, if the company goes by its tradition of giving each of its products enough shinning moment, then it is likely that the market may have to wait a while longer for the wearable device from Apple. And this is exactly what the King of internet search business is counting on.

Google is seeking to benefit from the first mover advantage with its Moto 360 smartwatch as Apple still procrastinate. While this may not be possible as the iWatch may hit the market as early as next week, there is still a possibility that the iPhone maker may yet wait a little longer to launch its iWatch.

Capabilities of the new wearable

There are already existing Android-based wearable, but these devices have limited capabilities if not paired with other devices Smartphone or tablets. However, the yet to unveiled version is expected to improve on this. Such functions include:

  • Moto 360 GPS capabilities can also use geo-location data to track their user’s fitness sessions.
  • Comes with a set of Bluetooth headphones
  • Can store music and thus the user can go for a run and leave his phone at home, but still listen to music through the headphones.

Generally, Google has expanded non-paired functionalities of its new device. The company further plans to offer frequent updates to Android Wear extending the platforms capabilities.

Conclusion

The new Android Wear version is expected to give developers a platform that make easier to develop apps. This will further position Google to continue perform in businesses outside its core search business. While next week’s Apple’s event may put pressure on Google stock, the stock is worth holding on.

 

Twitch Deal: Its Amazon and not Google

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Amazon outwits Google in battle for Twitch

On July 25, we reported that Google Inc. (NASDAQ: GOOG) was in the verge of acquiring Twitch for $ 1 billion fee. Things seems to have taken a different turn and now Twitch has confirmed that it has been acquired by Amazon.com (NASDAQ: AMZN) instead. It is emerging that e-commerce giant pounced on the deal after Google and Twitch arguably failed to agree on a breakup fee due to the antitrust issues.

Google has courted Twitch, a video game streaming website, since May when the first reports emerged that the two tech companies were in talks. While neither Twitch nor Google ever confirmed these reports in public, VentureBeat confirmed the deal saying it was only awaiting official confirmation.

Amazon Twitch Deal

On Monday Amazon confirmed the deal is happening. The e-commerce giant said in a press release that it is investing in Twitch, which dominates the online video streaming.

Twitch CEO Emmett Shear has also confirmed that Amazon has acquired his company. Through a statement posted on the company websites, he praises Amazon and justifies why the company accepted the e-commerce company’s offer.

“Today, I’m pleased to announce we’ve been acquired by Amazon. We chose Amazon because they believe in our community, they share our values and long-term vision, and they want to help us get there faster.” – Emmert Shear, Twitch CEO.

“Like Twitch, we obsess over customers and like to think differently, and we look forward to learning from them and helping them move even faster to build new services for the gaming community.” – Amazon CEO Jeff Bezos.

Amazon will pay $970 million in cash and potential add ons that may value the whole deal at $1.1 billion. The deal will be completed next year.

Amazon and Google battle on all fronts

The Twitch deal is just but one battle among the many battles these two American tech companies are involved in.

While both companies were conventionally not rivals, both companies have diversified their portfolios through innovations and acquisitions that they are now obvious rivals. Amazon’s co-business is e-commerce, while Google’s is digital marketing.

After acquiring Nest labs, Google now makes thermostats and smoke alarms, it has invested in Smartphone market through its Android Operating system, it operates an online retail store known as Google Shopping Express and it is still the leading digital medium of advertising. Amazon on the other hand ventured into electronics, has recently revamped its digital media investment especially T.V. programs, and is working on delivery drones. Google and Amazon are already offering same-day delivery in select markets for their retail sites.

Why Google wanted Twitch

Had Twitch deal gone through as thought, Google would have folded the live video game streaming service into its video division, YouTube. Twitch is YouTube’s biggest challenger in broadcasting and live-streaming on-demand videos, especially game sessions. Nevertheless, Google’s video unit is the world’s largest and most-visited content streaming website.

Gamers have preferred to use YouTube for posting game ads, highlights and tutorials, while using Twitch as the live broadcast platform. More than half of Twitch viewers spend at least 20 hours a week watching, with every viewer watching 106 minutes per day on average. In short, gamers spend more time on Twitch than YouTube. Consequently, fusing the two video giants would not only have helped the search engine giant eliminate competition, but also expand its video community.

Conclusion

The Twitch deal is strategic for Amazon given its recent foray in digital media. This acquisition will definitely help Amazon in its quest to become a heavyweight in digital advertising, a market which is currently dominated by the search Company.  To Google, missing Twitch is not just a big miss, but losing 50 million potential online viewers to its now sworn rival, Amazon.

JetPac and Gecko deals extend Google’s Domestic acquisitions

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Google Acquires Gecko Design and may use JetPac to strengthen its navigation app

Google Inc. (NASDAQ: GOOGL) has acquired JetPac, amobile app, and Gecko Designs, which has a design company that has worked with renowned industries players such as DellHewlett-Packard Co. and wearable-device provider Fitbit Inc. The fees involved in both cases have not been revealed. The company had dedicated at least $20 billion of its foreign earnings for acquisitions. However, its latest acquisitions, which both bring different values in the own ways, could have been funded by holdings from its domestic coffers.

JetPac Deal

Here is what JetPac wrote on their website: “We are joining Google…we look forward to working on exciting projects with our colleagues at Google.” JetPac is an iPhone application that amasses picture data to identify trends in the data and in turn use it to identify trending locations. It is not clear why Google acquired the start-up, but given the capabilities of the app it is definitely something to do with location, that is Google Maps to be precise.

JetPac Features and uses

  • The start-up has two image recognition technologies, spotter and Deep Belief. These allow its users to locate top joints and restaurants. The apps customized suggestions may be what Google is interested in, because this can be fused with Google Maps just like Google’s “Near You” feature.
  • JetPac City Guides offer customized geographic information which could come in handy in Google’s quest to be the best personal electronic tour guide.

Gecko Designs Acquisition

Gecko Designs has been in business of product design and engineering for the past 18 years. The firm is headquartered in Los Gatos, California, but will now be joining Google’s X lab. The firm’s president Jacques Gagne confirmed the acquisition reports on a web post. He wrote: “This is an incredible opportunity for everyone at Gecko… We are very excited and honoured to join Google(x) and work on a variety of cutting edge projects.” Even though Google confirmed that it was bringing Gecko to X, it did not give out any details. Google has several projects in the pipeline including Android Car, Computerised Eyewear and other Wearable. Gecko Designs employees are experienced in design and they may prove very useful in giving the Google Glass final touches before its commercial launch.

Conclusion

Google is known for its never ending acquisition binge. The California-based search engine giant has built its empire through innovations and acquisitions. It has spent over $22 billion in acquisitions, and it has acquired at least 100 businesses including Android, YouTube, Nest Labs and Double Click. As a start-up, Google was merely meant to help estimate and rate importance of sites using back links, but 14 years down the road, the company has turned into a global tech conglomerate with unparalleled success. While its latest acquisitions, JetPac and Gecko, will soon vanish in the face of the earth, they are going to work behind the shadows to make life easier, as Google has always done. The two companies’ employees are now Google’s employees and will work together with in-house developers.

Could Google Play take over from Google Search?

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Mobile transition will benefit Google in the long-run if it explores Google Play and in app advertisements

Since going public in exactly a decade ago, Google Inc. has expanded its business to include all the tech spheres. Virtually all its businesses are revolutionary, especially its core search business which has continued to experience unrivalled success thanks to its omnipresent mark on the internet. However, the increasing use mobile devices is slowly eating on Google’s search business and particularly its -per-click (CPC).

YouTube has been tipped as the frontrunner to take over from Google Search as the next big growth driver for the search engine multinational. Google acquired YouTube, a video streaming website, in 2006 for $1.65 billion. Those who tipped YouTube must have ignored the perpetually growing Google Play and the strategic position it holds in this company.

Google Play and its Revenues

Google Play is a digital app store whose contents include games, books, magazines, TV programs, movies and music. According to consensus estimates, the venture is expected to contribute close to $4.4 billion in the FY 2014. Correspondingly, Google Play’s annual gross sales are expected to be $9 billion with net revenue of $1.5 billion. Though this still trails Apple Inc.’s (NASDAQ: AAPL) App Store revenues, the two digital stores are predicted to be level at $19 billion with a net revue of $5.7 billion by 2016.

As the Android community continues to grow, so does Google Play and its subsequent revenues. In this app marketplace, mobile games are the leading revenue earners accounting for almost 90% the total app revenue.

The mobile transition and the future of Google

In the past couple of years, there has been a mass migration of users from PCs to mobile gadgets. As result, mobile internet traffic has been on the rise at the expense of PC traffic, right from 1% in January 2009 to over 30% so to speak. During the same period PC internet traffic has declined to 70% from 99%. At this rate, it is predicted that mobile traffic will dominate the internet come 2015.

In preparation of this, Google Inc. (GOOGL) has heavily invested in Android, an operating system for mobile gadgets such smartphones and tablets. While it is yet to monetize this platform, it has opened it for handset manufacturers such as LG, the South Korean electronic outfit Samsung, and a host of Chinese handset makers including Lenovo and Huawei.

Since the Android users have Google’s email service as the default account, the growth of the android community helps Google secure more users for its search services. Also this helps it earn more from Google Play given that the search engine giant earns 30% of subscription payments from its developers, and which it only uses to cater for the credit card fees, but share the rest with its telecom partners.

Google Play can earn more through in app advertisement

Mobile apps have transformed how people surf the web today. While the mobile internet traffic has increased over the years, many consumers spend time on mobile apps rather than the internet. The number of people who are directly using apps without passing through the normal searches has also increased substantially in recent times.

But Google has made impressive inroads in the world of mobile apps during this mobile revolution through Google Play. As a result it has positioned itself strategically to exploit the more than $3.5 billion in app advertisement of the mobile advertising market.

What if Google introduced in-store advertisement, or it cohorts with the app owners to initiate in app advertisement? Or isn’t this why Google acquired AdMob,a company with focus on in-app advertising, back in 2009?

Ad Rates Battle: Google to stabilise its CPC

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Declining ad rates leaves Google exposed to Facebook blitz

When Google Inc. (NASDAQ: GOOG) released results of its second quarter ending June, the company generally displayed a solid quarter both on the basis of earnings and operating cash flow. The company had a remarkable 22% revenue growth. Even so, the search engine giant could not help but notice a disturbing trend – a continuing quarterly decline of its ad rate otherwise referred to cost-per-click (CPC).

Cost-per click is the price advertisers pay every time potential customer clicks on an advert. Google’s ad rate has taken a downturn over the past few years, and this decline has been linked to pricing pressure from other digital marketing firms such as Facebook Inc. (NASDAQ: FB), which is getting it right in mobile advertising.

While the search engine multinational still thrive with its businesses, it cannot ignore this negative trend that threatens its reign as the digital marketing master. The company has therefore hatched a plan to restore stability on its ad rates.

Comparing Google and Facebook on Ad Rates

In digital advertising, conversion rate is the key to success. Advertisers are happy if a good number of people who click on their ads end up buying the product. So ad rate should be directly proportional to the advertisement conversion rate.

The plan to stop declining cost-per-click must start with proper analysis of the market data. However, since Google gives its customers a free hand to customize their adverts, the company needs to provide them with improved tools. If the results are better, then customers will not even notice the higher fees.

In order to improve the conversion rate, the Google needs to tailor its adverts for specific audience. Actually this has been working for Facebook, which posted impressive revenue growth. The social media giant uses its ever increasing user data to customize ads visible on users’ pages.

Last quarter the Mark Zuckerberg’s firm garnered about $3 billion in revenue. While the revenue growth was driven by increased sale of ads, we cannot ignore its well tailored ads that attracted advertisers who were willing to pay without second thoughts.

Shopping Campaigns: Google’s response to Facebook threat

Already Google has AdWords and merchant accounts which its clients use to monitor different performance metrics of their posted advertisement. But if you compare these tools with Facebook’s, Google clients, to some extent, have limited options. This is why Google is planning to introduce a more comprehensive analytic suite for its customers.

Google has introduced Shopping Campaigns for Product Listing Ads (PLA) to help its advertisers to easily promote their products and connect with their consumers online. The new service rationalizes items management, has advanced reporting and provides comprehensive insights. According to Google, the new system will enable them which strategies are working so that they can adjust their efforts effectively.

Conclusion

It is undoubtedly true that Google’s ads business dwarfs Facebook’s, but the latter is quickly leaving the minion zone and this is a reason enough for the online search king to worry about. The good this is Google always learn from mistakes and it cannot afford to ignore the threat posed by the social media network. So it has already begun to explore ways to improve its worrisome ad rates. However, the game is on until the search engine giant does something about its floundering mobile ad business.

Mobile Ads – Google Struggle in Facebook’s Goldmine

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Mobile Ads business proves to be hard nut to crack

mobile ads, Google, FacebookGoogle Inc. (NASDAQ:GOOGL) is finding mobile advertising a little bit difficult to crack. Possessing the first mover advantage, the search engine giant dominates internet advertising. It has been an online advertiser since the year 2000. However, it trails Facebook (NASDAQ:FB) in mobile ads. Last year, its mobile ad revenue stood at $3 billion, trolled by the social media platform’s $3.28 billion. In the quarter ending June, Google reported an astounding 22% revenue growth. Nevertheless, the results revealed that its cost-per click is declining courtesy increased competition, particularly from Facebook.

The Mobile ad Market

In the last quarter, the number of Facebook’s ad impressions on mobile devices surpassed that on the desktop. According to data from eMarketer, the social media’s mobile display ad revenue grew by 50.5% year-over –year (YoY) in the US, dwarfing Google’s 33.3%.

Facebook

Facebook has refined its strategies towards bolstering its users’ interaction with its ads, be it mobile or internet. But mobile ads seem to be its goldmine, since these ads now account for 59% of Facebook’s total ad revenues. Facebook had earlier been tipped to lead mobile advertising. In fact, after its IPO, its share price tumbled as a result of poor monetization of its mobile market. After getting its mojo back, the social media network is proving to be a pain in the ass for the world’s leading search engine and e-advertising giant. In 2012, Facebook’s accumulated display ad revenue was $2.18 billion, trailing Google’s $2.25 billion. After overtaking the search engine company last year, Facebook is continuing to open the gap. Its mobile app platform is now also the leader in in-app advertising. eMarketer revised its earlier Facebook’s digital display revenue forecast of $3.35 billion, and it now estimates that the social network will collect $4.8 billion to Google’s $4.0 billion in 2014.

Google

Google’s ad prices have been declining for the past two years. The 2014’s second quarter saw the cost per click drop by 6% compared to 2013’s second quarter.  Cost per click is the price that advertisers pay whenever somebody clicks on an ad. It is however difficult to tell how much earned from mobile ads, given that it does not separate it from desktop ad revenue. But the truth is, Google is yet to gain traction in mobile ad market as Facebook has. In 2013 Google’s mobile ad market dropped from 49.8% it held in 2012 to 41.5%. Facebook on the other hand gained 9% over the same period to take its market share to 16%. Isn’t it obvious that the social media giant is eating into Google’s market share? Google is a much diversified company than Facebook. Even in ad business, it collects revenues from search ads, YouTube, and other partner sites. YouTube ads relatively earn more money. In 2013 alone, the company collected a net of $2 billion from these ads, which was 5.6% of its total net ad income that year.

Conclusion

Digital marketing is quickly shifting from PCs to mobile devices, with smartphones leading the pack. So while Google continues to experience growth, it needs to find a way to crack the mobile ad market which is driving Facebook’s phenomenal growth.

Google to Pay $1 Billion in Twitch Deal

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Google eliminates Competition for its Video unit by its new $1 Billion acquisition

Google Inc. (NASDAQ: GOOG) is in the verge of buying Twitch, the world’s largest video game streaming website, for $ 1 billion. VentureBeat reports that the deal is done and is only awaiting official confirmation. The Twitch deal will see Google fold the video game live-streaming service into its video service unit, YouTube.

About three months ago, there were reports that YouTube, Google Inc’s video division, was planning to acquire Twitch and its services. The game website was YouTube’s live-streaming footage biggest rival, and its purchase will help the former expands its line of operation.

Authenticity of the Twitch Deal Report

Until now, neither Google nor Twitch has said anything about the reports. However, the tech world is optimistic that they’ll soon make a statement. Perhaps both parties are waiting their legal officers to handle all the matters before they can make the deal public.

Since both Twitch and Google will be at the table in the GamesBeat 2014 event in Germany this September, there is every chance that if until then these reports have not been confirmed, then this event will be the best place for this public announcement.

About Twitch

Twich is the leading live game-broadcasting site. The site was officially launched three years ago. During the launch, it had only 3.2 viewers a month, but this has now swollen to over 45 million viewers a month.

Twitch has a huge fan base among youths, as most of its users are aged between 18 and 34 years. It has warded off threat from YouTube, and has been a constant pain in the ass for Google’s video unit.

People visit Twitch to watch live broadcast of video games and as at now more than one million gamer players broadcast themselves on this platform. The platform also has over 400,000 content providers, including GameSpot and Joystiq. Primarily, the site earns revenues through ads and it shares it with these content providers.

About 58% of Twitch viewers spend more than 20 hours a week watching, while on average viewer watch 106 minutes per day. The numbers may grow beyond these, thanks to earlier deals that will see Twitch built directly into the newest gaming consoles from both Sony and Microsoft.

What Next after Acquisition

In 2006, Google bought YouTube for $1.65 billion and now the video site is now the internet premier video-streaming service. Twitch is likely to be folding into YouTube, and perhaps offer live streams of other forms of entertainment, after YouTube’s efforts have drastically failed to make an impression in those areas. Moreover, many game developers have been using both Twitch and YouTube. YouTube has for a long time offered gamers a platform to post their video game tutorials as well as highlights, while on the other side, Twitch has been their live broadcast platform.

After months of speculations, and behind the curtain talks between Twitch and YouTube, it now appears that the two streaming sites have agreed on the terms of the deal. While both parties remained tight-lipped about the deal, Twitch acquisition by Google will suffice.

Google Releases Q2 Earnings Report

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Google 2nd Quarter Earnings in Line with Expectations

The internet giant Google Inc. (NASDAQ: GOOG) has revealed its second quarter earnings. According to its earnings report, the quarter, dating from March though June, saw its revenue rise to $16 billion, which is a 22% jump compared to last year. Its profit swelled by 6%, rising to $3.5 billion in the same period, thanks to impervious demand for its advertising services.

The company also announced that its chief business officer Nikesh Arora, who has been with the company for a decade now, will be leaving for SoftBank. His position will be filled by Google’s business founder, who formerly led the company’s sales team, Omid Kordestani.

Meanwhile, the stock market responded positively to the Google’s earning report, with its share price closing 1% higher.

Earning Report Breakdown

Revenues

Searches and the subsequent clicks on ads on Google search engine and partner sites continued to be the major source of revenues for the company. The number of paid clicks was 2% higher than in the first quarter, and 25% higher than the same period last year. The number of paid clicks on its own sites, such as the Google search engine, YouTube and Blogger, rose by 33%, while those of its partner sites increased by merely 9%.

However, these adverts continued to become cheaper, registering a 6% decrease from the same period in 2013, and remained stable from the first quarter of 2014.

Google now makes much of its revenue from its own website. $10.94 billion (69% of its total revenue) collected in the quarter was basically from traffic to its website. This figure is 23% higher compared to last year, and is enamours compared to the 7% increase in network revenues from partner sites. These sites delivered $3.2 billion into the search engine’s coffers.

Traffic Acquisition

Google is known to pay companies for placing its ads on their sites. It also pays web browsers for placing the search engine on their search bars. These costs make up the traffic acquisition costs and it increased by about $28 million from last year’s $3.01 billion.

The Company’s Future Prospects

Google’s growth is astounding. Ten years ago no one would have believed that Google would be this big. Then it posted revenues worth $3.2 billion, and now it is almost 20 times as large. Its sales have shown enormous growth with an average of about 40% annually. Yet, this growth has not come easy.

The company, which begun as a search engine tool and focused on ads for revenues, has now diversified its portfolio and is now a key player in the Smartphone market. Thanks to its strong financial muscle, the company is able to invest in different areas that would otherwise flex its position.

Many people believe that Google many not continue to grow at its current pace. However, this has been said for a while now, but the company shows no sign of aging growth. Its near monopoly in the search industry is one of it greatest strengths.  Its Android platform, which it may soon monetize, the budding wearable market, and introduction of its operating system to household appliances and automotives will play a huge role in its growth and development in the future. Other areas that investors should also pay keen attention to include its Google Glass and high-speed fibre optic robotics projects.