October 15, 2009

Google Reports Great Third Quarter, 'Worse Behind Us' CEO States

Google had its third quarter financial report today and beat estimates of analysts with a 7% year over year growth with net income increase of 27% over same period last year, CNN Money reported.

Eric Schmidt, Google's chief executive, on a conference call with investors said "while there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future."

The stock price which had dropped about 1% during regular trading today jumped up by over 3% in after hour trading.

"Google's strong third quarter could be a good sign for the economy, as the company's ad clicks serve as a kind of barometer of consumers' willingness to spend. The more people click on ads, the more willing they are to buy things," CNN Money noted.

Schmidt also said Google will be "stepping up" hiring in the engineering and sales areas.

Posted by Frank Watson at 7:05 PM | Permalink | Comments (2)

July 16, 2009

Google Revenues Increase 3% Year-Over-Year in Q2 2009; Paid Clicks Hold Steady

Google released second quarter earnings for 2009 today, and the news was relatively positive. Revenues increased by 3% year-over-year, coming in at $5.52 billion.

Paid clicks were 2% lower than Q1, but 15% higher than the second quarter of 2008. Meanwhile, the average CPC (cost-per-click) increased 5% over Q1 2009 but decreased 13% from Q2 2009.

Revenues shared with partners, primarily Adsense partners, totaled $1.45 billion in the second quarter, which was down ever-so-slightly from Q2 2008's $1.47 billion.

Considering the volatile economy going on around the world, you would think this earnings report was good news. But after hours trading on Wall Street was punishing GOOG:

Posted by Nathania Johnson at 4:55 PM | Permalink | Comments (0)

April 17, 2009

Search Continues to Bring Home the Bacon for Google in Q1 2009

While Google saw an overall decrease of 3% in their first quarter results, as compared to last year's fourth quarter, their paid search actually increased 3% in the same time frame.

Compared to first quarter 2008, Google overall saw an increas of 6% with revenues of $5.51 billion. Again, search outperformed the rest of Google with an increase of 17% over Q1 2008.

Google reported revenues of $5.51 billion for the quarter ended March 31, 2009, an increase of 6% compared to the first quarter of 2008 and a decrease of 3% compared to the fourth quarter of 2008.

GOOG stock was up 1.47% at the time of this post.

Those overall quarterly losses at Google could have been worse had they not cut operating expenses. Overall operating expenses were 28% of revenues at $1.52 billion in Q1 2009 compared to 29% of revenues at $1.65 billion in Q4 2008. Payroll was reduced to $774 million in the first quarter of 2009 compared to $890 million the quarter prior.

Posted by Nathania Johnson at 10:50 AM | Permalink | Comments (1)

January 22, 2009

Google Beats Wall Street Estimates for Q4 2008, Despite Profit Drop

Google announced their earnings today as planned (though a bit early, but not as early as Microsoft) - and the news was good. They reported net revenue of $4.2 billion, while analysts' estimates were at $4.12 billion.

Adjusted earnings (see below) translated to $5.10 a share, whereas the Street predicted $4.95.

However, the good news comes with a caveat. Net income saw a sharp decline, year-over-year. The fourth quarter of 2007 saw a net income of $1.2 billion while Q4 2008 saw "just" $382 million.

Aggregate paid clicks for Q4 were up 18% year-over-year and up 10% over the third quarter of 2008.

“Google performed well in the fourth quarter, despite an increasingly difficult economic environment. Search query growth was strong, revenues were up in most verticals, and we successfully contained costs,” said Eric Schmidt, CEO of Google. “It's unclear how long the global downturn will last, but our focus remains on the long term, and we'll continue to invest in Google's core search and ads business as well as in strategic growth areas such as display, mobile, and enterprise.”

UPDATE (Kevin Newcomb): The huge dip in Google's net income can be attributed to a $1.09 billion "impairment charge" Google took during the quarter, including charges of $726 million related to its investments in AOL, and $355 million related to its investments in Clearwire.

That basically means that Google is admitting it overpaid for those investments, and it's using the turmoil in the broader economy to make up for that, without drawing too much fire from investors.

Without those charges, Google would have reported $1.62 billion in net income, or $5.10 per share, for Q4 2008, instead of the $382 million in net income and $1.21 earnings per share with the charges. That compares to $1.56 billion in Q3, and $1.20 billion in Q4 2007.

ClickZ News has more details in "Google's Q4: Advertisers Keep Spending, Consumers Keep Clicking."

Posted by Nathania Johnson at 4:09 PM | Permalink | Comments (1)

January 21, 2009

As Goes Google So Goes The Economy?

Forbes just published a piece about "Google as Economic Barometer". It has some merit and a lot of details. Basically stating "Investors searching Google's fourth-quarter earnings may see clues about the state of the Internet ad business, the economy and the future of the company itself."

Dropping various products like Print Ads, its Twitter-like application Jaiku, and Lively a Second Life clone, reflects a tightening of its bottom line. Firing 100 recruiters (and the implied drop in future hires) and the closing of its offices in Sweden and Norway, as well as a newly opened one in Austin, Texas are also the actions of a company trying to improve its numbers. The cutting of 20 engineers cuts a little to the heart of the company's operation.

In a recent discussion with a Google Adwords employee I found out it is going even deeper. Apparently budgets for entertaining top level advertisers have also been cut back. Guess now that they have them spending money there is no need to spend as much in appreciation.

To me this reflects a lack of foresight. Google has hit a wall. Those year over year double digit growth days are gone. They have become the major resource and there are not that many new clients to acquire.

Increasing what is paid for the clicks has been a careful balancing act that may not bring in as much revenue as it will lose them clients. That ban on gambling ads to stand as a "No Evil" stalwart lasted just as long as it took Yahoo to start taking money in countries that allow gambling.

Google does reflect our economy. And if they want to strengthen their position they have to do what will help the economy recover. Start helping the little guys. They are the ones that will stimulate the economy and can also stimulate Google's income.

If there was more transparency in AdWord's Quality Score, less expansion in broad match and an understanding of how to better serve the little guys - those 10s of thousands of minor advertisers - maybe the revenue numbers will increase.

I remember sitting in a search conference session and hearing many people say minimum bids have pushed them out of using PPC. They were not arbitragers, they were not agencies, they were small business owners who could no longer find a profitable CPA.

At one time all PPC companies had faith the market would work itself out. There was a little traffic left over for them to make some money. They worked the long tail and specific keywords many big comapnies did not. Now with expanded match the big advertisers are getting those and more for keywords that are now in some cases not converting.

If Google took a few steps back maybe everyone would be happier and the financial situation would work itself out. Whether our economy can do the same has yet to be seen.

Posted by Frank Watson at 6:35 AM | Permalink | Comments (2)

October 16, 2008

Google Q3 Revenue Increases 31% Year-Over-Year, Up 3% Over Q2 2008

Google beat Wall Street with its third quarter earnings, announced today. Their revenue is up 31% year-over-year and up 3% over Q2.

Analysts have been worried that a weak economy would mean worse results for the search giant, due to tightening advertising budgets and decreased consumer confidence.

But, of course, almost the opposite is true. Advertising on Google is much more affordable than traditional marketing methods such as print and television. Search advertising is also more easily measured and has the opportunity to provide a wealth of behavioral data.

Posted by Nathania Johnson at 4:46 PM | Permalink | Comments (1)

April 19, 2007

Google Income, Profits Up

Google reported its first-quarter financial results today, with profits up 69 percent to $1 billion, or $3.18 a share, on revenues of $3.66 billion, up 63 percent year-to-year.

Google execs spent much of the earnings call emphasizing the importance of its core businesses, search and search advertising. The company has been criticized of late for its apparent lack of focus, exhibited by its dabblings in offline media, intended acquisition of display ad network DoubleClick, and other non-search activities. More details are available from ClickZ News.

Posted by Kevin Newcomb at 10:22 PM | Permalink

March 21, 2007

Minus Expenses Yahoo, Google Ad Revenues Similar

While it is well known Google has higher search market share, recent analysis of profits show Yahoo's ad revenue is a lot closer than the market share would suggest.

Jupiter Research blogger David Card reports thast Google has 17 percent of online ad revenue to Yahoo's 16 percent.

These numbers are of what the comapny keeps after expenses.... could be the YouTube deal is holding down those numbers... or as some are suggesting Yahoo keeps more of the money - they pay less to their search partners... though from what I have seen Yahoo pays more, but has lower click through rates...

Posted by Frank Watson at 9:55 AM | Permalink

November 21, 2006

Google Breaks $500 Per Share

For fun, my MSN Direct watch is set to show the stock prices of all the major search engines. It only works in the US, and I wish I were there now to capture a screen from it showing Google having broken the $500 per share mark. AP has a longer story on it here. It's around $503 when I looked just now.

No doubt Safa Rashtchy at Piper Jaffray is keeping his fingers crossed (along with thousands of Googlers) that it will keep going. Earlier this year, Safa predicted a $600 price point by the end of 2006.

That's still much to go but far closer than the $2,000 that analyst Mark Stahlman predicted a few days later However, I don't believe Stahlman gave a time when that would happen.

Given that Google's cofounders are big fans of Berkshire Hathaway -- which I believe has never split its stock -- it's possible that inflation alone could help Google get into that range, assuming they also avoid splits. Berkshire's class B stock is at $3,588, currently.

Posted by Danny Sullivan at 11:06 AM | Permalink

November 9, 2006

Microsoft, Ask & Fox On Google At Web 2.0

Photo from kennejima at Flickr

Yesterday, Ask and Microsoft talked about taking on Google at the Web 2.0 Summit. But honestly, the highlight for me was the image of Microsoft's Steve Berkowitz sitting next to Ask's Jim Lanzone. Lanzone use to work for Steve, then took over his spot running Ask when Steve left. Both remain good friends, and it was cool to see them up on that panel side by side.

ZDNet covered what they said, plus they have an even better side-by-side photo. Jim's push in taking on Google is that its vulnerability is being distracted by projects other than search. He also puts out this new line I haven't heard used before: "Google is the model T of search. Over time peoples' needs evolve." But I heard you can have search in any color you want, as long as it's black!

Steve talked about consumer experience, the idea that search within IM might be presented differently than within a community site. Plus, he talked about Google's weakness in terms of cultural issues, such as still learning how to act as a public company.

Greg Linden also has a short write-up of the talk, looking at the question about personalized search. Steve wanted to give users complete control of their data. Jim was more pessimistic on personalized search, seemingly in terms of users actually helping with it, since more are "lazy" and don't want to customize things, which is pretty true.

Greg points over at InternetNews, which has another write-up of the talk -- this time with Microsoft CTO Ray Ozzie saying in the fight against Google, there is "immense opportunity in the core space" that he's "surprised" Microsoft hasn't branched into. I take core space to mean search.

At PaidContent.org, Ross Levinsohn of Fox Interactive is noted to have said it was "genuine" of Google CEO Eric Schmidt to have visited so quickly after Google snapped YouTube away from a possible purchase by Fox. Plus, he offers soothing words that YouTube would have been "fun" to own but Fox couldn't do it at that price.

Posted by Danny Sullivan at 8:50 AM | Permalink

Google Video Sued, Plus More Info From New SEC Filing

The Associate Press reports that Google Video was actually sued for copyright infringement but yet, Google did not reveal who actually sued them. The lawsuit was disclosed by Google via a quarterly filing with the Securities and Exchange Commission (link via Gary, but we do not know much more. PaidContent reports (site currently down), that Google may loan YouTube money prior to closing the deal with them, in order to help them settle or battle certain lawsuits.

Posted by Barry Schwartz at 8:02 AM | Permalink

November 2, 2006

In UK, Google To Surpass Channel 4's Ad Dollars

The Independent reports that Google UK is expected to earn "£900m from the UK ad market in 2006." When compared to Channel 4's "£800m at the TV group" this year, Google is expected to beat this TV player in ad dollars. Channel 4's Andy Duncan said, "Some broadcasters have been very slow to realise this. The industry as a whole is frankly rather backward-looking and is perhaps underestimating the scale of change that is going on and the pace of change."

Posted by Barry Schwartz at 8:59 AM | Permalink

October 26, 2006

Google 3rd Most Valuable Technology Company

Nathan Weinberg, while at a wedding, reports that Google has passed IBM to be ranked the 3rd most valuable technology company, behind Cisco and Microsoft. Google's stock is currently trading above $475 per share, so their "market capitalization reached some 145 billion dollars, surpassing the total value of IBM at 139.5 billion." More details at The Raw Story.

Posted by Barry Schwartz at 9:33 AM | Permalink

October 19, 2006

Google Releases 2006 3rd Quarter Results

Google has released their earnings for the third quarter of 2006. You can find the earnings summary at Google's press center. Bloomberg summarizes the reports showing how profits almost doubled and revenue increase seventy-percent. Google's net income is $733.4 million, or $2.36 a share, up from $381.2 million, or $1.32, a year ago. Google's revenue rose to $2.69 billion.

Posted by Barry Schwartz at 5:09 PM | Permalink

October 18, 2006

Google To Own 25% Of 2006 Online Ad Revenue

An eMarketer.com report estimates that Google will account for twenty-five percent of all online ad revenue. Google's share continues to increase (65% increase YoY) while Yahoo's growth continues to decrease, eMarketer says. Google first surpassed Yahoo in ad revenue back in 2005, but barely. Google in 2006 is expected to earn over $4 billion in ad revenue but Yahoo has just $2.9 billion according to eMarketer.com.

Posted by Barry Schwartz at 9:24 AM | Permalink

October 12, 2006

Ballmer: YouTube Overvalued & Google Transferring Wealth From Content Owners

The Web According to Ballmer from BusinessWeek has Microsoft CEO Steve Ballmer questioning the value of the Google-YouTube deal and oddly warning that Google is transferring wealth away from rights holders. It's an odd statement, since that's what Microsoft wants to do as well.

First the questioning of the YouTube value:

[You've got to ask] could Google do whatever it is they're hoping to buy without paying $1.6 billion? Is YouTube really some permanent, long-term thing, or is it a fashion?....Right now, there's no business model for YouTube that would justify $1.6 billion.

Though strangely, when BusinessWeek tries to pindown what seems a clear statement that Google overpaid, Ballmer says:

I'm not saying it is overvalued. I'm not trying to say that. It depends on a set of factors. I'm not saying I wouldn't write a check for that amount of money. I might.

And back to the controversial statement about Google's relations with content:

And what about the rights holders? At the end of the day, a lot of the content that's up there is owned by somebody else.

The truth is what Google is doing now is transferring the wealth out of the hands of rights holders into Google. So media companies around the world are all threatened by Google. Why? Because basically Google is telling you how much of your ad revenue you get to keep. They better get some competition. Us. Yahoo! (YHOO). Somebody better break through or you can short all media stocks right now. As long as there are two, you can hold onto media stocks. Google understands that. And that's one reason why they're willing to lose money up front.

Microsoft has its own video sharing service up, Soapbox. It has a question answering service, Q&A. It has an entire search engine that crawls the web like Google, Windows Live. Microsoft has plans for contextual placement of ads on pages, similar to AdSense. It's specific to MSN content now, but that will inevitably change. All of these things leverage the content of others in order to make money from Microsoft. So if these actions leverage wealth away from content owners, Microsoft is just as guilty of it as Google.

Frankly, all Ballmer seems to be saying is content owners would be better off if Microsoft was a strong third participant in ad game. Sure -- but let's not kid ourselves. Microsoft gets a lot better off by that as well, and it didn't jump into the game out of some desire to counter-balance the power of Google. It's in it to make as much money as it can, as well.

Posted by Danny Sullivan at 7:42 AM | Permalink

October 11, 2006

Yahoo Hurting While Google Healthier Than Ever

The NY Times has an article named Yahoo's Growth Being Eroded by New Rivals (free version available at (IHT.com). The article goes through how Yahoo is suffering and lagging behind its competitors. (1) They made a bid at YouTube but those deals broke down, according to the article, and Google "swooped" them up. (2) The new Yahoo search ad system, Panama, is over a year delayed. This "delay has sucked up the company's engineering resources and prevented it from developing new advertising products."

Based on my coverage of Yahoo over the past year, it seems like webmasters, SEOs, and industry folks have become less and less interested with the company.

The LA Times has an article this morning that goes on the same theme. If you can't get to the article, try going through Google News to gain free access, it worked for me.

Postscript From Greg Sterling:

This is not the kind of publicity you want to see if you're on the PR team. While it's true that Google has momentum and Yahoo may need a kind of "shot in the arm," what people forget is that Yahoo is the largest site on the Internet with the most monthly uniques.

It also has a bunch of market-leading properties including mail, finance and local (among others). Mail is also the number one mobile site.

Google, though a very dynamic and powerful company with lots of momentum, is not without its challenges and vulnerabilities. If anything the YouTube acquisition was an admission of some of those. Though, by the same token, Google now has great opportunity with YouTube.

I'm not sure, from where I sit, how many problems identified in the Saul Hansell Times piece are real and how many are simply perceived. But perception does influence reality.

Yahoo is a little like a strong sports team that happens to be in a bit of a slump right now.

Posted by Barry Schwartz at 9:40 AM | Permalink

September 25, 2006

Fortune Looks At Chaotic Google & Whether It Can Have A "Second Act"

Chaos by design is a Fortune cover story on Google, covering the company's fast-paced, seemingly disorganized approach to products and exploring if it can come up with a "second act" to please investors:

There's nothing to suggest that its growth engine -- ad-supported search -- is in trouble. But it's clear from Google's tentative lurches into new forms of advertising and its spaghetti method of product development (toss against wall, see if sticks) that the company is searching for ways to grow beyond that well-run core.

Another highlight:

What vexed Galaxy is precisely Google's challenge today. For all its new products -- depending on how you count, Google has released at least 83 full-fledged and test-stage products -- none has altered the Web landscape the way Google.com did. Additions like the photo site Picasa, Google Finance, and Google Blog Search belie Google's ardent claim that it doesn't do me-too products. Often new services lack a stunningly obvious feature.

And:

Much-hyped projects like the comparison-shopping site Froogle (nearly four years in beta and counting) and Google's video-sharing site have been far less popular than the competition. One of Google's biggest misses is its social-networking site, Orkut, which is a hit only in Brazil and -- as Marissa Mayer, Google's 31-year-old vice president of search products and user experience, says with an impressively straight face -- is "very strong in Iran."

In case you've missed it, the entire Google-needs-a-hit-like-web-search theme/meme has been strong this year. I tend to view those expectations as unrealistic. I agree, it's been some time since Google's come out with an "oh wow" product similar to Gmail or Google Maps, where people get very buzzed about it being so different or new or unique. But then again, I haven't exactly been "oh wowed"  that much by stuff out of Yahoo or Microsoft or Ask, either.

For me, personally, Yahoo's Flickr has become a category killer in photo sharing. I use it all the time. But it wasn't home grown. Yahoo Answers is more of a homegrown wow -- perhaps not so much with me, but with others certainly.

Microsoft's Windows Live Local rocks for how anyone can create custom collections, and the new image search interface is wonderful. Both get wows or "cools" out of me.

Ask has been doing great stuff with its maps and smart answers -- the earthquake smart answer like you see here is the latest and something I totally would have gone to Ask for last month during a small Bay Area quake I felt.

Still, Google's got plenty of good stuff as well. I don't know that any of these players are going to roll out a major "second act" that blows away everything before. Instead, it's more likely we're going to see a steady growth of products, with all of them having some gains and plenty of products that simply won't catch on.

Posted by Danny Sullivan at 10:01 AM | Permalink

August 30, 2006

Google CEO Eric Schmidt Joins Apple's Board Of Directors

Google CEO Eric Schmidt's looking for another small company to help run -- this time, Apple. He's just been elected to Apple's board of directors.

Google CEO Dr. Eric Schmidt Joins Apple's Board of Directors is the press release on the move, with these quotes from the two main men:

"Eric is obviously doing a terrific job as CEO of Google, and we look forward to his contributions as a member of Apple's board of directors," said Steve Jobs, Apple's CEO. "Like Apple, Google is very focused on innovation and we think Eric's insights and experience will be very valuable in helping to guide Apple in the years ahead."

"Apple is one of the companies in the world that I most admire," said Eric Schmidt. "I'm really looking forward to working with Steve and Apple's board to help with all of the amazing things Apple is doing."

Google CEO elected to Apple Computer board of directors from the AFP has the expected (and reasonable) speculation that this will mean closer ties for Google and Apple.

The Wall Street Journal in Google CEO Schmidt Joins Apple Computer Board (paid sub. probably required) notes some of the cross-pollination going on:

Mr. Schmidt's election deepens existing high-level personal ties between the two companies. Genentech Inc. CEO Arthur Levinson sits on the Google and Apple boards, while former Vice President Al Gore and Intuit Inc. Chairman Bill Campbell, both Apple directors, are longtime advisers to Google. Mr. Schmidt's appointment means half of Apple's eight-person board of directors has a formal relationship with Google.

Messrs. Schmidt and Jobs also share the battle scars from long careers competing against Microsoft, Redmond, Wash. Mr. Schmidt, one of Silicon Valley's most seasoned technologists, spent more than a dozen years at Sun Microsystems Inc. starting in 1983, rising to the post of chief technology officer during that computer maker's fierce efforts to establish the Java programming language as an alternative to Microsoft's dominant programming standards. Mr. Schmidt joined Novell Inc., a bitter Microsoft rival in the market for network software, in 1997 as chairman and CEO.

Want to comment or discuss? Join our Search Engine Watch Forums thread, Google CEO Eric Schmidt Joins Apple's Board.

Posted by Danny Sullivan at 7:32 AM | Permalink

August 25, 2006

Google Has Too Much Money, Possibly Classified As Investment Fund

Bloomberg reports and the Wall Street Journal reports that Google has asked the SEC for an exception to a rule that would classify them to be regulated as a mutual fund company. Basically, if a company's securities make up more than 40 percent of their assets, then they can be classified as mutual fund company. Google's plea to the SEC was "that it is not in the business of investing, reinvesting, or trading in securities." Right now no one knows if Google will be granted the exemption.

Posted by Barry Schwartz at 10:01 AM | Permalink

August 23, 2006

Google's Dominance Of Big & Small Companies

Fortune has a nice write up they named "How Google can make - or break - your company." Not only does this article go over how Google can break a small online retailer who depends on organic results, but also how they can break large firms like travel agencies, newspapers, realtors, advertising firms and software makers (even Microsoft). The article makes a good read if you have the time. If you have more time, also read Google Sees Content Deals As Key to Long-Term Growth at the Wall Street Journal, which explores more of Google's future and how you may be a part of it.

Posted by Barry Schwartz at 8:27 AM | Permalink

August 18, 2006

Googlers Only Have Sold GOOG Stock - Cause Of Drop In Stock Price?

Bloomberg has a very interesting report on why they believe Google's stock has been falling this year, down about 7 percent this year. They say that Google's executives have sold off a boatload of stock since the IPO.

"Google's top executives have offloaded about $7.4 billion of stock, equal to about a third of the company's starting market value when it sold shares at $85 each in the August 2004 IPO," says Bloomberg columnist, Mark Gilbert. Not only that, he reports "not a single Google insider has bought a single share of the company in the 18 months since the IPO lock-ups expired." Can you believe that!

Postscript From Danny: It's worth noting that at least to me, the idea that the insiders are selling their stock and not buying is unsurprising. They've got a lot of stock. A lot of stock!

Buying some shares would probably be a good PR move, and after an article like this one, I can imagine some of the execs might start doing it. But the point of selling, as the article itself notes, is to diversify portfolios that, for these execs, are ironically unhealthily skewed toward Google.

For the curious, there are various places to see insider sales over times. Yahoo has a nice list here. Note how entries for Eric Schmidt and many others are tagged "automatic." That because, to my knowledge, they have preplanned to diversify their portfolios by selling shares automatically over time. That protects them against accusations of insider sales.

Also interesting are entries like exec Omid Kordestani acquiring 76,459 shares on June 12, 2006. Didn't the Bloomberg article say no big Googlers were buying? Yes -- so what's this? I assume that Googlers might still be gaining shares in other ways, which adds further understanding as to why they might not be buying on the open market.

Finally, it's no surprise that that over the past 18 months that neither founders Larry Page or Sergey Brin have been selling. That's because they already said in 2004 that they'd spend the next 18 months diversifying their portfolios through planned sales.

Overall, insider trades are definitely interesting to watch, and I'm sure Google will take a PR black eye over the apparent lack of purchases. But I think there are factors that don't make it as bad as it seems.

Posted by Barry Schwartz at 8:12 AM | Permalink

August 10, 2006

Google's Costs To Increase With Data Center Needs & Increased Employee Compensation

CNN Money covers how Google reports that expenses will rise in its latest 10-Q filing. Reason? Increased costs of data centers and the demand for higher employee compensation. Google commented in the report, "Our cost of revenues will increase in 2006 primarily as a result of anticipated increases in traffic acquisition and data center costs, although traffic acquisition costs may fluctuate as a percentage of advertising revenues," and "our cash-based compensation per employee will likely increase."

Posted by Barry Schwartz at 11:15 AM | Permalink

August 7, 2006

Google & MySpace In $900 Million Deal On Search & Contextual Ads

Just in, an announcement that Google and MySpace have reached a deal for Google to provide search and contextual ads to MySpace, in return for giving MySpace (well, the entire Fox  Interactive Media network) $900 million in guaranteed payments through 2010. From the press release:

MOUNTAIN VIEW and LOS ANGELES, Calif., August 7, 2006 - News Corporation's Fox Interactive Media and Google Inc. (NASDAQ: GOOG) today announced a multi-year search technology and services agreement whereby Google will be the exclusive search and keyword targeted advertising sales provider for Fox Interactive Media's growing network of web properties including MySpace.com (http://www.myspace.com).

The agreement calls for Google to power web, vertical and site specific search for MySpace.com and the majority of Fox Interactive Media properties. Google will be the exclusive provider of text-based advertising and keyword targeted ads through its AdSense program, for inventory on Fox Interactive Media's network. Google will also have a right of first refusal on display advertising sold through third parties on Fox Interactive Media's network.

The integration of Google's services including consistent search navigation across Fox Interactive Media's network of properties is slated to begin in the fourth quarter 2006 and will provide users with access to Google's industry leading search capabilities as well as text and display advertising from its global advertiser base.

Under the terms of the agreement, Google will be obligated to make guaranteed minimum revenue share payments to Fox Interactive Media of $900 million based on Fox achieving certain traffic and other commitments. These guaranteed minimum revenue share payments are expected to be made over the period beginning in the first quarter of 2007 and ending in the second quarter of 2010.

I'm at our Search Engine Strategies show in San Jose at the moment, so I don't have time to do a long post on the news, which I'm still digesting. I've taken a number of phone calls on it already, so I'll provided what I've given to some other reporters who have asked.

• Big win for Google? Sure. Lots of traditional players are worried about MySpace, even if the site itself isn't earning that much now, from what I understand. This gets Google in, keeps Yahoo and Microsoft out, and might be a cheap payment to protect Google's front in the social networking wars. In other words, even if Google doesn't make a net profit off of MySpace, the intangibles could be worth the cost. The closer ties also give Google deeper insight into the MySpace traffic, since it will soon see everyone going to these pages. That will be very helpful for Google if it wants to do a renewed social networking effort of its own.  
• Big loss for Microsoft and Yahoo? Maybe, maybe not. If social networking is hot, both of them -- unlike Google -- have very healthy communities in several international markets. In fact, that potentially could have been an issue in trying to win MySpace. Revenue-wise, Yahoo indirectly provides ads to MySpace, but current revenue doesn't appear to be substantial, plus Yahoo already would have been giving a big chunk of this to whomever is the unknown middleman.

John Battelle notes there's a conference call going on, plus he's working on some follow-ups, so keep an eye on his post. I or Barry will also postscript stories from elsewhere to our post here or do a fresh round-up tomorrow.

Posted by Danny Sullivan at 5:47 PM | Permalink

July 31, 2006

NASDAQ Error Sends Google's Stock Price Down To $38

The New York Sun reports that on Thursday, during after hours trading, Google's stock price fell accidentally by $350 to about $38, due to some glitch. Reportedly, "someone from a Nasdaq member firm punched in an erroneous figure to commence a trade," which caused the error. Thursday, between 4:10 p.m. and 4:12 p.m., prices for Google stock were as low as $38. At 5:01 p.m. NASDAQ disclosed their decision to "cancel all after-hours trades in Google that were at or below $352.07." So for those of you that thought you made it big, I am sorry. And for those that you that thought you lost your shirts, I am happy for you.

Posted by Barry Schwartz at 10:35 AM | Permalink

July 25, 2006

The Abridged Version: Independent Report On Google's Click Fraud Detection Practices

Last Friday, an independent report on how Google deals with click fraud was published as part of the ongoing Lane's Gifts v. Google class action lawsuit over click fraud. To my knowledge, it is the most comprehensive, detailed public look into how Google deals with click fraud that's ever come out. It finds that Google's efforts to combat the issue have been reasonable, though there are some eyebrow raising bits on how the author only finds the situation was in control by the end of 2005 and how it's impossible to fully know whether some clicks are invalid -- and thus, potentially -- impossible to prevent some types of fraud through purely automated means.

The report is long, a 47 page PDF file. Anyone interested in click fraud issues should give it a thorough read. But given how everyone's always busy, I thought I'd highlight below a number of sections that stood out in my review of the document.

The report is by Dr. Alexander Tuzhilin, Professor of Information Systems at New York University. To prepare it, he says in the Executive Summary at the beginning (page 1):

I have been asked to evaluate Google?s invalid click detection efforts and to conclude whether these efforts are reasonable or not. As a part of this evaluation, I have visited Google?s campus three times, examined various internal documents, interviewed several Google?s employees, have seen different demos of their invalid click inspection system, and examined internal reports and charts showing various aspects of performance of Google?s invalid click detection system. Based on all these studied materials and the information narrated to me by Google?s employees, I conclude that Google?s efforts to combat click fraud are reasonable. In the rest of this report, I elaborate on this point.

Immediately, the first thing that comes to mind is that he makes no mention of talking with individual advertisers, which could lead you to think that if he's only talking with Google, of course he's likely to come away with the idea that Google is doing everything just fine.

When you read the report, it's clear this isn't the case. Google does come under criticism. It's also important to realize Tuzhilin was not employed by Google to create this report. He's an independent expert appointed to my knowledge by the court. Exactly how he was selected is unclear, and I do think it would be a better report if advertiser data had been involved. But there's still plenty of good stuff here to digest.

Page 2 covers his background and materials reviewed from Google to prepare the report.

Page 3 and some of page 4 covers those he talked with at Google. Interesting details are that Google's click quality team consists of about 36 people, one-third engineers looking to design detection systems and the remaining two-thirds dedicated to doing manual investigations of suspected fraud.

Pages 4 through 6 cover the history of the internet, search engines and Google, most of which isn't that necessary for most experienced search marketers. Page 7 talks about three main ways of purchasing advertising:

• CPM - cost per impression
• CPC - cost per click
• CPA - cost per action

Again, basic stuff. But it's worth touching on because of some of the current debate that Google and other search engines will be forced to go to CPA pricing to fully eliminate fraud.

On page 8, Tuzhilin lends some support of this, or at least the problems that others have raised with CPC:

Although currently popular, the CPC/PPC model has two fundamental problems:

• Although correlated, good click-through rates (CTRs) are still not indicative of good conversion rates, since it is still not clear if a visitor would buy an advertised product once he or she clicked on the ad. In this respect, the CPA-based models provide better solutions for the advertisers (but not necessarily for the search engines), since they are more indicative that their ads are ?working.?  
• It does not offer any ?built-in? fundamental protection mechanisms against the click fraud since it is very hard to specify which clicks are valid vs. invalid in general, as will be explained in Section 8 (it can be done relatively easily in some special cases, but not in general). For this reason, major search engines launched extensive invalid click detection programs and still face problems combating click fraud.

In response to these two problems and for various other business reasons, Google is currently testing a CPA payment model, according to some reports in the media. Some analysts believe that the conversion-based CPA model is more robust for the advertisers and also less prone to click fraud. Therefore, they believe that the future of the online advertising payments lies with the CPA model. Although this is only a belief that is not supported by strong evidence yet, Google is getting ready for the next stage of the online advertising ?marathon.?

What Will Replace Pay-Per-Click Advertising? over at Publishing 2.0 from Scott Karp is a good roundup and debate on some of the issues of CPA perhaps as the solution to CPC issues.

I've posted lots of comments in Karp's post, but my personal view is this. Currently, Google is offering all three major payment systems: CPC, CPM and CPA. It is offering all three not just because of fraud issues but because advertisers have different goals with advertising, where different payment models may be required.

Building brand? You want impressions perhaps more than clickthrough, and suddenly CPM makes sense. Really savvy with conversion tracking? CPA might make more sense for you, as a way for you to feel less likely to be exposed to fraud and more likely to really be paying only for key traffic. Fairly rudimentary with conversion tracking? Doing low-cost CPC ads might make a lot of sense, for your situation. And beyond the three big ones, I'm sure we'll see other options emerge. The unifying goal around all of them, from Google's perspective, will be figuring out a way to help advertisers track that the ads are working according to some type of metrics that the advertisers want.

Skipping down past background on how AdWords works and the AdSense program (AdSense For Domains doesn't get mentioned, though it's a major program), page 13 starts in on what Google can tell about clicking activities.

Google is apparently making use of conversion data that advertisers provide to determine if fraudulent clicks are happening. My understanding was that conversion data was supposed to be ringfenced and not used by Google for anything, not even in the aggregate. But perhaps the policy has changed or perhaps I misunderstood this. I'll check on that (and also note that confusingly, the report says on page 34 that "None of the filters uses the conversion information that Google collects"). Certainly Google made no such restrictions when it launched Google Checkout. But even with conversion data, the report notes using this info isn't perfect.

Google collects various types of information about querying and clicking activities, including certain types of ?post-clicking? data about conversion actions on the advertiser?s website where the visitor is taken following the click. All this data accumulated by Google is extracted from various sources and contains comprehensive information about visitor?s activities on the Google Network.

As stated before, the conversion data ? the ?post-clicking? data about conversion actions on the advertiser?s website ? constitutes an important piece of this collected data. In particular, if the advertiser formally agrees to provide this information, Google collects data on whether or not the user visited certain designated pages on the advertised website that the advertiser marked as ?conversion? pages, such as the checkout page and certain form filling pages. This conversion data is limited to what the advertiser decided to provide to Google and is not as rich as the clickstream data collected by advertisers themselves on their websites. Also, many advertisers decide to opt out from providing this conversion data. In this case, Google does not have any conversion information and therefore does not know what happened after a visitor clicked on the ad. Nevertheless, this post-clicking conversion data is important for Google even in its limited form because it conveys some intentions of the visitors on the advertised website and provides good insights into whether or not the visitor is seriously considering purchasing the advertised product or service....

This ?raw? clicking data described above is subsequently cleaned, preprocessed and stored in various internal logs by Google for different types of subsequent analysis conducted on this data.

One inherent weakness of Google?s (or any other search engine) data collection effort that is important for detecting invalid clicks, is inability to get full access to all the clicking activities of the visitors of the advertised website. In other words, the conversion data that Google collects provides only a partial picture of all the post-clicking activities of the visitor on the advertised website. This data is important for detecting invalid clicks since better invalid click detection methods can be developed using this data. Unfortunately, Google (and other search engines) does not have full access to this data, unless the advertised website decides to provide its clickstream data to Google, which many websites are reluctant to do. However, this is not Google?s fault ? this is an inherent limitation of the types of data available to Google.

While it might not be perfect, the report also notes at the end of this section that no one has the perfect collection of information:

However, this lack of full conversion data available to Google is compensated by various types of querying and clicking data that Google can collect, whereas advertisers and third-party vendors cannot. Therefore, there exists a tradeoff between the types of data relevant for detecting invalid clicks that is available to Google, advertisers and the thirdparty vendors. None of these three groups have the most comprehensive set of data pertinent to detecting invalid clicks, and each of them needs to settle for the invalid click detection methods possible only with the data that they have.

On page 14, the report addresses the frustration advertisers feel over the relatively non-granular nature of Google's reporting versus Google's need to keep some things carefully protected:

The smallest unit of analysis is one day. For example, the number of invalid clicks on an ad detected by Google (or any other related statistic) can only be reported on a daily basis (although there are certain alternative methods of obtaining aggregation granularity that is smaller than a day). In other words, advertisers cannot know if a particular click on a particular ad was marked as valid or invalid by Google, and Google refuses to provide this information to advertisers.

This is a source of contention and dispute between Google and the advertisers, and one can understand both parties in this dispute. On one hand, the advertiser has the right to know why a particular click was marked as valid by Google (when the advertiser thinks that it is invalid) because the advertiser pays for this click. On the other hand, if Google discloses this information, it opens itself to click fraud on a massive scale because, by doing so, it provides certain hints about how its invalid click detection methods work. This means that unethical users will immediately take advantage of this information to conduct more sophisticated fraudulent activities undetectable by Google?s methods.

This conflicting dilemma between advertisers? right to know and Google?s inability to provide the appropriate information to advertisers because of the security concerns is part of the Fundamental Problem of the PPC advertising model to be discussed in the next section. More recently, Google tried to bridge this gap between Google and the advertisers.

Page 15 spends time looking at various definitions of click fraud, bringing us to page 16 which raises the bigger issue that it is impossible to know the intent of ALL clicks, which is crucial to understand what chunk of them might be fraudulent:

Unfortunately, in several cases it is hard or even impossible to determine the true intent of a click using any technological means. For example, a person might have clicked on an ad, looked at it, went somewhere else but then decided to have another look at the ad shortly thereafter to make sure that he/she got all the necessary information from the ad. Is this second click invalid? To make things even more complicated, the second click may not be strictly necessary since the person remembers the content of the ad reasonably well (hence there is no real need for the second click). However, the person may not really like or care about the advertiser and decides to make this second click anyway (to make sure that he/she did not miss anything in the ad and his/her information is indeed correct) without any concerns that the advertiser may end up paying for this second click (since the person really does not care about the advertiser and his/her own interests of not missing anything in the ad overweigh the concerns of hurting the advertiser). Therefore, in some cases the true intent of a click can be identified only after examining deep psychological processes, subtle nuances of human behavior and other considerations in the mind of the clicking person.

Soon after this, on page 17, comes the first real bombshell to me. As said above, you can't detect the intent of all clicks. Given this, there's no reasonable way to be certain that technological fixes for click fraud detection are working:

In summary, between the obviously clear cases of valid and invalid clicks, lies the whole spectrum of highly complicated cases when the clicking intent is far from clear and depends on a whole range of complicated factors, including the parameter values of the click. Therefore, this intent (and thus the validity of a click based on the above definitions) cannot be operationalized and detected by technological means with any reasonable measure of certainty.

What? Didn't the report find Google was acting reasonably? Yes, and I think this is is because as the report goes on, it's because Google's not relying solely on automated means to stop click fraud, which might allow some clicks to get through, if that were only the case.

Page 18 picks of the issue even more strongly, and I've bolded this section because it deserves special attention. Note that the italics were originally included:

The last statement has one important implication: given a particular click in a log file, it is impossible to say with certainty if this click is valid or not in all the cases. This means that

• It is impossible to measure the true rates of invalid clicking activities, and all the reports published in the business press are only guesstimates at best.  
• The invalid click detection methods need to be developed without a proper operationalizable conceptual definition of invalid clicks.

The important word above is all the cases since in some cases it can be stated with certainty if a particular click is valid or not. For example, it is easy to detect a doubleclick using relatively simple technological means, assuming that the doubleclick is invalid.

Again, it seems to be a case that automation can catch some, perhaps lots of click fraud, but it can't catch all of it because the intent problem. Also crucial in the above is the stressing that rates we've been given from various sources are simply guesses, since the intent of clicks aren't know to some of these other sources.

Indeed, in the case of the recent Outsell report, you don't even have to worry about figuring out the intent of particular clicks. Click fraud stats from that report come from half the panel entirely guessing about what click fraud rates they might have -- guessing, because that half does not auditing of clicks at all.

Page 19 deals with ways of identifying invalid clicks, at least according to operational approaches -- IE, automated criteria. Do the clicks show some type of:

1. Anomaly from past clicking patterns for a site or ad?
2. Violate certain predefined rules?
3. Fall into certain classes of behavior that make them deemed invalid?

Page 20 explains that Google primarily depends on the first two approaches -- looking for anomalies and using rules -- but then gets into what it stresses as the "Fundamental Problem" of fraudulent clicks:

We conclude that there is a fundamental problem associated with the definition of invalid clicks for the Pay-per-Click model. This problem can be summarized as follows:

• There is no conceptual definition of invalid clicks that can be operationalized in the sense defined above.  
• An operational definition cannot be fully disclosed to the general public because of the concerns that unethical users will take advantage of it, which may lead to a massive click fraud. However, if it is not disclosed, advertisers cannot verify or even dispute why they have been charged for certain clicks.

This problem lies at the heart of the click fraud debate and constitutes the main problem of the CPC model: it is inherently vulnerable to click fraud.

Page 21 poses solutions to the problem:

• The ?trust us? approach of the search engines. The search engines can assure advertisers that they are doing everything possible to protect them against the click fraud. This is not easy because of the inherent conflict of interest between the two parties: the money from invalid clicks directly contribute to the bottom lines of the search engines. Nevertheless, it may be possible for the search engines to solve this trust problem by developing lasting relationships with the advertisers. However, the discussion of how this can be done lies outside of the scope of this report.  
• Third-party auditors. Independent third-party vendors, who have no financial conflicts of interest, can work with advertisers and audit their clickstream files to detect invalid clicks.

These two approaches would still constitute only a partial solution to the Fundamental Problem because there is no conceptual definition of invalid clicks that can be operationalized.

Page 21 continues on looking at how Google does click fraud detection, covering a range of general preventative measure and more active things done when clicks actually happen.

On page 23, a look at filtering systems begins, ending with this summary that's positive for Google, at the moment. It also stresses that filtering will always come under new challenges:

The current set of Google filters is fairly stable and only requires periodic ?tuning? and ?maintenance? rather than a radical re-engineering, even when major fraudulent attacks are launched against the Google Network. It also demonstrates that various recent efforts of the Click Quality team to improve performance of their filters produce only incremental improvements. Thus, the Click Quality team currently reached a stability point since additional efforts to enhance filters produce only marginal improvements.

Having said this, the Click Quality team also realizes that this is only a local stability point in the sense that major future modifications in clicking patterns of online users and new types of fraudulent attacks against Google can lead to radically new types of invalid clicks that the current set of filters can miss. Therefore, the Click Quality team is working on the next generation of more powerful filters that will monitor a broader set of signals and more complex monitoring conditions. These new filters will require a more powerful computing infrastructure than is currently available, and the Click Quality team also participates in developing this infrastructure. Their overall goal is to make click spam hard and unrewarding for the unethical users thus making it uneconomical for them and turning many of them away from Google and the Google Network.

At page 28, the expert notes that Google's filters are relatively simple in nature, yet they work:

The structure of most of Google?s filters, with a few exceptions, is surprisingly simple. I was initially puzzled and thought that Google did not do a reasonable job in developing better and more sophisticated filters. I was initially certain that these simple filters should miss many types of more complicated attacks. However, the evidence reported in the previous two sections indicates that these simple filters perform reasonably well.

Why? A variety of reasons, such unsophisticated attacks:

Although some of the coordinated attacks can be quite sophisticated, the majority of the invalid clicks usually come from relatively simple sources and less experienced perpetrators....Still, there are certain types of attacks that Google filters will miss; but these attacks should be quite sophisticated and would require significant ingenuity to launch. Therefore, there cannot be too many of these, unless perpetrators become much more imaginative....

The Long Tail / Search Tail even gets a mention, with the idea being that -- if I understand correctly -- most activity focuses around the same type of things that the filters work well to detect. IE, the filters do well at cutting off the head of click fraud -- and if tail activity gets through, it's relatively little in comparison:

Despite its current reasonable performance, this situation may change significantly in the future if new attacks will shift towards the Long Tail of the Zipf distribution by becoming more sophisticated and diverse.

At the bottom of page 29, the report starts examining whether Google is letting stuff slide to earn more money:

Since Google does not charge advertisers for invalid clicks, this means that it loses money by filtering out these clicks. Thus, there is a financial incentive for Google not to forgo some of these revenues and simply be ?easy? Long Tail Left Part Frequency Rank 30 on filtering out invalid clicks. Therefore, it is important to know if any business considerations entered into the filter specification process or is it entirely determined by Google?s engineers in an objective manner with a single purpose to protect the advertiser base. This is one of the important issues that I investigated as a part of my studies of how Google manages detection of invalid clicks....

The conclusion is that Google isn't trying to favor itself:

I have spent a significant amount of time trying to understand who sets these threshold parameters, how, and what are the procedures and processes for setting them. In particular, I tried to understand if it is an entirely engineering decision that tries to protect the advertisers from invalid clicks or any of the business groups at Google are involved in this decision process with the purpose of influencing it towards generating extra revenues for Google.

As a result of these investigations, I realized that it constitutes exclusively an engineering decision with no inputs from the finance department or the business units, except the following two cases:

• The first one was a special case when one particular IP address was disabled because of inappropriate clicking activities, and a business unit requested the Click Quality team to conduct an additional investigation since it was an important customer associated with that IP address, and restore it if the investigation results were negative. When I was explained what had happened, I felt that Google?s actions were reasonable in this particular situation.  
• The change in the doubleclick policy that was considered in Winter 2005 and implemented in March 2005. It turned out that the change in the doubleclick policy (i.e., not to charge advertisers for the immediate second click in a doubleclick) had non-trivial financial implications for Google. Being a publicly traded company at that time, this change would have had a noticeable effect on Google?s total revenues with corresponding implications for the financial performance of the company. Therefore, this policy change had legitimate concerns for Google?s management, and these financial implications have been discussed in the company. Still, despite its noticeable negative effects on its financial performance, Google decided to abandon the old doubleclick policy and not to charge advertisers for the second click, which was an appropriate action to take.

In conclusion, with the exception of the doubleclick, I found Google?s processes for specifying filters and setting parameters in these filters driven exclusively by the consideration to protect the advertiser base, and, therefore, being reasonable.

Doubleclick constitutes a special case. For me, the second click in the doubleclick is invalid, as I argued in Section 8, and the advertisers should not be charged for it. It is not clear to me why it took Google so long to revise the policy of charging for doubleclicks. Nevertheless, this policy was revised in March 2005 despite the fact that the company lost ?noticeable? revenues by taking this action.

I find the conclusion that Google wasn't trying to benefit itself doesn't mesh well with the expert's own concern/confusion/uncertainty about why Google took so long to change its policy on doubleclicks. Moreover, that entire policy isn't well explained. Way back up on page 20, there's this very brief mention:

It turns out that Google had a history associated with the definition of a doubleclick: at some point doubleclick was considered to be a valid click and advertisers were charged for it, while subsequently Google reconsidered and treated doubleclick as invalid.

And that's it until the section later in the report, where Google's effectively accused of footdragging on changing its policy, where business discussions about the change were made, but Google then seems to be given the all clear because eventually it did the right thing.

The entire matter is something that feels like it should have been explored more, but page 31 sheds light as to why this might have been difficult. Google's apparently had a complete staff change in relation to click fraud detection since it began charging by the click:

In this subsection, I will describe the history of development of Google filters. First of all, I would like to point out that most of the descriptions in this subsection are not based on documents provided to me by Google but rather on the verbal descriptions by the members of the Click Quality team based on their recollections of the past events and on the ?folklore? evidence since none of the team members I interviewed were even around or involved in the click fraud effort when the AdWords program was introduced in February 2002.

The section continues with detection divided into these groupings -- and I've bolded a key part:

• The Early Days (February 2002 ? Summer 2003). These were the early days of the PPC model and of the click fraud characterized by extensive learning about the problem and determining ways to deal with it.  
• The Formation Stage (Summer 2003 ? Fall 2005). This stage started with the introduction of the AdSense program in March 2003, formation of the Google Click Quality team in the Spring/Summer 2003, launch of new filters and the intent to take the invalid click detection efforts to the ?next level.? It ended with the development of the whole infrastructure for combating invalid clicks and the consolidation of Google?s invalid click detection efforts. This stage was characterized by significant progress in combating invalid clicking activities and developing mature systems and processes for accomplishing this task. Although the Click Quality team?s solutions were still not perfect, based on the information provided to me by Google, I reached the conclusion that the invalid clicking problem at Google was ?under control? by the end of 2005.  
• The Consolidation Stage (Fall 2005 ? present). By this time, Google had enough filters and perfected them to the level when they would detect most of the invalid clicking activities in the Left Part of the Zipf distribution (see Figure 1) and some of the attacks in the Long Tail. They would still miss more sophisticated attacks 32 in the Long Tail, and the Click Quality team continued working on the neverending process of improving their filters to detect and prevent new attacks. The Click Quality team has also been working on enhancing their infrastructure and improving their processes....

What? Click fraud wasn't under control until the end of 2005, yet Google is said to have acted reasonably by the report? How does this make sense? The best explanation seems to be that as the report goes on, the author feels click fraud was an evolving problem, and that Google was reasonably reacting to prevent it even though it wasn't "under control" until the end of last year. In contrast, had Google been doing nothing, then it might have been deemed not to have been taking reasonable steps to gain control.

Page 32 looks at the early days and notes that for a year and a half, no new filters were added other than the three original ones that CPC-based AdWords started with. Why? Maybe click fraud was less understood at that time since it was so new (though Search Engine Watch was citing articles on the problem like this one from Wired as far back as 2001). That's one suggestion, along with Google having fewer resources, lacking the right infrastructure or click fraud being on a smaller scale. But these are all guesses, since as the author notes (again, I've bolded a key part):

Not a single person on the Click Quality team was either around or involved in the click fraud detection back in 2002. The only person from this era who is still at Google is on an extended leave and was not available for comments during my visits to Google.

It is hard to judge reasonableness of Google?s invalid click detection efforts between 2002 and summer 2003 because there is simply not enough information available for this time period for me to form an informed judgment about this matter. One exception is the doubleclick policy that I have described before. As I have already stated, the second click in the doubleclick is invalid in my opinion, and Google should have identified it as such well before March 2005 (however, the detection and filtering out the third, fourth and other subsequent clicks was there since the introduction of the PPC model, and advertisers were not charged for these extra clicks).

Again, I get confused by the report declaring that Google operated reasonably when it also states that it can't judge if it indeed acted reasonably for part of the claim period.

The middle period finds progress with far more confidence, as covered on page 33:

The Formation Stage (Summer 2003 ? Fall 2005). This stage started with the introduction of the AdSense program in March 2003 and the formation of the Google Click Quality team in the Spring/Summer 2003 (the first person was hired in April 2003 with the mandate to form the Click Quality team; several people joined the team during the summer of 2003, and the initial ?core? team consisting of Operations and Engineering groups was consolidated by Fall 2003).

During this time period, two new filters were introduced in Summer 2003 and one more in January 2004. These three new filters remedied several problems that existed since the launch of the first three filters and significantly advanced Google?s invalid click detection efforts. Besides the development of new and better filters, there was a separate effort launched to develop the whole infrastructure for doing the offline analysis of invalid clicks and managing customer inquiries about invalid clicks and billing charges.

Despite all these efforts, the new filters and the offline analysis methods still failed to detect some of the more sophisticated attacks (presumably from the Long Tail of the Figure 1) launched against the Google Network in 2004 and the first half of 2005. In response to these activities and as a part of the overall invalid click detection effort, Google engineers introduced some additional filters around Winter and Spring 2005, including the filter identifying the second immediate click in a doubleclick as invalid.

As a result of all of these efforts by the Click Quality team, a significant progress has been made in combating invalid clicking activities and developing mature systems and processes to accomplish this task. Although the Click Quality team?s solutions were still not perfect, based on the information provided to me by Google, I reached the conclusion that the invalid clicking problem at Google was ?under control? by the end of 2005.

And overall filtering is given this conclusion at the top of page 35:

Google put much effort in developing infrastructure, methods and processes for detecting invalid clicks since the Click Quality team was established in 2003. These efforts were not perfect since Google missed certain amounts of invalid clicks over these years and it adhered to the doubleclicking policy for too long in my opinion. However, click fraud is a very difficult problem to solve, Google put a significant effort to solve it, and I find their efforts to filter out invalid clicks as being reasonable, especially after the doubleclick policy was reversed in March 2005.

Page 35 then begins looking at "offline" or non-automated ways to find click fraud that's gotten past filters. By page 37, it gets into systems applied to review what happens on some AdSense sites:

Auto-Termination System is an automated offline system for detecting the AdSense publishers who are engaged in inappropriate behavior violating the Terms and Conditions of the AdSense program. It examines online behavior of various publishers and either immediately terminates or warns the publishers who are engaged in the activities that the system finds to be inappropriate.

Interestingly, the system is still relatively new, only about a year old, as explained on page 38:

The first prototype of the auto-termination system was built in the early 2005 and the system was launched in the summer 2005. Recently, Google has developed major enhancements to the current version of the auto-termination system deploying an alternative set of technologies.

Page 38 also starts a look at the manual review that the click fraud team does, with this positive summary coming on page 40:

I have personally observed several such inspections and can attest to how successfully they have been conducted by Google?s investigators. This success can be attributed to (a) the quality of the inspection tools, (b) the extensive experience and high levels of professionalism of the Click Quality inspectors, and (c) the existence of certain investigation processes, guidelines and procedures assisting the investigators in the inspection process.

However, using humans also poses a bottleneck, as covered on page 41:

My only concern with these manual inspections is about scalability of the inspection process. Since the number of inquiries grows rapidly, so does the number of inspections required to investigate these inquiries. As stated before, Google tries to automate this process by letting software systems do a sizable number of inspections. Still, the number of manual inspections keeps growing significantly over time, based on the numbers that I have seen. This means that Google has a challenging task of expanding and properly training its team of inspectors to assure rapid high-quality inspections of inquiries in the future.

Page 41 also revisits the tug-of-war between advertisers wanting more transparency and Google trying to protect against click fraud by giving too much information away:

One of the complaints about Google?s investigation system that I keep hearing is that Google is quite secretive and does not provide meaningful explanations of the inspection results neither to the advertisers nor to the publishers. After examining how their inspection systems work, I can understand this secrecy. If Google provides such explanations, then the unethical users can gain additional insights into how Google invalid click detection methods work and would be able to ?game? their detection methods much better, thus creating a possibility of massive click fraud. To avoid these problems, Google prefers to be secretive rather than to risk compromising their detection systems and the advertiser base.

And this interesting tidbit on how when someone gets kicked out of AdSense, advertisers apparently get refunds:

Finally, I would like to point out that when Google terminates an AdSense publisher, all the clicks generated at that publisher?s site over a certain time period (valid and invalid) are credited to the advertisers whose ads were clicked on that site....

How well are things going? That begins to be addressed at the bottom of page 41, and here's a key statement from page 42:

The number of inquiries about invalid clicks for the Click Quality team increased drastically since late 2004. However, the number of refunds for invalid clicks provided by Google did not change significantly over the same time period. Therefore, the number of refunds per inquiry decreased drastically since late 2004. Since each inquiry about invalid clicks leads to an investigation, this means that significantly fewer investigations result in refunds. This statistic can be interpreted in several ways. First, it can be an indication that Google?s invalid click detection methods have significantly improved over this time period and that reactive investigations do not find any problems when searching for invalid clicks. Second, this statistic can mean that Google tightened its refund policies and is less generous with its refunds than it used to be. Third, this statistic can mean that more advertisers are looking more carefully into their logs and are more suspicious about invalid clicks since this problem received wide attention in the media and the public discourse in general. Therefore, they may request Google to investigate suspicious clicking activities even if nothing really happened. I examined investigative activities of the Google Click Quality team and can attest that it consists of a group of highly professional employees who do their investigations carefully and professionally. Therefore, I do not believe in the second reason stated above. The third reason is quite possible since advertisers are indeed concerned about invalid clicks and request Google to investigate suspicious clicking activities more frequently than before. However, the number of inquiries increased so significantly that I would expect that the number of refunds would also increase somewhat. Since this did not happen, I attribute this effect to the fact that Google?s invalid click detection methods work reasonably well by now.

I've bolded the most important parts to me. The expert is saying that more advertisers are raising inquiries, probably because of increased concerns (which we know is the case from various surveys over the past two years) but that Google isn't refunding more. Nor is that Google just protecting itself, the expert says. To him, it's a case that the concerns aren't matching the reality. Click fraud -- bad clicks getting past Google -- do not appear to be on the rise.

Nor is click fraud getting past filters a major problem compared to the amount Google is proactively catching, the expert says:

The total amount of reactive refunds that Google provides to advertisers as a result of their inquiries is miniscule in comparison to the potential revenues that Google foregoes due to the removal of invalid clicks (and not charging advertisers for them).

Another interesting part is how Google is comparing traffic across its network to that from within Google.com, which is said to be a "gold standard" of a pure site. The network is said to compare well:

Another indirect piece of evidence provided to me by Google is that Conversions-Per- Dollar (CPD) rates on various partner sites of Google Network are not significantly lower than on their ?flagship? Google.com site. CPD is the statistic determining the number of conversions that occurred divided by the dollar amount spent on advertising. This statistic shows how effective advertising campaigns are for the advertisers. Since Google spent much effort over the past 4.5 years to make sure that Google?s AdWords program works reasonably well, it now serves as the ?golden standard? against which other programs are compared at Google. Since CPD numbers for other parts of the Google Network approach that of at Google.com, this is an indication that other advertising programs work as well as AdWords works on Google.com. Since other parts of the Google Network are affected by invalid clicking activities significantly more than Google.com, this is an indication to the Click Quality team that their efforts to combat fraud on other parts of the Google Network are as effective as on Google.com.

At the bottom of page 43 is an overall conclusion about that Google's doing a reasonable job with detection, as best as this scientist can tell. It also takes some slams at general reports of click fraud being widespread in the press as not being proven true or false yet. I've bolded the key paragraph for all this below:

As a scientist, I am accustomed to seeing more direct, objective and conclusive evidence that certain methods and approaches ?work.? Having said this, I fully understand the difficulties of obtaining such measures for invalid clicks by Google, as previously discussed in this report. Moreover, one can challenge most of the reports pertaining to invalid clicking rates published in the business press by questioning their methodologies and assumptions used for calculating these rates. Most of these reports would not stand hard scientific scrutiny.

Still, as a scientist, it is hard for me to arrive at any definitive conclusions beyond any reasonable doubt based on Points (1) ? (6) above that Google?s invalid click detection methods ?work well? and remove ?most? of the invalid clicks ? the provided evidence is simply not hard enough for me, and I am used to dealing with much more conclusive evidence in my scientific work.

Having said this, the indirect evidence (1) ? (6) specified above, nevertheless, provides a sufficient degree of comfort for me to conclude that these filters work reasonably well. Finally, this statement should not be interpreted as if I find Google?s effort to detect invalid clicks (a) unreasonable, or (b) not working reasonably well. It only states that Google did not provide a compelling amount of conclusive evidence demonstrating the effectiveness of their approach that would satisfy me as a scientist.

Finally, the measures (1) ? (6) above are only statistical measures providing some evidence that Google?s filters work reasonably well. This does not mean, however, that any particular advertiser cannot be hurt badly by fraudulent attacks, given the evidence that Google filters ?work.? Since Google has a very large number of advertisers, one particular bad incident will be lost in the overall statistics. Good performance measures indicative that filters work well only mean that there will be ?relatively few? such bad cases. Therefore, any reports published in the business press about particular advertisers being hurt by particular fraudulent attacks do not mean that the phenomenon is widespread. One simply should not generalize such incidents to other cases and draw premature conclusions ? we simply do not have evidence for or against this.

Page 44 has a section that restates conclusions in terms of economic aspects -- IE, any economic motivation for Google to hide or ignore click fraud:

First of all, most of the revenue that Google foregoes due to discarding invalid clicks comes from the filters since they identify most of the invalid clicks. The second source of the forgone revenues comes from the terminated AdSense publishers (as stated before, all the clicks made on the terminated publisher?s website generated over a certain time period are credited back to the advertisers regardless of whether they are valid or invalid). However, this second type of revenue is relatively small in comparison to the foregone revenues due to filters. The third source of the foregone revenues comes from the AdWords credits. However, these AdWord credits are miniscule in comparison to the other sources of foregone revenues. In summary, the most significant source of foregone revenues, by far, are Google filters. Hence their performance is the most crucial factor for the whole invalid click detection program (note that this observation does not mean that Google focuses mainly on this part of the invalid click detection program since other parts are also important)....

It makes no business sense for Google to go after these extra revenues and that the best long-term business policy for Google is to protect advertisers against invalid clicks. Policy reversal on the doubleclick is a good example of this. By not charging advertisers for the doubleclick since March 2005, Google lost a ?noticeable? amount of revenues. However, the revenues lost as a result of this action are insignificant in comparison to the revenues that Google risks to lose if it loses trust of the advertisers. Therefore, reversing the doubleclick policy makes sense not only from the legal, ethical and public relations point of view, but it is also a sound economic decision.

Finally, the beginning of page 46 gives this overall conclusion:

Google has built the following four ?lines of defense? against invalid clicks: pre-filtering, online filtering, automated offline detection and manual offline detection, in that order. Google deploys different detection methods in each of these stages: the rule-based and anomaly-based approaches in the pre-filtering and the filtering stages, the combination of all the three approaches in the automated offline detection stage, and the anomaly-based approach in the offline manual inspection stage. This deployment of different methods in different stages gives Google an opportunity to detect invalid clicks using alternative techniques and thus increases their chances of detecting more invalid clicks in one of these stages, preferably proactively in the early stages.

Since its establishment in the Spring and Summer of 2003 the Click Quality team has been developing an infrastructure for detecting and removing invalid clicks and implementing various methods in the four detection stages described above. Currently, they reached a consolidation phase in their efforts, when their methods work reasonably well, the invalid click detection problem is ?under control,? and the Click Quality team is fine-tuning these methods. There is no hard data that can actually prove this statement. However, indirect evidence provided in this report supports this conclusion with a moderate degree of certainty. The Click Quality team also realizes that battling click fraud is an arms race, and it wants to stay ?ahead of the curve? and get ready for more advanced forms of click fraud by developing the next generation of online filters.

In summary, I have been asked to evaluate Google?s invalid click detection efforts and to conclude whether these efforts are reasonable or not. Based on my evaluation, I conclude that Google?s efforts to combat click fraud are reasonable.

Posted by Danny Sullivan at 1:58 PM | Permalink

July 24, 2006

Google Versus Yahoo: Consistency Or Wow In Product Development?

An article over at the New York Times 'In the race with Google, it's consistency vs 'wow'' discusses the differing approaches of Google and Yahoo to the introduction of new technology and resources. The fact that Google hasn't added some of the basics to its mapping service in comparison to the Yahoo and AOL offerings is the starting point for an indepth discussion on how both engines (MSN, AOL and Ask get very short shrift) are trying to increase their user base.

Alan Eustace (Senior VP at Google for engineering and research) is quoted as saying "We are trying to come up with something that is new and different, that makes people say ?Wow.? " Yahoo on the other hand is taking a rather different approach of ensuring that their services are predictable and consistent.

Although the article doesn't use the analogy it does remind me very much of the tortoise and the hare story, with Google of course being the hare, bouncing along, playing to the audience, not really looking where he's going, but getting there very quickly. The Yahoo tortoise carefully places one foot in front of the other, and it isn't very exciting, but you know where you'll be with it.

Is one approach better than the other? Clearly there are examples that can be drawn from both camps; the speed of Google mapping with its click and drag approach certainly did draw 'wow' responses. 'Wow' is exciting - it gives bloggers something to write about, teachers something new to teach and industry commentators something to talk about on the conference podium. On the other hand consistency is rather dull, but ultimately important if you want to provide a raft of integrated services.

I'm as guilty as the rest - when demonstrating features from search engines I like to demonstrate all the 'wow' functionality, and the delegates love it and enjoy playing with it. But at the end of the day, when it comes to answering quiz questions they tend to go for the resources and functions that work, and that they can rely on.

What I'd like to see is a situation where I can look at a search engine, with all of its offerings, search syntax, extra resources and so on and go 'Wow - all this stuff works well together, and it's really exciting', but perhaps that's asking too much?

Posted by Phil Bradley at 12:36 PM | Permalink

July 20, 2006

Google Announces Great Second Quarter Results

Google just announced their second quarter results for this year.

Google reported revenues of $2.46 billion for the quarter ended June 30, 2006, an increase of 77% compared to the second quarter of 2005 and an increase of 9% compared to the first quarter of 2006. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs, or TAC. In the second quarter of 2006, TAC totaled $785 million, or 32% of advertising revenues.

News.com reports that Google beat Wall Street's expectations with this release. A transcript of the earnings call is here.

Posted by Barry Schwartz at 4:52 PM | Permalink

July 18, 2006

The Google Idiots Are Damn Smart

Spotted via Battelle, the folks running Google are a bunch of idiots! At least that is what Google's CEO, Eric Schmidt wants you to think. Schmidt remarked to reporters the other day, “So, yes we are IDIOTS — and please WRITE THAT DOWN.” Huh? Write it down? What does that get you? Schmidt continues, “We have every known problem that a growth company has — quicker…Write down all the obvious problems, we have every one of them. So we make a list of them (potential problems) and we anticipate them.”

Sarcasm, personally, I think it is great. Some people may be a little disturbed by this unusual happenstance but I think overall, it brings Google back to being human. Google wants that, I suspect. Yes, people are idiots, they make mistakes, they have problems and they work on solutions to fix those problems. Smart idiots are better than dumb idiots. Now it is up to you to decide for yourself which type of idiots would the Google's leaders be classified as.

You can listen to the complete interview (39 minutes) by clicking here (MP3 file), or review some of the highlights that Reuters has posted. I have not listened to it, so I did not write any of this based on the tone of his voice.

Posted by Barry Schwartz at 8:34 AM | Permalink

July 6, 2006

Inside Google's New-Product Process

Marissa Meyer (VP of Google's search products and user experience) is interviewed over at Business Week in the article 'Inside Google's new-product process'. It's not the newest article out there, but if you haven't taken a look at it, it's worth doing so, if only to get a handle on what Google is thinking with regards new products. The spin would appear to be 'lets try lots of different things; some of them will work and will be really useful'. A company like Google can certainly take that sort of approach, given their reputation and bank balance. By the law of averages this will indeed create some excellent products, but what happens to all those products that don't make it, and more importantly, the people who use them? I have a slightly different and less charitable view over in my own weblog.

Posted by Phil Bradley at 11:16 AM | Permalink

Google Posts First Quarter '06 Quarterly Report 10-Q

For those of you who own Google stock or track Google's revenues, Google has just posted their quarterly statement. You can find the update on the Google investors page with a link to a PDF document for Google's March 31, 2006 10-Q.

Posted by Barry Schwartz at 9:10 AM | Permalink

July 3, 2006

New York Times Looks At Google's Hardware & Infrastructure

A New York Times article has a detailed analysis of Google's infrastructure and discussion with Urs Hölzle, senior vice president for operations at Google. Here are some of the key points I pulled from that article.

+ Google tends builds from ground up versus buying. + Google's computing costs are half those of other large Internet companies and a tenth those of traditional corporate technology users. + Critics call Google's philosophy "unnecessary and inefficient." + "Google is reducing cost while maintaining performance by shifting the burden of reliability from hardware to software — individual hardware components can fail, but software automatically shifts the local task and the data to other machines." + Google is among Advanced Micro's five largest clients.

Posted by Barry Schwartz at 9:51 AM | Permalink

BBC News Features Article On Google Search Spam

A BBC News front-page article named Google to stay focused on search brings the issues of search spam to the public. The article explains how seventy-percent of Google's focus in on Web search and then goes into several paragraphs on how search spam is a huge issue. The article quotes Douglas Merrill, of Google engineering, saying, "Spam is an arms race," explaining that "spammers are highly motivated. There is a lot of money at stake."

Posted by Barry Schwartz at 9:38 AM | Permalink

Google's Non Search Products A Flop

BusinessWeek reports that when Google launches a new non-search product, the competition "shivers," Google has yet to lead in market share for any of those non-search products. Google's Gtalk is currently ranked number ten with two percent market share, Google Finance is the "40th-most-visited finance site," and Gmail "is the system of choice for only about one-quarter the number of people who use MSN and Yahoo e-mail." So with all these product launches, is Google a threat? Read more at BusinessWeek.

Posted by Barry Schwartz at 9:18 AM | Permalink

June 29, 2006

Google Knocks Off Apple On The Wired 40

The Wired 40 was just released and Google has secured the top spot, at number one this year. They have bumped off Apple, who last year ranked number one. Wired commented on Google with the following;

Less cuddly but more profitable than ever, the monster from Mountain View has rivals but no peers. Is it a search engine? A media company? A software provider? Who cares? Microsoft, for one. Get ready for the grudge match of the decade.

Wired is a huge Apple fan and supporter, as far as I know. For them to hand over the spot to Google, says something. Note that Yahoo is on the list at a respectable number 5.

Posted by Barry Schwartz at 10:03 AM | Permalink

June 22, 2006

Google Disposes Of Stake In Baidu

Reuters reports that Google has sold its "modest investment in Baidu." Google owned about two-percent of Baidu.com, worth about $63 million, and "disposed" of that investment on May 25th. Google spokesperson, Debbie Frost said, "It has always been our goal to grow our own successful business in China and we are very focused on that."

Posted by Barry Schwartz at 3:13 PM | Permalink

Google Partners With Adobe For Toolbar Distribution In Shockwave, Other Product To Be Named

Both Adobe (PDF link) and Google have announced a new deal where Adobe will distribute the Google Toolbar for Internet Explorer as part of Adobe Macromedia Shockwave Player downloads. That was supposed to begin yesterday, and bundling with other Adobe products will happen in the future.

Wait a minute? Weren't Yahoo and Adobe buddy-buddies? Yes -- a special version of the Yahoo Toolbar is built into the popular Adobe Acrobat Reader program, through a deal dating back to October 2004.

In January of this year, Google began distributing Adobe Reader as part of the Google Pack without the Yahoo Toolbar being part of it. Google told me (article for SEW members) then that the Adobe-Yahoo agreement only covered the distribution Adobe did.

So is the Yahoo-Adobe deal completely over? No. Reuters reports that Adobe says that will continue:

Adobe previously included Yahoo Inc.'s toolbar as an option with the Shockwave Player, Adobe spokeswoman Katie Juran said. Adobe still offers the Yahoo toolbar as an option for its Flash Player and Adobe Reader products, she said.

I just uninstalled Acrobat Reader and downloaded a fresh copy. I definitely see the Yahoo Toolbar as part of the latest installation.

As for the Abobe-Google deal, the bundling with Google Pack wasn't based on payment, Google told me at the time. This latest deal is a financial arrangement, though exactly how much money is changing hands is not disclosed.

As for the distribution, I downloaded Shockwave and got no prompt for the Google Toolbar to be added. Of course, I already had it in Internet Explorer, and that seems to be why I didn't get a separate install. The Shockwave FAQ suggests that you should see a separate install process and that this won't happen if you have the Google Toolbar already.

That FAQ also notes that the Yahoo Toolbar, previously bundled with Shockwave, has now been dropped. In addition, it says that that third parties that distribute Shockwave do not have to bundle the Google Toolbar with those distributions.

The Google Blog post also says:

Starting today, Adobe is offering the Google Toolbar to its customers as a free download -- a great way to take Google search with you anywhere on the web.

So far, that seems to be true within Shockwave. But it's also a bit overstated. The Google Toolbar on its own is not offered anywhere on the Adobe products page, nor does a search for "google toolbar" flag any page for those who just want the toolbar on its own

The best, most specific information is part of the Shockwave FAQ that I've mentioned. There is at least a direct link to the Google Toolbar download page. But that's much different that the idea the Google Blog suggests, that people visiting Adobe might be getting a pitch for the Google Toolbar on its own. Not yet, not so far.

Postscript Barry:

I was sent a screen capture of this in action, you can view the screen capture at tcal.net.

Posted by Danny Sullivan at 6:48 AM | Permalink

June 19, 2006

Google's Mobile Operations Expected To See Largest Growth

The Times Online UK reports that Google's mobile division, which is based in London, is expected to "become the biggest driver of new business" for Google. Search on mobile phones, wireless laptops and personal digital assistants (PDAs) are seen as a huge opportunity for many search companies. In Britain, there is a mobile phone for every person, but in some other areas, like Scandinavia, "mobile ownership is almost double that rate."

Posted by Barry Schwartz at 10:39 AM | Permalink

June 16, 2006

Schmidt Talks On Staying In China, GBuy & More

Conde Nast Portfolio, a new business magazine out next year, landed a nice coup of having Eric Schmidt speak yesterday at its launch party (Schmidt's also apparently set to be one of the first profiles in the new magazine). The video of the interview is online here, covering mostly stuff you've already heard Schmidt say before in other interviews (the LA Times had one last week) over the past years. But here are some things worth highlighting to me.

What would be the one do over for him? He says if Google had done any one particular thing three months earlier, it would have been better.

China was an example of this. In hindsight, he wishes Google had gotten a Chinese government approved version going sooner. "I don't think we would have changed the decision, but I think earlier, the better." He didn't say exactly why. My assumption would be that Google would be stronger in China compared to Baidu, but also that he would say they would have been serving people in China better for a longer period.

Was Google cofounder really suggesting last week that Google was having second thoughts when he said:

"Perhaps now the principled approach makes more sense," Brin said.

No -- it was either a nuanced comment, a misquoted one and there was also a whole part of what he said missing, Schmidt said. The missing part Sergey had said was, he explained, was that Google had decided to go ahead with what it considered the lesser of two evils, serving people even though it had to do censorship.

There's more of the how Google operates stuff, the 20 percent time (for engineers -- still not others, apparently), the 70-20-10 time allocation of work time, and the idea of not trying to tell people what to do, for fear of stifling creativity. Instead, Google suggests what are company priorities and hopes employees agree because they, too, want to work on what's important for the company.

He talks about Google doing ads on cell phones in Japan and says they'll come to Europe this summer and to the US within the next 12 months.

GBuy? That's the press name, not Google's name, and "It's not like PayPal at all." He says its designed to help advertisers have their customers buy things more quickly than through other mechanisms. We'll see. If PayPal means sending money between two people, it probably won't be. If PayPal means an alternative to buying with a credit card (or having a credit card account as a merchant), then I think GBuy will be very much like PayPal. And it operates this way already on Google Base. For more, see Google GBuy Launch Later This Month To Challenge PayPal?. And hang in there. Schmidt said it's coming soon.

Will Google do its own hardware? "It's much better to have a partner," and "It's much better to be in the software business," he said. The economics are better, he explained.

Biggest competition? Yahoo and Microsoft are both strong and good competitors, but Yahoo is the "primary competitor."

Is Google too powerful, especially given statements he made years ago relating to Microsoft that could be applied to Google today. There are a number of other choices consumers could go to, he said -- "and we know this."

In other words, Google knows that it could potentially lose customers at any time, so it will self-police itself. Same thing he told me back in 2002 in my Google: Can The Marcia Brady Of Search Stay Sweet? article:

"We have very poor lock in. Microsoft has very high lock in," said Google CEO Eric Schmidt, when we spoke at Google's offices last month. "The switchover cost for you to move to one of our competitors is none. As long as the switchover costs are so low, we run scared. Everyday I wonder if there are very smart people at Berkeley coming up with a new algorithm," Schmidt adds -- but in a way that clearly suggests that he wants Google to run scared, in order to keep the company smart and honest.

Although to update things, Google has much better lock-in these days, given Google's many portal features. People are storing email, web analytics data, photos and spreadsheets to name only few things they may not wish to abandon, not to mention kicking the Google Habit can be hard and people aren't likely to do it unless Google gets really bad, as I've written.

As for having knocked Microsoft when he was at Sun for releasing weak products and using customers as guinea pigs, how does he respond to accusations that Google does the same? He says they have a two to three month product cycle now. To be fair, the endless betas Google used to do have gotten better.

During Q&A, Chris Anderson of Wired asks about the impact AdSense has on fueling spam across the web -- search spam, comment spam, trackback spam and so on. Schmidt responds to say Google looks had at preventing click fraud, not really answering the question.

ClickZ also has coverage of his talk in Google's Schmidt at Conde Nast Lunch Today and Reuters looks at the GBuy comments in Google tests Web buying system, says unlike PayPal.

Need more on Schmidt talking Google? See our Google , Google: Employees and Google: Revenues categories of Search Topics for archived articles going back for years, if you are a Search Engine Watch member.

Posted by Danny Sullivan at 9:57 AM | Permalink

May 23, 2006

Google To Host Investor Conference Call May 31st

Google posted the details of new investor conference call to take place on May 31, 2006 at 11:00 AM PT. Google is supposedly going to "offer more opportunities for the investment community to interact with" Google's senior management. The Webcast can be accessed live at http://investor.google.com/webcast at that time.

Posted by Barry Schwartz at 4:22 PM | Permalink

Google's Eric Schmidt Interviewed on CNBC

ResourceShelf points to a CNBC interview of Google's CEO, Eric Schmidt. The two-part interview goes over the "plan B" for Google's growth, Google the "portal," the competitive landscape, the CNET controversy, Bill Gates comments about Google, Wall Street, the international front, and finally click fraud. A few things I will put out for you is that Google wants to increase "targeted ads" for all media, Google won't call itself a portal, content companies are not competitors, there is a difference between public information being available and publicizing that information, and Asia is a growing market that Google will be aiming for. Listen to the two part interview at the Wall Street Journal (not sure if registration is required): Part I & Part II.

Posted by Barry Schwartz at 9:25 AM | Permalink

May 17, 2006

Google Adding More Jobs Than Yahoo

BusinessWeek.com reports that Google is adding more jobs than Yahoo. Google has 1,800 open positions this year, up from 800 open positions last year. Yahoo has 800 openings this year, but they have declined from last year, with 935 job openings. Google is also higher a higher percentage of employees overseas, with 51% of their job openings based outside of the U.S. Yahoo has 29% of their job openings based overseas, up 15% from last year. Yahoo still has more employees than Google, with 10,098 employees at Yahoo and 6,790 employees at Google.

Posted by Barry Schwartz at 8:59 AM | Permalink

May 12, 2006

Google's CEO & Founders Keep Control Over Google

News.com reports that Google has kept the criticized dual class stock ownership structure. The dual structure gives Class B stockowners 10 votes per share, where Class A stock owners have 1 vote per share. Guess who the only Class B stockowners are today? You got it, only the CEO Eric Schmidt and founders Larry Page and Sergey Brin. More details on the politics involved at News.com.

Posted by Barry Schwartz at 9:08 AM | Permalink

May 9, 2006

Google Helps California Earn Record Tax Receipts

SFGate.com reports that Google has probably helped the State of California bring in record tax receipts for the 2005 year. The article says that California brought in "a record $11.3 billion in personal income tax receipts," which was $4.3 billion more than it collected the previous year. They attribute a "significant chunk" of the $4.3 billion towards Google employees and executives stock in Google, specifically 1/8th or more of the total gain. The executives alone could have paid around $450 million in capital gains tax on their stock sales of $4.4 billion at the 10.3% state-tax bracket.

Posted by Barry Schwartz at 9:27 AM | Permalink

May 2, 2006

Google to Host Annual Stockholders Meeting May 11th

Google is to host their annual stockholders meeting on May 11, 2006 at 2PM (PST). There will be a live webcast of the event at http://investor.google.com/webcast. For more information about this meeting, read the release or visit the events page.

Posted by Barry Schwartz at 8:42 AM | Permalink

April 21, 2006

eBay Wants To Team Up With Yahoo And/Or Microsoft To Compete Against Google?

A Wall Street Journal article reports that eBay is in talks with both Yahoo and Microsoft to see which one (or possibly both) is a "worthy ally" to compete against the all-mighty Google. Currently eBay spends a ton on Google AdWords, pretty much any search you do on Google, you get an ad for eBay in the sponsored results. Google also is a heavy indexer of eBay content in the organic results. This all leads to tons of referrals to eBay's content from Google. The issue is, Google is now competing with eBay on several fronts, including a PayPal alternative, online auction service and Google's other services such as Froogle and Base together lead to a huge competing e-commerce portal. Hence the need for eBay to make some changes in the future. The article at the WSJ has a nice write up with the details here.

Posted by Barry Schwartz at 8:52 AM | Permalink

Google Revenues Up

Google's first quarter revenues are in, $2.25 billion, up 79 percent compared to the same time last year and 17 percent over last quarter. Net income was 62 percent higher than last quarter, various sources calculate.

The Rundown

• Revenue from Google-owned sites was 58 percent; Google network sites made up 41 percent; the remaining 1 percent is either a rounding issue or non-ad income.  
• Non-US revenue was 42 percent.  
• Traffic Acquisition Costs were 32 percent, down from 33 percent last quarter.  
• Net income was $592 million, compared to $372 million last quarter.  
• Cash in the bank: $8.43 billion.  
• Employees: 6,790, up from 5,680 at the end of last quarter.  
• Animals Harmed During The Production Of Google: None. (Just seeing if you all are paying attention!)

Official Resources

• Press Release  
• Earnings Conference Call

Coverage

• Google Grows Q1 Revenue 62 Percent, Expands More Globally: The numbers from ClickZ, with news that international growth was lead by Scandinavia and Europe generally; that CPM-based contextual ads aren't reaching the price keyword-targeted ads get (no surprise there); that Google may do more branded/display ads on Google sites, though perhaps not within search.  
• Current AdSense Publisher Cut from Google Figures: Threadwatch highlights that publishers got a tiny bit less of the Google cash.  
• Google's Ad-Grabbing Pushes Profit Up 60%: Puts Google's revenues in perspective with the overall ad market and how Google expect to continue growing as more money moves online.  
• Google Lost A $Billion In Unspent Ads: Via Inside Google, BuyGoogle highlights that advertisers want to spend even more with Google but can't. They can't, of course, because the search inventory really isn't there. Two things will solve this problem for Google, FYI. First, prices will continue to rise. Second, Google will continue going offline to try and help those advertisers spend their money.  
• Earnings: GOOG Q1 Call: No Plans To Monetize Google Base: PaidContent covers how Google doesn't plan to turn Google Base into a new paid inclusion system.

Posted by Danny Sullivan at 7:49 AM | Permalink

April 13, 2006

Google Shareholder Dreams Of A One Share, One Equal Vote World

Google shareholder wants two-tiered stock structure dismantled from the San Jose Mercury News covers how a pension funding holding a tiny amount of Google shares will push at the upcoming shareholder's meeting for the two tier voting structure to be dismantled. That's the structure that gives cofounders Larry Page, Sergey Brin and Google CEO Eric Schmidt effective control over the entire company. Well, you can't say this structure wasn't clear when you bought the stock. Google says its board is opposed to the change, not surprisingly. And without the support of the big three, it ain't gonna happen. Hat tip to Kathryn Cramer's blog.

Posted by Danny Sullivan at 9:18 AM | Permalink

April 12, 2006

Google's Chinese Censorship "Absolutely The Right Move," Says CEO Schmidt

Wow. Google's apparently not feeling bad about censoring for China anymore. When it happened, there was all that hand-wringing about balancing a compromised mission versus not being there at all. Google even created an evil scale to decide just how bad censoring would be. Now along with news of Google's new Chinese name, Google Blogoscoped points to an Associated Press article where Google CEO Eric Schmidt is quoted as saying the decision was "absolutely the right one."

Absolutely. Contrast that against some of these past statements:

We aren't happy about what we had to do this week, and we hope that over time everyone in the world will come to enjoy full access to information.

That was from the official Google Blog statement on the move. How about this from Schmidt himself, back in January:

We concluded that although we weren't wild about the restrictions, it was even worse to not try to serve those users at all.

With respect, the decision Google made is absolutely not the absolute right one. It was one the company itself admits was riddled with compromise and a move it's not entirely comfortable with. Saying that Google made "absolutely" the right move is about as bad as still saying one of the mottos is "Don't Be Evil." It suggest that anyone who questions their decision is absolutely wrong, because Google and Google alone knows the absolutely right answer. They don't. They simply know an answer they believe meets their circumstances. It's not absolutely right -- it's just what they've decided is right for them to do.

Schmidt also said it would be "arrogant" to walk into a country and tell it how to operate. Gosh, Google didn't feel too arrogant about telling the US government where to go when it demanded search log data. It doesn't feel arrogant having a lobbying firm to fight for its interests, such as ironically getting the US government off its back about censoring for China.

Is there some set time period that has to expire for you to earn money within a country before you feel like you can question or influence the laws there? If so, Schmidt didn't outline that. For China, he said they've done no lobbying at all for rules to change. But he pointed out they've not tried to get other laws changed elsewhere.

Posted by Danny Sullivan at 11:24 AM | Permalink

April 3, 2006

Selling Google's Ads

The World According to Google from Sales & Marketing Management magazine talks to various execs from the Moneyplex, Google's sales side, about pitching their wares.

Interestingly, the article takes angle that rather than there being a church-and-state divide between the Moneyplex's ad folks and the Googleplex's engineering teams, people are said to work side-by-side to help produce a product they hope will serve customers and advertisers alike.

Well, maybe. I get the impression that what the article really means is that technical people who develop ad products and ad sales people who sell those products work alongside each other. The editorial teams don't, to my knowledge.

Overall, not a lot you probably didn't already know about Google here, but it'll give anyone a few more quotes plus some nice pictures of executives.

Posted by Danny Sullivan at 10:03 AM | Permalink

March 30, 2006

The Google Portal

Last week's launch of Google Finance revived the entire "Is Google A Portal" question. I previously wrote in my article on how I saw Google Finance as being closer to Google's search mission than some other products it has launched. Still, Google's got plenty of other things that firmly put them into the "stealth portal" or "Portal 2.0" category for me. But does it matter if Google's a portal? One reader recently asked me this. Maybe not; maybe so, especially given their own denials. Below, a further look at that, plus some related commentary around the web.

Let's start off with revisiting what a portal is. That was a tricky question even back in the days when everyone wanted to be a portal, kind of like people trying to say what's a Web 2.0 site today. Seriously. When portals were hot, everyone ran around saying they were a portal regardless of whatever set of features they offered. It's very similar to how everyone calls themselves Web 2.0 today without there being agreement of what what is Web 2.0.

To me, a portal is a highly trafficked site that offers a core set of features designed to allow a general audience to either start their day at the portal or return to it once if not often during their internet day. Ironically, portals can be both "sticky," in trying to keep users coming back to them, as well as living up to where they get their names, portals through which you flow to other sites.

Search is a core feature of a portal. If you don't offer robust search, you aren't a portal, in my books. Other features, including search, I'd say include:

• Search
• Email
• Personalized Home Page
• Instant Messaging / Chat
• Free Home Pages / Blogs
• Communities / Club Areas / Discussion Lists
• Stock Portfolios

I'm not just making this list up because it conveniently itemizes things Google now has, as a way of proving my point that Google's a portal. These are a set of features that evolved in the late 1990s for portals. If you're a Search Engine Watch member, see my archived Portal Features Chart from 1998 which illustrates this for the major players back then.

Here's some more background on the history of portals as they related to search engines, for those trying to rub Web 2.0 dust from their eyes and remember what portals were all about:

• Welcome To SearchEngineLand from me in 1997 looks at how search engines started to evolve portal features.  
• Racing to the start line from News.com in 1998 is a good overview of how these features fell under the "portal" name.  
• In the Web's 'Portal' Industry, A Search for a Better Word from the Wall Street Journal later in 1998 looks at how some portals tried to get away from that name because they didn't like the impression it gave of people just "passing through" them.  
• Portals: the new desktop? from News.com in 1999 about how we were getting away from having stuff on our desktops and instead using web apps from portals. So much for that being a 2005ish Web 2.0 thing :)  
• The End For Search Engines? from me in 2001 on why search engines went the portal route, why it made sense (in short, no paid links back then) and how they managed to survive when paid links allowed their most important feature -- search -- to become a money maker.  
• Return To The Sad Days Of More Than A Search Engine? from me in 2004 on how search engines were getting back into the portal game.

For even more background, see Portal Features category of Search Topics and older portal articles archived here. Again, these resources are for our Search Engine Watch members.

So let's say I've semi-convinced you that my list above defines a portal. Does Google have all these features? Absolutely. Search is a given as one of its portal features. Here's a rundown on other features, with how I commented about their portal natures when they came out:

Blogger Acquired Feburary 2003 From my story, Google Buys Blogging Company - But Why?

In the 1990s, it was "home pages" that were touted as the easy way for anyone to get a presence on the web. Today, weblogs make it even easier for people to express themselves and share information, plus they are largely seen as more sophisticated than having a "home page."

The comparison to home page-hosting services is critical. When search engines transformed themselves into portals in the late 1990s, offering home page building services was one of the essential features they all grabbed. Yahoo probably made the biggest splash when it bought GeoCities in early 1999, and the move was seen as a way to capture users and keep them associated with Yahoo.

Google has long said it has no intention of becoming a portal, but so far, it's hard not to see the acquisition of Blogger as adding a portal feature in the same way that Yahoo did when it bought GeoCities. We'll almost certainly see an eventual option from the Google home page inviting visitors to create their own weblogs using Blogger. It will be discrete. It won't get in the way of searching at Google. Yet, it will have nothing to do with search, a giant departure for the company.

Note that I called blogs the sophisticated successors to personal home page tools. Nevertheless, three years later in Feb. 2006, Google also launched a Google Page Creator, a dedicated personal home page tool.

Gmail Launched April 2004 From my story, Google Launches Gmail, Free Email Service:

Email, of course, was one of the first "sticky" features that the search engines of old added when they transformed themselves into portals. Excite jumpstarted the move, and Yahoo and Lycos quickly followed. Even AltaVista eventually offered free email in 1998, only to give it up in 2002 when its attempt to be a portal failed.

Isn't becoming a portal something Google vowed never to do? Not exactly. As I reminded recently, Google has never ruled out email or any other feature it thought it could do well.

"I won't say we won't add services, but we wouldn't put free email on our site unless we thought we could do a much better job," Google cofounder Larry Page told me back in 1999, talking then about Google's potential future directions.

That interview is especially telling, as it highlights another reason Google wanted to avoid adding portal-like features. To keep its portal partners from viewing it as a threat.

Today, with two of the three major portals gunning for it, rolling out email is a way for Google to fire back at MSN and Yahoo. Whether that might also upset Google-partner and major portal AOL remains to be seen.

Google Groups Relaunched May 2004 From my story, Google Groups Adds Mailing Lists & Other Features, Competes With Yahoo Groups

The new free mailing list feature, while useful and welcomed, seems like another move to add another sticky portal feature.

Indeed, Yahoo Groups exists because way back in 1998, they were created (and then called Yahoo Clubs) as part of the race to add portal features and capture users. Mailing list capabilities came as part of Yahoo's later acquisition in 2000 of eGroups for $428 million in stock.

Now as Google's competitors are fighting to win users in the current search wars, Google Groups 2, like Gmail and Blogger before it, seems a way for Google to strike back at the portal features that some (see Forrester and Moreover) mistakenly assumed it would be weak on or missed buying.

What's next? I'm betting some type of financial type of service similar to Yahoo Finance. Letting people set up stock portfolios and linking these to information was one of the earliest sticky portal features around. It's a big gap at Google, in the way that the service once had a big gap in term news search.

Google has since filled that news gap, with its 2002 enhancements making it a more compelling place for newshounds to start their day -- and perhaps pulling some of those people away from Yahoo News.

Similarly, a financial service makes competitive sense. It also fits in with Google's mission. In addition, once the company goes public, it might want to offer this if only to avoid the embarrassment of employees seeking financial updates elsewhere such as at Yahoo or MSN. Currently, both are key providers of data that Google's largely unknown stock quote service uses.

Google Personalized Home Page Launched May 2005 From my story, Google Launches Personalized Home Page:

The new personalized home page service will no doubt make many people scream "Portal!" That's because despite the name, it is essentially a "My Google" feature, similar to the My Yahoo, My MSN and other My Whatever pages that portals created so their users could access the many features they offer.

Well, Google's already been a stealth portal as I've called it for some time, offering standard portal features such as email, search and the home pages of today, blogs. The new personalized home page is merely a visible acknowledgement of this.

But the feature is also welcomed. It makes sense for Google to offer a unified page for many of its services, and the page does this without impacting the regular Google site nor getting far away from the general Google feel at all.

Google Talk Launched August 2005. From my story, New Google Talk Offers Instant Messaging & Voice Chat:

The entry sees Google directly competing against the much more mature clients and established user bases of competitors Yahoo and MSN, not to mention its own partner AOL. The move also opens Google up to accusations that it is way off its mission of "to organize the world's information." Heck, Google Talk doesn't even feature a box to let you search for things, as rival products from AOL, MSN and Yahoo do.

Of course, the failure to launch an instant messaging product would leave Google at a competitive disadvantage. In the end, while the company may not like the P word, but a portal Google effectively is.

Google Finance Launched March 2006 From my story, Google Launches Google Finance

Finance areas are a staple of portals, one of the first features they all introduced to help attract and keep searchers. After all, if you've established a portfolio with a service, you're less likely to depart to someone new.

Google is allowing people to save a portfolio, a further extension of the stock tracking it already introduced for its personal home page service back in May. So this move definitely gives Google another portal feature to notch on its belt buckle -- and a feature that may help keep searchers sticking with it (though at the moment, there's no import portfolio feature to better ensure this).

But Google Finance is not just a sticky portal feature. Many searches are financial in nature. Offering a finance area is actually firmly within Google's core mission of organizing the world's information. In fact, not having offered some type of financial search was something I wrote in article for SEW members as being a big gap back in 2004:

As you can see, by the time Google Finance rolled around, whether Google was a portal or not no longer seemed a matter of debate. I felt earlier moves already made this a self-evident fact.

Still, the popular media revisited the issue. Google Finance: A Portal Play? is a recap of notable blog commentators calling Google out for a portal play. Google Evolves Into All-Purpose Web Site from the AP is another look at this (I'm quoted in that, but my comment on Google Finance being within the search mission didn't make it).

The AP article gets into how the Google mission has changed, how things it promised not to offer such as chat, horoscopes or financial advice were removed from its philosophy page not too long ago (and all of which you now get, including horoscopes). That change actually happened last August, but the latest portal addition is attracting new changes.

So is Google a portal from its official view? Back to the AP story, we're told:

The company remains committed to guiding its visitors to other Web sites with useful information. "Our motivation isn't to provide sticky services."

Are you kidding me? Or course Google's offering sticky features! What planet is this coming from, Google Mars? How can you say sending people to Gmail each day isn't sticky? How can you say offering them their own personalized home page isn't sticky? Why are you telling them to personalize it, if you aren't expecting them to come back often? Geez -- offering good web search is sticky.

Let's step higher on the Google food chain, say up to CEO Eric Schmidt. He told John Battelle back in December:

Battelle: OK, so does that mean Google?s a portal? Because if you think of it that way, as Terry Semel recently pointed out, it ranks as one of the smaller ones.

Schmidt: Well, if I can be obnoxious --

Battelle: Please.

Schmidt: You?re using a tired model of looking at corporate behavior. You?re looking at us based on market share for technologies and ideas that were invented 10 years ago. A much better way to ask that is to say, Are the things that we?re doing consistent with the mission of the company? We?re not in the portal business, we?re in the business of making all the world?s information accessible and useful.

So Google's not in the portal business. Got it? Except, with respect Eric, you are. And by the way, Google Finance is now your eighth most popular service, Hitwise says (though seeing Google America Samoa at 11th does give me pause).

Finally, who gives a darn anyway? So what if Google's a portal. One of my readers loves getting portal things from Google. Isn't it a smart business move for it to be making?

Sure, I agree. Some of these portal features are smart things to offer. There's no reason why Google shouldn't be a portal and ALSO a good search engine. My reader and I explore this more in a thread at our Search Engine Watch Forums, Who Cares If Google's A Portal? I'll quote my two main points as to why being a portal might be bad:

Why care? Two reasons: 1) You're pretending that you aren't, and that's just annoying. Be proud! Say yes, we are a portal, a portal that doesn't forget about search and one that knows we're stronger in search for our users if we stay closer to them with portal features. This pseudo "I never had portal relations with those users" just feels like you think we're stupid. 2) If they slip on search, even a little bit, they leave themselves open for accusations they've lost focus, that they've forgotten their roots. Those are my two reasons why people might care. They can easily solve the first. The second really depends on whether they can indeed juggle all the balls well. Time will tell on that front. There's a strong argument as I've said that if they don't go in some of these directions, they might be making business mistakes that eventually could hurt them on the search front.

Agree, disagree, have comments of your own. Please share in our forum thread, Who Cares If Google's A Portal?

Posted by Danny Sullivan at 6:07 AM | Permalink

March 29, 2006

Google To Issue 5.3 Million Additional Shares

Google has just filled with the SEC a supplement to Prospectus dated March 29, 2006, which shows that they are offering 5,300,000 class A shares to be sold in the offering. This offering should raise an addition $2.1 billion, if they go by today's close price of GOOG. For the full details read the filling here.

Hat tip to ResourceShelf.

Posted by Barry Schwartz at 5:53 PM | Permalink

Google Reaches Definitive Agreement To Buy 5% Stake In AOL

Reuters reports that Google has finally reached an agreement with AOL to buy a 5% stake in the company. You can view the update here that says, in part; "On March 24, 2006, the parties signed definitive agreements governing this $1 billion investment in AOL and Google expects that the investment will close in the second quarter of 2006." So Google needs to hand over $1 billion in cash to AOL to acquire a 5% equity interest in AOL.

Posted by Barry Schwartz at 4:09 PM | Permalink

March 27, 2006

San Francisco's Mayor & The Google Guys

Via Valleywag, "S.F. mayor's friendship with Google founders" from the San Francisco Chronicle looks at questions of propriety over San Francisco mayor Gavin Newsom accepting rides on a private jet with Google's cofounders along with campaign contributions he's received from individual Googlers and "hang out" time with Larry Page. Nothing illegal is said to have happened, but with Google now pitching to win a contract to give San Francisco wifi, there are concerns the Chronicle says about relationships being too "chummy."

Want to comment or discuss? Visit our SEW Forums thread, San Francisco's Mayor & The Google Guys

Posted by Danny Sullivan at 10:30 AM | Permalink

March 24, 2006

Google To Join Standard & Poor's 500 Index

The big news overnight was that Google is going to be joining the Standard & Poor's 500 Index. Google will be listed after trading has closed on March 31st. They will be taking the spot of Burlington Resources Inc., an oil company being acquired by ConocoPhillips. GOOG will be the highest priced stock amongst its other members in the S&P 500. "S&P 500 fund managers will have to buy $11.1 billion of Google's stock because of its inclusion in the index," according to the Bloomberg article. John Battelle also has his thoughts here.

Posted by Barry Schwartz at 9:20 AM | Permalink

March 23, 2006

Google's 2006 Q1 Earnings Conference Call Scheduled On April 20th

Google has posted the schedule for the 2006 first-quarter earnings conference call. The conference call is to take place on April 20, 2006 at 1:30 PM PT.

Posted by Barry Schwartz at 12:02 PM | Permalink

March 21, 2006

Google To Talk At Goldman Sachs Seventh Annual Internet Conference

I just noticed Google updated the investors page by adding that they will be talking at a Goldman Sachs event. The event details shows that Google will give a talk at the "Goldman Sachs Seventh Annual Internet Conference" on May 25, 2006.

Posted by Barry Schwartz at 8:44 AM | Permalink

March 16, 2006

Google Files Annual Report

Google has just filed their annual report for fiscal year ended December 31, 2005. The report can be viewed here, you can find a list of Google's subsidiaries and amendment with AOL. The SEC EDGAR filing documents, Form 10-K can be found here. I have not read any of it yet. Big thank you to ResourceShelf.

Posted by Barry Schwartz at 5:13 PM | Permalink

March 8, 2006

Google Analyst Day Recap

We've written about notes accidentally leaked out of last week's Google Analyst Day, but what about what was happily said by Google that day? Now playing catch-up, as I was gone last week when it happened, here are some links to give you a rundown.

Google Investor Relations: You can listen to the webcast (media player link) or see the slides (PDF) from this page.

Live: Google faces off with analysts: From News.com, an outstanding live summary that Elinor Mills compiled from listening to the webcast, complete with key sections highlighted. Nice, nice, nice! It's kind of weird, however, because it runs backwards. The newest stuff from the event is at the top, and the end marks the beginning of the conference. If you care about Google, read the rundown, because all types of issues were addressed.

You'll be happy to know that search spam is said to be at an all time low for Google and the industry. I beg to differ. Google's got plenty of spam, and maybe it's less now than in some years, but it is more than in Google's early years when it wasn't a spam magnet.

My favorite part is probably the explanation of why Orkut only seems to be taking off in Brazil. "Brazilians are just very community-oriented." What, all those crazy US kids jumping into MySpace like my niece don't have a sense of community?

In a world with infinite storage, bandwidth, and CPU power: From Greg Linden, another nice rundown, along with many of the notes not read to analysts but he and others found that revealed things like GDrive and Google's social search plans.

Google Goof Posts Revenue Figure: Just the Wall Street Journal underscoring how those leaked notes were so striking in that they gave a financial forecast inadvertently from the company now famed for saying it wouldn't do that.

Langberg: Investors deserve facts, not sarcasm: From the San Jose Mercury News, columnist Mike Langberg says "shame on you, Eric Schmidt" for laughing off the idea of giving financial guidance. Then again, you can't say investors weren't warned. Google said from the front they weren't going to do this. It's just semi-fun to watch as they get forced to get closer to doing so.

Google Tries to Make Nice: Covers how Google is perhaps learning that the financial analysts it didn't want to cater to must indeed be catered to.

Did I say slower growth? I meant limitless growth: From Good Morning Silicon Valley, that blog with the funny post titles I wish I could write, it's a nice summary of how Google CFO George Reyes freaked out analysts when speaking before analyst day at another event by saying growth is slowing. As John Battelle highlighted, this is the second major round of damage control Google's now done after a Reyes statement. In 2005, it was click fraud. In 2006, it was slow growth. Don't worry. By 2007, I'm sure Google will have finally found a new CFO, chief food officer, to speak again as with the first analyst day.

Heavy Spending Becomes a Fact Of Life for Many Web Companies: The Wall Street Journal again, with a nice look at all the capital spending Google is doing and why many web company feel they must do so.

Google 2006 capital spending to jump from 2005: From Reuters, a brief look again at capital spending and the big jump Google expects to do this year, mainly for computers and supporting hardware.

Posted by Danny Sullivan at 8:58 PM | Permalink

TeraGoogle, Google's Social Search Aspirations & More From Accidentally Released Analyst Day Notes

Imagine Google "as ubiquitous as brushing your teeth." That's how Google would like you to think of them, at least according to notations accidentally released in their Analyst Day PowerPoint slides. Those notes also contain other interesting tidbits such as a TeraGoogle project and plans for Google to expand with social search.

The PowerPoint faux pas -- which had unspoken comments about everything from AdSense margins to specific ad revenues -- prompted Google to file a Form 8-K with the US Securities and Exchange Commission after the notes were inadvertently left in the PowerPoint slides released to the public on March 2, 2006.

The slide notes make reference to how Google wants to be everything they can possibly be to everyone, a one-stop-shop so to speak, for consumers and advertisers. Comments like this included:

Think of Google "as ubiquitous as brushing your teeth."

Treat advertisers as full-fledged businesses with a broad set of needs (not just advertising).

The notes made reference to additional offerings for advertisers, including direct mail (something not previously associated with Google) as well as previous moves into print, radio and television ads.

The notes also mentioned worries that "[Yahoo] and MSN will do un-economic things to grow share" in regards to the ad network. In other words, both companies might provide sweetheart deals to partners that might cost them money in the short term, as a way to secure long-term gains.

Ironically, Google has done these same things in the past, namely paying more to some AdSense partners than they actually earned from them. It came out during their SEC filings in 2004 and Bambi Francisco commented on the special deals given to some partners:

Google didn't disclose which of its distribution partners are getting that "more than the revenue we receive" payment. But many analysts speculated that some distribution partners were receiving 80 to 90 percent of the revenue generated from the traffic they sent to Google's advertisers. Now we know it's more than 100 percent in some cases.

The slides also gave a revenue projection for AdSense and margins, as covered more here on my JenSense blog. In summary, Google said to expect advertising revenues from AdSense partners to grow from $6 billion this year to $9.5 billion next year.

The user interface in search was also discussed on several levels. The notes mention, "Experiment with several new UI features to make the user experience better." We have seen many of these interfaces being tested over the past year, sometimes to the point of confusing searchers (see here and here), but none of them have been locked down for a widespread release to users.

Google's also looking at some type of invisible tabs solution to expanding vertical search, meaning that users will see more verticals but not more tabs. Notes from the slides included these references to that:

For example, we need to provide unified search experience by integrating multiple verticals & data sources through UI and ranking solutions

Add features, not properties and make it really easy to use Guide users to help them search better

The notes also hint at the possibility of user interaction or a social aspect being added to refine the Google search results, as well as leveraging implicit and explicit user feedback to improve popular and navigationally-oriented queries:

Encourage our large user base to actively contribute metadata that leads to better search results

Wiki of search: empower users/experts to improve search results in their domains of expertise ? create a million verticals

Effectively integrate user feedback (ratings, comments, tags) into search

Bringing a social aspect into the search results first began with the Google Toolbar's voting mechanism back in 2001, where users could click a smiling or frowning face to vote for or against a particular web page. However, if this data was actually used for anything internal was unknown. Of course, new personalization elements being introduced is also mentioned, most significantly through recent tagging, results removing, bookmarking via the toolbar and making personalize search more mainstream.

Exactly how Google plans to integrate user data into the results is unclear, other than through Google Base which especially depends on meta data. Social search, of course, has been a big area that Yahoo has been making inroads on.

The Google notes also say the company wants to "expand to include other, new information." Photos are named as part of that, meaning that Google might be planning a competitive product to Flickr, which is Yahoo's photo community and makes heavy use of social tagging.

Lastly, the slide notes include references to the size of the Google search index, including the bold statement of "Get all the worlds information, not just some." There is also a mysterious reference to "teragoogle", which implies it is an internal project Google is currently working on, in reference to "All webpages included in the Google index and searched all the time", which the teragoogle makes possible.

The edited PowerPoint slides can now be downloaded in PDF form. The complete webcast (video & slides) can be viewed here.

Want to comment or discuss? Please visit our Search Engine Watch Forums.

Posted by Jennifer Slegg at 9:28 AM | Permalink

February 24, 2006

Google to Host Second Annual Analyst Day

Google announced today that it will be hosting an Analyst Day for the second time. This event will take place on Thursday, March 2, 2006 at 10:00 a.m. PT through about 2:00 p.m. PT. The Webcast will be viewable at http://investor.google.com/webcast and archived about two weeks later here. Last year they hosted this event on February 9, 2005 and Danny has a write up on it from May 2005.

Posted by Barry Schwartz at 10:29 AM | Permalink

February 12, 2006

Google Shares to Drop an Additional Fifty-Percent

ABC News reports that Barron's said we can see an additional 50% decline in Google's stock value. As I write this, GOOG is down almost 10 points, from $362 to $353. Barron's says the stock can go as low as "$188, versus its recent $360." Keep in mind the stock was as high as $475.11.

Posted by Barry Schwartz at 3:17 PM | Permalink

Time Interviews Google's Brin, Page and Schmidt

Time Magazine features Sergey Brin, Eric Schmidt and Larry Page of Google on the February 20, 2006 edition. The cover story is named In Search Of The Real Google. There is also a detailed interview by Adi Ignatius of Time named Meet The Google Guys.

Posted by Barry Schwartz at 2:58 PM | Permalink

February 8, 2006

Google Testing Software Distribution With Dell, Plus Details On IE7 Search Battle

We covered last month that Google was providing personal home pages for Dell. Dell testing preinstalled Google software package from Reuters now looks at how Google is working with Dell to put Google's desktop search and toolbar on Dell computers. It's said to be a test distribution, at the moment. Meanwhile, the Wall Street Journal looks at that and more about the search battle shaping up within IE7.

John Battelle points to Pressuring Microsoft, PC Makers Team Up With Its Software Rivals (paid sub. required) from the Wall Street Journal, which sparked the Reuters story about Google and Dell. The WSJ article covers how Google might pay Dell fees approaching $1 billion over three years for distribution.

The story goes deeper into concerns by Yahoo and Google that the new search toolbar in Internet Explorer 7 might hurt them, since MSN would be the default. Sure, it might. Then again, MSN Search has been the default in IE since at least IE3, if I recall. Despite this, non-Microsoft search engines haven't just survived, they've thrived. Yes, IE7 sports an actual search box this time, but I still think we'll see users change this off the default setting in various ways.

There's lots of detail on Google wanting Microsoft to ask consumers to make a conscious choice about search providers, rather than IE7 automatically using their choice in IE6 (which is probably MSN Search, for most people). It's an odd argument, given that Google has not demanded that Firefox make consumers do similar choices in that browser. A partnership deal makes Google the default in Firefox, except for Asian-language versions where Yahoo cut its own deals.

Chris Sherman is planning our own look at some of these issues in the near future. I'd love to see some universal agreement about how ALL browsers should handle choices of search providers, in terms of how defaults are set and can be changed. What I fear is another round of stealth default changes, where each of the players constantly try to switch you around.

Google and Yahoo encourage you to choose them as a default search provider through their software apps. I don't mind, because I can see they are clearly asking me when this happens. Both also try to encourage you to change in other ways, as you can see here and here. Again, I don't mind, because you can understand what's going on. But a few years ago, other players would just make the changes, leaving users puzzled about why all their searches mysteriously started going through some new search engine. We don't need that again.

Posted by Danny Sullivan at 8:39 AM | Permalink

February 1, 2006

Google Looking To Traditional Ads For Growth

Google Growth to Come From Traditional Media from Susan Kuchinskas at InternetNews.com covers something that may have been lost in all the news about Google's stock plunge after it didn't meet analyst expectations. Google laid out big plans to put ads in print, radio, TV and streaming media, where it expects to see major revenue growth.

Posted by Danny Sullivan at 9:53 AM | Permalink

January 31, 2006

More on Google's Guy in D.C.

Back in October we pointed out that Google was opening a lobbying office in D.C. Today, Matt Marshall in Silicon Beat points to an article in the Wall Street Journal (subscribers only) about Google and other tech company lobbying efforts in D.C. The post is titled: Google's one employee in Washington.

The WSJ article itself includes comments from Alan Davidson, Google's D.C. employee, who says the company will soon grow its DC operation and who has already hired an outside lobbying firm to handle tax issues.

"Carrier control over Internet activity is bad for consumers," counters Alan Davidson, a telecom lawyer hired by Google last summer to build the company's Washington office. The proposal would stifle innovation of Internet services, he says. It also might add to Google's operating costs. "We're not worried consumers won't be able to reach Google. The real threat is to the next Google and to the services that are important for consumers," he says.

The hiring of Mr. Davidson, who served as associate director of the Center for Democracy and Technology, a nonprofit civil-liberties group, underscores Google's recognition that it can no longer ignore Washington. Recently, Mr. Davidson hired an outside lobbying firm to handle tax issues. He says he plans on "bulking up the operation" soon, characterizing a Google fight against the Bells as "a David-versus-Goliath story."

Postscript: If you're interested in tracking lobbying efforts by Google and other companies and organizations, a service such as PoliticalMoneyLine can be a big help. Most services are fee-based but others are free.

Posted by Gary Price at 11:51 PM | Permalink

Google Releases Q4 2005 Earnings

Google has released their Q4 2005 earnings as covered in this news release.

From the news release: "We are very pleased with our results for the fourth quarter as we achieved excellent performance across our businesses," said Eric Schmidt, CEO of Google. "We generated significant revenue growth in our core search and advertising business, driven by continued strength in traffic and monetization. We will continue to invest significantly as we develop innovative new products and as we extend our core technologies to new user access points and to different channels."

From CNNMoney.com: Google reported fourth-quarter sales, excluding traffic acquisition costs (TAC), the revenue that Google shares with advertising partners, of $1.29 billion. That was in line with expectations. But John Aiken, an analyst with Majestic Research, an independent research firm, said earlier Tuesday that Google would probably need to report sales of $1.37 billion to impress Wall Street. And more alarming to investors, the company posted earnings per share, excluding the effect of stock options costs and research and development-related charges, of $1.54 a share, well below analysts' consensus estimates of $1.76 a share.

From the Google Q4 Earnings News Release (also includes 2005 financial highlights):

+ GAAP net income for the fourth quarter was $372 million as compared to $381 million in the third quarter. Non-GAAP net income was $469 million, compared to $437 million in the third quarter.

+ GAAP EPS for the fourth quarter was $1.22 on 304 million diluted shares outstanding, compared to $1.32 for the third quarter, on 290 million diluted shares outstanding. Non-GAAP EPS was $1.54, compared to $1.51 in the third quarter.

+ Google reported revenues of $1.919 billion for the quarter ended December 31, 2005, an increase of 86% compared to the fourth quarter of 2004 and an increase of 22% compared to the third quarter of 2005. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs, or TAC. In the fourth quarter, TAC totaled $629 million, or 33% percent of advertising revenues.

Revenues: + Google Sites Revenues - Google-owned sites generated revenues of $1.098 billion, or 57% of total revenues. This represents a 24% increase over the third quarter revenues of $885 million.

+ Google Network Revenues - Google's partner sites generated revenues, through AdSense programs, of $799 million, or 42% of total revenues. This is an 18% increase over network revenues of $675 million generated in the third quarter.

+ International Revenues - Revenues from outside of the United States contributed 38% of total revenues, compared to 39% in the third quarter of 2005 and 35% in the fourth quarter of 2004. International revenues reflected the unfavorable impact caused by the appreciation of the U.S. dollar and stronger seasonal trends in the U.S. relative to the international business.

+ TAC - Traffic Acquisition Costs, the portion of revenues shared with Google's partners, increased to $629 million in the fourth quarter. This compares to TAC of $530 million in the third quarter. TAC as a percentage of advertising revenues decreased to 33.2% in the fourth quarter from 34.0% in the third quarter, reflecting primarily the continued shift in our revenue mix from Google network revenue to Google-owned site revenue.

Cash + As of December 31, 2005, Google had cash, cash equivalents and marketable securities of $8.0 billion.

Employees + Google employed 5,680 full time employees as of December 31, 2005, up from 4,989 as of September 30, 2005 and 3,021 as of December 31, 2004.

From CNNMoney: During a conference call with analysts, Google chief financial officer George Reyes said that earnings took a hit largely due to a larger than expected tax rate that Google had to pay...Reyes added that Google's sales were hit by unfavorable currency comparisons. Revenue would have been better if not for a strengthening dollar, he said...[Eric] Schmidt also stressed that Google would continue to spend heavily on research and development in order to remain an innovative company. "We invest with a long-term view of the business. We are going to make some really big bets," he said.

From Dow Jones: "To me, it was a very solid quarter," agreed Google bull Safa Rashtchy, an analyst at Piper Jaffray. "I'm not disappointed at all. We knew the point would come when operations would match expectations."

From News.com: The company is focused on the continued growth opportunities in Internet advertising and in international sales, said Chief Executive Eric Schmidt. "Most important, we believe the rate of innovation will increase in 2006 as we continue to bring the most talented minds into Google and our unique innovative model delivers amazing new products," he told analysts in the conference call...Almost all of Google's revenue comes from advertisements that appear on search result pages and on partner Web sites. Advertising on Google-owned sites generated 57 percent of total revenue, while partner sites generated 42 percent.

From AP: Substantially higher expenses also weighed on Google's earnings. For instance, the company spent $155 million on sales and marketing during the fourth quarter, more than doubling the $76 million spent last year. The company also hired nearly 700 more workers during the fourth quarter, expanding its payroll to 5,680 employees.

From Bloomberg: "I was somewhat astonished'' at Google's stock decline, Chief Financial Officer George Reyes said in an interview. "We're here to build a business for the long term. We'll take this quarter in stride."

Postscript: From Business 2.0 and Om Malik "Entrepreneurs and venture capitalists in Northern California and elsewhere are shrugging off the fourth-quarter earnings miss that drove shares down 12 percent in after-hours trading on Tuesday. For a company that has grown at breakneck speed, single-handedly revived the online advertising industry, and touched off a new wave of entrepreneurial activity in the Valley, it's just growing pains, they say.

Posted by Gary Price at 11:15 PM | Permalink

January 27, 2006

How Google Censors Itself For China & Paid Exclusion As Being Evil

Declan McCullagh posts an update to his great earlier story looking at how Google is censoring results at China. I talked with him a bit about this today and actually found myself even more upset over what Google's doing. That's because rather than just censoring what China is telling them to block, Google's actively coming up with its own list.

My assumption had been Google and other companies were given a list of sites by China to block. I'm actually still waiting to hear back from Google to talk more about what exactly they are doing. But Declan writes in his original story:

China's government has an extensive Internet filtering process in place that controls which overseas Web sites its citizens can access. (A 2005 study by the Open Net Initiative called it "quite thorough.") With that filtering as a guide, foreign companies are expected to build their own lists of Web sites to delete from Chinese search listings.

Got it? China will give the search engines some advice on censoring and guidelines, but it remains up to the search engines to do the actual dirty work.

If Google was going to cave in China and create evil Google, at the very least they could have pushed back to say they'd block specific sites given to them. Instead, they seem to be blocking a combination of known sites plus other sites that might have objectionable material, all based on what they decide themselves.

In particular, as Declan notes, they may have been relying on a modification of their SafeSearch filter used to keep children from stumbling into porn. Feed that filter some things that are considered "bad" and then it will keep the bad stuff away. But bad needn't necessarily be porn. Bad could be potentially "subversive" material.

If this is what's happening -- if censorship in China from Google means a combination of blacklisted sites but automated filtering -- then it explains some of the disclosure failures that Declan found earlier.

Google's disclosure system in China is almost certainly based on the same system they use for DMCA disclosures in the US (for more about this, see my Google Now Censoring In China story). That system seems to work by looking for URLs that have been knowingly removed from the results and inserting a message that they were pulled at the bottom of the search results page.

By the way, Google does NOT do this type of disclosure in France and Germany to my knowledge, despite what I've seen the company say, such as cofounder Sergey Brin yesterday:

In France and Germany there are Nazi material laws. One thing we do, and which we are implementing in China as well, is that if there's any kind of material blocked by local regulations we put a message to that effect at the bottom of the search engine. "Local regulations prevent us from showing all the results." And we're doing that in China also, and that makes us transparent.

I've looked at the removals in France and Germany for well over a year now. I've never see such messages coming up to notify anyone that material was pulled.

While there's a mechanism likely in place to handle specific URLs and sites that are pulled, there's nothing likely in place to indicate material removed by an algorithmic based filter. For example, do a SafeSearch search at Google, and it doesn't tell you that anything in particular has been removed. It simply says "Safesearch on" next to the search results count and a message such as:

The word "porn" has been filtered from the search because Google SafeSearch is active.

So maybe this keyword-triggered notification is working in some cases but failing to go active if a site is removed. In other words, the message may be showing up if you search on a forbidden word. But search for something "innocent" but where the filter still pulls out a site automatically, one that wasn't on a specific blacklist, and that might not trigger a notification.

The easy solution is to scrap the filtering and publish a list to everyone of all the sites that are on the blacklist. That would be transparent. A better solution would be not to do the filtering at all.

No filtering? But then Google can't be in China, where it will still help all those people who want access to at least some information. So what. Why does Google need to be in China? It's not like people in China can't do these types of searches on other search engines such as Baidu? It's just that by not being in China, Google itself won't make money. It might miss out on the big Chinese market that so many investors want to tap into.

Google being in China helps itself more than China and simply does not fit into the "Don't Be Evil" mantra we've been spoon fed for several years now. As a reminder, here's what Google told investors about that in its IPO filing:

DON?T BE EVIL

Don?t be evil. We believe strongly that in the long term, we will be better served?as shareholders and in all other ways?by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company.

Google users trust our systems to help them with important decisions: medical, financial and many others. Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating. We also display advertising, which we work hard to make relevant, and we label it clearly. This is similar to a newspaper, where the advertisements are clear and the articles are not influenced by the advertisers' payments. We believe it is important for everyone to have access to the best information and research, not only to the information people pay for you to see.

It's hard to trust a system that's widely censored. It's difficult to see how they are unbiased when widespread censorship makes them inherently biased. Why is paid inclusion so evil that it must be named as a bad thing in the IPO. Because it involves payment? If payment is so bad, then caving into widespread government censorship is a form of paid exclusion that should similarly be avoided.

Well heck. It's not that much material involved in the paid exclusion. After all, when Google chose to censor Google News in China, we were told that it was less than two percent of the sources out there. That's tiny!

Yep. And Yahoo has said that only 1 percent of its index is made up of paid inclusion material. But that tiny amount is enough for Google to view Yahoo as tainted. Evil, as it were, isn't a percentage game. It's about the principles involved.

Postscript: Looking for a search at Google Germany today on "nazi," I see this notice now at the bottom of the page:

Aus Rechtsgründen hat Google 1 Ergebnis(se) von dieser Seite entfernt. Weitere Informationen über diese Rechtsgründe finden Sie unter ChillingEffects.org.

This looks new. I don't recall seeing it earlier this week. A similar search on Google France brings up no message like this.

Over at Google Canada, a search for "jew" does not bring up the Jew Watch site that was removed there in 2004 for legal reasons, Google's told me.

FYI, I don't like the sites that have been removed -- I'm simply pointing out they are gone without disclosure.

Postscript 2: Google's just added a very good post explaining their side of the argument for being in China on the Google Blog.

Postscript 3 from Gary For a look at what's often referred to as the Great Firewall of China, a BusinessWeek article that we blogged two weeks ago (before this week's news about Google.cn) is worthy of your attention.

Agree, disagree, just like to talk and discuss things? Feel free to comment on this issue in the Google Agrees To Chinese Censorship at our Search Engine Watch Forums.

Posted by Danny Sullivan at 3:07 PM | Permalink

January 25, 2006

Google Now Censoring In China

Oh, the irony. Less than a week after we hear that Google is ready to fight the US government in part to defend its users, now comes news that Google will cave into the Chinese government's demands for its new Google China web site. However, the issues aren't directly comparable. Moreover, while I'm no fan of Chinese censorship, I like some of the way Google is reacting to the demands. Come along, and we'll explore the entire censorship situation in China, the US and some other places you rarely hear discussed, like France and Germany.

What's Google done? They've agreed to impose censorship on the Google China service that's reported to be rolling out. Actually, Google's had sites designed for those in China to use for some time. They did obtain the Chinese domain that this "new" site is using back in May, and you were able to search there uncensored by Google itself since that time. Now Google is stepping in to do the censorship directly, rather than the Chinese government doing it.

China was censoring Google without Google helping? Yes. It's been that way for years. It either began or really came to public attention back in 2002, when people in China were suddenly shocked to find that they had trouble doing certain types of searches.

That later stopped to some degree, which caused some to speculate that Google had cut some secret deal with China. But Google was always adamant this hadn't happened. Moreover, while the initial overbearing blocking stopped, other types of blocking still continued (something that wouldn't happen if some deal had been arranged).

Wired had a nice article last year that illustrated how those in China encountered such blocking as imposed by the Chinese government, rather than Google. Moreover, that blocking is one reason why Google seems to have dropped in popularity in China while Baidu rose, as the LA Times covered not too long ago.

The one exception until now has been with Google China News. In September 2004, Google decided to omit some news sources because the Chinese government itself was blocking access to them. As they blogged to explain:

For last week's launch of the Chinese-language edition of Google News, we had to decide whether sources that cannot be viewed in China should be included for Google News users inside the PRC. Naturally, we want to present as broad a range of news sources as possible. For every edition of Google News, in every language, we attempt to select news sources without regard to political viewpoint or ideology. For Internet users in China, we had to consider the fact that some sources are entirely blocked. Leaving aside the politics, that presents us with a serious user experience problem. Google News does not show news stories, but rather links to news stories. So links to stories published by blocked news sources would not work for users inside the PRC -- if they clicked on a headline from a blocked source, they would get an error page. It is possible that there would be some small user value to just seeing the headlines. However, simply showing these headlines would likely result in Google News being blocked altogether in China.

So was Google censoring or just acting to protect the user experience? Whatever you call it, the end result was the same. You simply couldn't find certain sites that might be relevant in Google.

Today's news is a fundamental shift. Google isn't running for the cover of protecting the user experience by omitting some news sites. It's flat out saying that the Chinese government wants it to do censoring in news search, web search and other areas and that Google will comply.

Google's complying for better access to the Chinese market, including being able to base servers in China and have access sped up because the Chinese government is not longer blocking them. Reuters provides more details on this plus an explanation from Google:

"In order to operate from China, we have removed some content from the search results available on Google.cn, in response to local law, regulation or policy," the company said.

Aware of the trade-offs it is making, Google executives said they believe the company can play a more positive role by participating in the Chinese market, despite restrictions, than by boycotting the country in order to avoid such compromises.

"While removing search results is inconsistent with Google's mission, providing no information (or a heavily degraded user experience that amounts to no information) is more inconsistent with our mission," the company stated.

Well censorship is just plain evil, right? So much for Google's "Don't Be Evil" motto! Not necessarily. Government imposed censorship is always worrying, because many people believe they should be able to decide what's good and bad, rather than their government doing this.

However, companies do have to follow the laws of the countries they operate in. For those in the US and elsewhere to say Google shouldn't follow Chinese laws is hypocritical if they are not forcefully demanding that Google not follow other laws.

To avoid this hypocrisy, I'd like everyone upset about the Google move in China to also start protesting that the governments of France and Germany should not require Google to remove Nazi or hate sites.

I've written about this and other types of country-specific censorship before. My Revisiting Google Censorship In Germany & France post provides a variety of references and tools that show this. But I'll do a quick illustration here.

Search on Google.com for nazi, and you get the American Nazi Party listed first. Ah, but those results are oriented toward America, right? Not necessarily. Over at Google UK, a search for nazi brings it up again. But Google France? A nazi search doesn't find it. Is that because I searched for just French pages? No, it was a worldwide search. Perhaps different ranking reasons? No. It's because that site has been omitted from Google France, as you can see here. Germany also censors sites. Google Blogoscoped did a big comparison last year that illustrates this, and Boing Boing today points to an example of a body modification site being banned.

If Google's not going to obey Chinese laws, then neither should it obey French and German ones. Nor perhaps should it follow US laws that require it to pull material, as I'll get to later in this piece.

Alternatively, Google could be selective and decide that some laws are simply unreasonable, repressive or so bad that it won't follow them. That means abandoning certain countries, of course.

Google could do that with China. It would be a far braver, less evil company if it said to the Chinese government that it won't do the widespread censorship that's being demanded. Keep your money, good luck with your suppression of knowledge and freedom, we'll do business in other places. See you when your policies change.

As for the actual censoring happening, if it's going to happen, at least Google's doing it in a way that I've suggested in my Got To Censor Search Listings? Why Not Disclose? piece from 2004. Do a search on something that's censored, and at least Google is telling Chinese searchers that their government has force a removal.

Here's an example. The Guardian has some examples of searches that might cause sites to be blocked, including [tiananmen square massacre]. So I tried that on Google China. Down at the bottom of the results is this:

据当地法律法规和政策，部分搜索结果未予显示。

I don't speak Chinese, but Google has a translation tool I used. It's the typical bad, broken machine translation you typically get, but the main point of what the Chinese are being told comes across:

According to the local law laws and regulations and the policy, partially searches the result does not demonstrate.

Good. At least if the results are censored, there's disclosure of this. That's far more than you'll see in any other country where censorship is happening other than the US. France and Germany? Multiple places are reporting that Google discloses removals there. It does NOT, to my knowledge.

How about the US? Disclosure is related specifically to the Digital Millennium Copyright Act and started not long after Google came under fire for removing pages from an anti-Scientology web site because of a copyright infringement claim.

You can see this in action with a search for kazaa, where you get disclosure of two different pages that have been removed:

In response to a complaint we received under the US Digital Millennium Copyright Act, we have removed 1 result(s) from this page. If you wish, you may read the DMCA complaint that caused the removal(s) at ChillingEffects.org.

In response to a complaint we received under the US Digital Millennium Copyright Act, we have removed 1 result(s) from this page. If you wish, you may read the DMCA complaint that caused the removal(s) at ChillingEffects.org.

Click on the links, and you are taken over to the source of the complaint, documenting what was alleged.

The disclosure that Google is doing censorship in China could certainly be pumped up. Over on Michael Connolly's blog, in his explanation about MSN reacting to pull a Chinese blogger offline, I commented:

I can understand you wanting to follow the laws of another country that you operate in, despite the fact that I might not agree with those laws. But do the laws prevent you from informing others that you've done this. In other words, if you have to censor certain words, can't you insert something like "Content Censored In Accordance With National Laws." Or if you pull a blog the Chinese government deems abusive, can't you at least tell those in China still trying to go to the former address, "Blog removed because of Chinese censorship demands."

It seems that's both following the laws but at least also helping those in China understand exactly who to blame for the censorship.

So if Google's going to do a disclosure but really in its heart doesn't agree with the censorship -- as I imagine is the case -- then get some backbone in what you say. Use the charged word of "censorship." Say exactly what law is requiring the material to be pulled. Give people an area or a way to express their disagreement.

Finally, what about the entire hypocrisy of not bending to US law but doing so with China. That's not the case. In the action with the Department Of Justice, Google has not disobeyed a law. US law allows people or organizations to be subpoenaed. People also have the right to argue they shouldn't be forced to be a witness in a case. Google's following the law in arguing against being forced to provide information. It's perfectly legal to do that. Ultimately, the case will be decided. Google may be ordered to hand over material. If so, it will do so -- or it will face penalties under US law.

In China, it's unclear what exactly the "law" is that is being used to impose this censorship. It would sure be nice to hear more about that from Google itself, along with as many details as they are legally allowed to provide. BusinessWeek shed a little light on this recently:

Virtually all Net outfits on the mainland are given a confidential list of hundreds of banned terms they have to watch for. The list changes over time, based on events such as the recent police shootings in the southern town of Dongzhou.

The rules are even tougher for companies that host their sites on servers in China. This group, which has included Yahoo but not Google, are pressured to sign the government's "Public Pledge on Self-Discipline for the Chinese Internet Industry," the U.S. State Dept. says. Under the agreement, they promise not to disseminate information that "breaks laws or spreads superstition or obscenity," or that "may jeopardize state security and disrupt social stability."

Translation: "If you own something, you're responsible for what's there," says Nicholas Bequelin, a researcher for Human Rights Watch in Hong Kong. That leads companies to "err on the side of caution and self-censorship."

But I assume that some way, some how, they have no ability to appeal the decision of what to censor. If they do have that ability -- and haven't tried to fight it through Chinese legal channels -- then sure, they deserve the taint of hypocrisy.

By the way, this shouldn't be a Google thing. Yahoo's sort of sidestepped the issue now by selling Yahoo China to Alibaba. As I wrote, this seems a handy way to run a service in China (Yahoo know owns 40 percent of Alibaba) but throw your hands up about censorship and say, "It's not us doing it." Maybe Alibaba now runs things, but Yahoo with a major stake should be pushing for at least disclosure of censorship to be provided. The same is true for MSN, which operates over there.

Nor should this be a China thing. If you're removing material from search results for various reasons -- spam, government censorship, whatever -- disclose that everywhere, not just in response to particular outrages.

In the end, I find myself struggling. I'm glad the disclosure is there. I wanted to see that type of disclosure, and it's welcomed. But I also want Google to say no to China, to argue that the censorship the country wants to impose is not based on reasonable, fair laws or in accordance with Google's supposed mission of organizing the world's information.

Ultimately, I want Google to pull out and fight back. I can see the argument for being engaged in a country, for trying to help promote change over time. But I feel like Google should be big enough and principled enough to be engaged by not being engaged. That might do far more good now than years down the line.

We've written before that US firms might be forced to do this type of thing. A US Congressional hearing is about to happen to consider whether US law might prevent US companies from obeying Chinese censorship demands.

Meanwhile, Rebeccca MacKinnon -- who is excellent to read on China and censorship issues -- points to a Wall Street Journal article on the Google move that some companies are looking to see if they can set up their own principles to force change:

Some U.S. tech companies are working behind the scenes to craft for the Internet in China an equivalent of the Sullivan Principles, guidelines formulated in the 1970s that helped mobilize U.S. corporate divestment to protest South African apartheid.

Meanwhile, Reporters Without Borders has a petition going that might be applicable to the current Google move:

Search engines: Search engines would not be allowed to incorporate automatic filters that censor "protected" words. The list of "protected" keywords such as "democracy" or "human rights" should be appended to the law or code of conduct.

The problem is, this doesn't go far enough. I wrote to them earlier this month to say these cases seemed more about blocking sites that actually blocking queries. A minimum, a better solution is to require disclosure if sites are blocked in addition to protecting the ability to search itself.

A couple of last things. Google.com itself won't be subject to Google-imposed censorship, according to the International Herald Tribune:

A growing number of visitors from China to the uncensored Web address www.google.com will now be redirected to the self-censored www.google.cn, Google executives said Tuesday. Citing concerns for the safety of the fewer than 50 Google employees based in China, company executives spoke on the condition of anonymity and insisted that all quotations for this article come from a written statement.

What good is that if people are redirected? That's actually normal behavior. Google routinely redirects those outside the US to a country-specific version of Google. Those who want to reach Google.com can do so by selecting the "Google.com in English" link on the home page of these versions. The Google China site has exactly this type of link.

Also, it's not surprising if Google.com is uncensored. In my example with Google France, my understanding is that someone in France could still go to Google.com, do a search and see Nazi or hate sites come up. It kind of makes the French censorship laws a waste of time, but maybe down the line France will try to force further changes.

I'm sure the Chinese government itself will continue to block Google.com without Google's cooperation, of course. It's also possible that Google might change the ranking of what you see at Google.com if you come from China, just as they already do for other countries, as I've explained in the past. It's also a good argument for stopping that type of skewing, as I've argued for. Everyone going to Google.com should see the same thing, regardless of their country of origin.

Finally, so far user information itself isn't being raised as an issue. Some worry what Google might do about email or blogging, where demands for personal information or censorship have caused problems for Yahoo and MSN. The San Jose Mercury News touches on this and has a Google response:

Google will introduce other services in China, such as e-mail and blogging, "only when we are comfortable that we can do so in a way that strikes a proper balance among our commitments to satisfy users' interests, expand access to information, and respond to local conditions.''

Before you breathe a sigh of relief, consider this. Part of last week's worry involved Google handing over search records to the US government that many consider private. As I've explained, no personally identifiable information was asked for or would have been released. You couldn't link any private queries with any actual individuals.

That same type of information is about to be generated on computers based within China itself. It's likely we could see China made similar demands for private search data, complete with personally identifiable information. Of course, given the country's already notorious monitoring of internet activity, they'll likely to have all this information already.

Want to comment or discuss? Please visit the Google Agrees To Chinese Censorship thread at our Search Engine Watch Forums.

Posted by Danny Sullivan at 7:26 AM | Permalink

January 23, 2006

Schmidt, Brin, Page Will Once Again Earn Base Salaries of $1.00 in 2006, Other Senior Execs Get $75K Raise

Google has just filed a report with the SEC that lists the annual base salaries (stock options and other items excluded of course) for top execs in 2006. Once again, Eric Schmidt, Sergey Brin, and Larry Page will have a base salary of $1.00. This is the same base salary they received in 2005.

Other Salaries listed in the SEC Filing David Drummond Senior Vice President of Corporate Development and General Counsel 2006 Base: $250,000 2005 Base: $175,000

Omid Kordestani Senior Vice President of Worldwide Sales and Field Operations 2006 Base: $250,000 2005 Base: 175,000

George Reyes Senior Vice President and Chief Financial Officer 2006 Base: $250,000 2005 Base: $175,000

Shona Brown Senior Vice President of Business Operations 2006 Base: $250,000 2005 Base: $175,000

The complete SEC filing is available here.

Posted by Gary Price at 5:36 PM | Permalink

January 9, 2006

Will Google Hit $2000 a Share?

Alerted by a post by Nathan Weinberg on Inside Google we learn that Mark Stahlman, an analyst at Caris & Co., sees shares of Google heading to $2000 a share. The Street.com's Jonathan Berr has a story that includes comments from Stahlman.

Stahlman writes in his note: "We believe that Google's addressable market has a chance to become much larger, more quickly than initially anticipated, perhaps a $100 billion annual sales company over time...

He goes on to tell Berr: We now have the technology to actually build out digital services...We didn't have broadband available in the 1990s. We didn't know how to build grids of computers.

On related notes, News.com asking: Where's the stock split? and Andrew Sorkin in The New York Times asking if: Is Google a Good Candidate for Rational Exuberance?

Sorkin's article discusses Safa Rashtchy's prediction last week they he saw Google heading to $600/share and if this is 1999 all over again. ...his [Rashtchy's] prophecy does raise the question of whether analysts and investors have once again become irrationally gaga over the Internet, and Google in particular. Reached on his cellphone at the Consumer Electronics Show in Las Vegas, Mr. Rashtchy acknowledged that his prediction might seem a bit 1999. "It's understandable that comparisons are made to the bubble," he said. "But this wasn't supposed to be a heroic call or to make noise."

One thing is for sure, while Google has many competitors (according to Eric Schmidt, there is plenty of room for all of them) I'll repeat what I've said many times before. It's not just about creating the best technology, it's also about having mindshare and Google is brilliant at not only getting it but keeping it growing (aka keeping buzz in all sectors strong). Case in point, the Google Video Store. Last week the announcement of it coming "soonish" got PLENTY of attention. Once the store officially launches, still no word on exactly when, watch the buzz and attention come back for a second round. Very smart. This non-stop positive buzz (this includes predictions of a growing stock price) can only do good things for the stock. The question is, what will happen if some of this buzz turns against the company? Will they loose mindshare? Does the expression what goes up, must come down apply to Google? So far the answer is no.

Of course, it's my belief that what Eric Schmidt said in his BBC interview about there being room for many players, both big and small is accurate. Of course, from a motivational standpoint, I wonder how difficult (if at all) it is for other search companies to keep their employees doing great work when one company gets most of the positive press attention when it comes to search and now many other related areas.

Postscript: On a somewhat related and important note, in his SearchDay article this morning, Chris has some great comments about Google and its share price. Thanks to Andrew for pointing them out.

Chris writes: Uh-huh. I can see it now: Google Doctor (beta). Look out below if this analyst suggests Google Beanstalk

The way things are going, I'm beginning to think that my business plan for GoogleJet and Foodgle that I posted last April Fool's day are sounding more realistic as each day passes.

Posted by Gary Price at 12:35 PM | Permalink

January 3, 2006

Piper Jaffray Says that Google Heading to $600 a Share

Brokerage house Piper Jaffray says that 2006 will be another great year for shares of Google. In a new report out today, PJ says that Google are on their way to $600 a share.

"Although such a high multiple may seem aggressive, we believe that given Google's dominant position in an already large yet still rapidly growing market, its phenomenal brand power, and its status as a technology leader justifies such a valuation," Piper said. The brokerage also predicted that 2007 earnings estimates will rise this year.

More in this article from The Street.

Postscript: Via Searchblog (thanks JB!) access to the full text of the Piper Jaffray report (PDF).

Posted by Gary Price at 10:41 AM | Permalink

December 28, 2005

Revisiting The "No Banners On Google" Declaration

I wrote previously of Google promising that the terms of its deal with AOL wouldn't see a flood of banner ads flowing onto its pages nor the selling out of Google's principles. But I still felt there was some "wiggle room" in that "no banners" isn't the same as "no graphical ads." Now I've had a chance to talk with Google. Yes, banners are pretty much out. However, other graphical units might still happen. Here's a rundown from my conversation today with Google's Marissa Mayer, vice president of search products & user experience, who took time away from her vacation to talk.

"There will be no banner ads on the Google homepage or web search results pages."

That was Mayer's declaration last week on the Google blog. Pretty much, that's the case. There are no plans for banner ads on the Google home page that everyone who is not logged into Google sees. That's primarily because Google doesn't feel banner ads -- or other types of ads -- can be well targeted to those users.

"We don't believe in untargeted ads, so how are we possibly going to serve a targeted ad on that page?," Mayer said, explaining that someone coming to the Google home page has communicated no information of what they might be interested in.

However, the Google Personalized Home Page is another matter. That service is available to anyone who sets up an account and logs in to Google. For these people, Google does have a better idea of what they might be interested in. Because of that, ads -- including graphical ads -- makes more sense.

"On the personalized home page, we do know things about you, what weather you're looking for, what stocks, what news. So it's more plausible to me," Mayer said. However, she stressed that there are no immediate plans for ads of any type.

"We're probably a good six months to a year away from even thinking about this. The entire focus now is on building a user base," Mayer said, adding that the top priority right now is to improve the usability of the personalized home page service.

When and if graphical ads should come, there's a slight chance they could be of the banner format. But far more likely, they'd be something completely different, Mayer said. Google would be looking for a display unit that was fresh and worked well with the geometry of that page, which currently uses a more rectangular "module" format.

How about search results pages? Banner ads were ruled out for those in Mayer's declaration, but in my article about that, I'd mentioned I'd heard from another reporter that non-banner graphic units might be coming. That was Elinor Mills, who now has her own article out today about them and other issues: What the Google-AOL deal means for users.

Yes, non-banner units may be coming to Google search results pages, Mayer said.

AOL raised the idea with Google of some type of icon-like display unit that might run in conjunction with text ads and which might be helpful in building brand recognition. Google's agreed this is something that might be tested.

At the moment, the idea is to perhaps run very small 16x16 pixel icons that might be associated with an ad. To illustrated how small these are, I've taken an actual AOL text ad running on Google and inserted the AOL logo next to the ad headline. Before I show that, let me stress:

THE EXAMPLE BELOW IS NOT, NOT, NOT ANYTHING OFFICIAL FROM GOOGLE, OTHER THAN THE PROPOSED SIZE OF THE GRAPHICAL UNIT.

Official AOL® Signup Download AOL® Internet. 50 Days Free Trial! www.Free.AOL.com

How exactly the icons would be place may not happen as I've shown above. They might not appear at all. I just wanted to give everyone a visual representation of how big -- or really how small -- the icons being discussed are.

Mayer also stressed that there is nothing in the contracts that requires Google to carry graphic units of any sort on the search results page. It simply something that's come up in the discussions and that Google may experiment with.

Should Google decide icon treatments are successful, Mayer said they won't be exclusive to AOL. Any advertiser would be able to use them, as well.

Icons added to search listings wouldn't be new. AltaVista Listing Enhancements are a classic example of a somewhat similar program that came out in November 2001. They never really took off, in part I felt because they were only available to paid inclusion customers. I can't recall when the program formally ended.

Outside web search, banner ads sold by AOL might come to Google Video or Google Images. The contract does allow for AOL's ads to show up on "suitable" Google properties, and both of those are given as examples -- though that's not a requirement that they must carry them.

Part of the deal covers Google showcasing AOL content in Google Video search. I worried earlier that this might mean coming into the Google Video home page and finding that there's an entire area devoted to AOL on the home page.

Mayer said exactly what will happen remains to be determined, but nothing of that magnitude I worried about seems to be in the works. Instead, it's likely that AOL -- along with a number of existing content partners -- will be allowed to have small logo treatments on the bottom of the Google Video home page. There might be text saying that content in Google Video is provided in part through partnerships with AOL and the other providers, and clicking on the logos would bring users into just content from those providers. Mayer said that all providers, not just AOL, are looking for brand visibility of some type. That's why this wouldn't be exclusive just to AOL.

The last big issue in the deal was the provision where Google says it has "agreed to assist AOL and Time Warner in understanding our published and/or publicly available tools for improving the accessibility of a web site?s content to Google's web crawlers."

Some have worried this means Google will be helping AOL rank better, perhaps by giving them ubersecret insight into their technology. I worried less about that, at least in the sense that Google already has been working with a variety of companies to give them indexing advice. In the same way, Google spends plenty of time doing the same at conferences and in online forums.

The concern on my end had been that previously, providing some of this advice as part of an ad deals leaves it open for the lines between church and state to seem blurry. The same happened with the AOL deal. Including editorial support and advice as part of that meant Google had to respond that it wouldn't do anything for AOL beyond what it would do as part of its overall mission to gather content.

So why put this in the agreement at all? Why, if it's something Google would do anyway, allow it to go into a business document that caused questions to be raised of impartiality?

Ultimately, it was a pragmatic decision, Mayer said. AOL especially wanted reassurance in the contract. Since Google was going to do this type of work irregardless of the contract, including it simply was being practical.

For AOL, Google will look at doing some special work to index content that isn't in HTML format or other formats readily accessible to its crawlers, Mayer said. However, that work will ultimately benefit anyone with similar content, Mayer said. Similarly, Google already works with a variety of publishers with content it would like to access but where special needs are required.

Mayer added that the provision AOL asked for was virtually identical to one Yahoo wanted when Google became its search provider back in 2000, before Yahoo shifted to its own technology. Yahoo naturally wanted to ensure that if it was going to have a search engine powered by Google, that search engine would include its own content.

Want to discuss or comment? Visit our forum thread, Google To Hold On To AOL.

Postscript: Hey, Jen reminds me that Google's already experimented with icons in text ads before within its contextual AdSense placements. She's got more in Advertiser favicons being used in AdSense ad units and screenshots which look very similar to what I was guessing at. In fact, the logo I used for AOL was the favicon they show when you go their site -- and favicons were what AdSense seemed to be pulling from.

Postscript 2: John Battelle was talking with Marissa as well today and posts his own take over in Interview: For AOL/Google, The Devil Is In the Details.

John's focused mainly on the possible inclusion of AOL content into Google OneBox results and how deals for those are done generally. However, it pretty much comes out that Google's not been doing deals for "OneBox Providers," if you will, which was pretty much my understanding. They've always seemed to just pick people they think have useful content and link over without requiring a business arrangement. AOL is a departure in this, in that it is promised to be included in relevant OneBoxes where they have "a materially equivalent service."

Marissa stresses to John, as she did with me, that many of the details are still to be worked out. I also covered that earlier in Google's AOL Stake Rolling Into Holding Company It Can Take Public In 2008 from last week. Details are expected to be sorted out by the first quarter of next year, with binding arbitration to be used if agreements can't be reached.

John also gets into how the deal was negotiated and one. The turnabout, according to the Wall Street Journal, was because the Microsoft deal was too complicated and the search engine and ad tech too new. Google was seen as the safer choice. A commenter on John post also points to this good follow-up piece from the WSJ.

Posted by Danny Sullivan at 2:00 PM | Permalink

December 23, 2005

Google's AOL Stake Rolling Into Holding Company It Can Take Public In 2008

I got a research note from Ben Schachter over at UBS Investment Research flagging that Google has now filed an 8-K form on the AOL deal that sheds light on some new details, include rolling its AOL stake into a new company that it can take public in 2008. You'll find the filing here. Highlights below:

• Some of the exact details of the agreement are still being worked out. That's expected to complete the first quarter of next year.  
• Should some details not be agreed, a resolution will be reached through binding arbitration.  
• Google is going to hold its 5 percent share of AOL through a new limited liability company (either called HoldCo or that being the term used to indicate a yet to be named holding company)  
• Google can sell the HoldCo interests in a public offering as of July 1, 2008 or afterward (so you're were right, John -- it is a second IPO, but in a different way than you thought!).  
• AOL can prevent a sale by exercising its right to purchase HoldCo from Google at an appraised fair market value.  
• The deal runs for five years, substantially longer than any previous deal Google and AOL have had.  
• It covers AOL being able to sell text ads on its own site in addition to carrying the same type ads from Google.  
• It covers AOL being able to sell display ads on the Google network.  
• It covers AOL being promoted on Google "consistent with Google principles," plus AOL receiving ad credits.  
• Google will fund marketing efforts for AOL through third party media outlines to promote agreed upon properties.  
• It covers the previously promised help for AOL and Time Warner to understand how to be indexed by Google better: "We have agreed to assist AOL and Time Warner in understanding our published and/or publicly available tools for improving the accessibility of a web site?s content to Google?s web crawlers."  
• Google Talk users will have to register their names with AIM in order to interact with AIM clients.

Posted by Danny Sullivan at 10:42 AM | Permalink

Google Says Don't Worry, AOL Won't Change Us - But There's Wiggle Room

Seeking to reassure searchers that Google has not sold out to gain the AOL deal, About the AOL announcement from Google vice president of search products & user experience Marissa Mayer offers words of reassurance, as well as a flat out denial that Google will ever have banner ads on the Google home page or search results. First of all, it's nice to see Marissa's finally gotten a better title and VP status! But now let's talk wiggle room.

First, the statement on banners:

There will be no banner ads on the Google homepage or web search results pages. There will not be crazy, flashy, graphical doodads flying and popping up all over the Google site. Ever.

So there you have it. Couldn't be more clear cut and hard to reverse, if they change their mind. But the key word here is "banners," which means those horizontal ads typically at the bottom of the page that many learned to ignore after they powered the early growth of the web. You know, like you'll find here on the types of image ads Google itself puts on sites across the web.

Notice there's lots of other ad formats. Why, there are big leaderboards. There are long skyscrapers. How about a medium rectangle? None of these are banners; none of these technically are ruled out by the promise today.

I'm going to follow up with Google on this. My assumption is that "banners" was probably something used quickly and in a shorthand way to mean large, graphical stuff isn't coming to Google and specifically the Google home page and web search results (other parts of Google aren't ruled out by this ban)

Having said that, I just talked with a trusted reporter who tells me that the idea of thumbnails or small graphical images associated with text ads may very well come. Again, I'm doing follow-up -- but if these do come, saying you won't do banners or "crazy, flashy, graphical doodads" probably wouldn't apply to these types of units. There's wiggle room for them.

I've already covered earlier why some small use of graphics wouldn't necessarily be a bad thing. But if they should come after what seems a flat-out statement, that's going to raise some eyebrows.

It's also worth reminding that Google has already -- and for some time -- run graphic units to promote both its Google Desktop and Google Toolbar applications on its search results pages. John Battelle gives you a screen shot of the toolbar promo here from October, but that had already happened previously months before, as well. Here you'll see a similar promo for the Google Desktop from back in March -- and I could swear I've seen this or the toolbar ad come up for me last week.

As for the Google home page, it's also worth remembering that Google's put graphic units there as well. Here's an example of that toolbar ad on the Google home page from back in October, and that's hardly the first example. It's not a new thing. It's just a sporadic one.

Finally on image ads, Google's said previously that graphical ads might show up on Google Images and Google Video as part of the deal. So while "crazy, flashy, graphical" stuff may not be on the Google site, other graphical stuff deemed relevant, useful and non-intrusive probably will.

Beyond image ads, Google reassures that results themselves won't be skewed to favor AOL and that "indexing more of AOL's content" is just part of the overall mission of including "all the world's information."

Sure, I believe that. But here's the thing. If Google's doing what it does for everyone, then it should have never -- ever -- been put into the press release on the deal. It's either a business deal arrangement or not. If it's just normal stuff -- which I fully believe will be the case -- then don't let your partner talk it up to score points with investors. Don't sell out in that way, if only that you then have to backtrack to reassure your own users you're really not selling out. By this measure, someone buying AdWords for Google might as well run a release saying that they expect Google will also be working with them to improve content indexing.

The issue of ad credits AOL is getting is addressed, with reassurance that while AOL has some credit to spend, that won't let it necessarily jump ahead of anyone else. Of course, $300 million is a lot of credit to spend, and AOL may not be as concerned about ROI impact as many of Google's regular advertisers are. It'll change the marketplace at least a tiny bit, but fair to say, not in the way of giving AOL some type of favoritism.

What's not addressed is the promotion of AOL video content. Google's going to showcase AOL content in Google Video in some way. I first heard of this when Saul Hansell of the New York Times told me about the plans, when talking with him for a story he later wrote. But the video arrangement didn't show up in his story, so I assumed it was a rumor that Google discounted when he followed up with them. Then in Elinor Mills' article at News.com after the formal announcement, the mention of showcasing was there.

Go to Google Video now. There are two tabs on the home page, with the default to show you popular stuff right on the home page -- which at the moment I assume really is popular stuff based in some way on search activity.

What's the showcase arrangement going to do? Am I going to get "Featured Videos" on the home page now like over at Yahoo Video, where I'm almost certain the only thing making them "featured" is arrangements with content providers?

If so -- or if AOL gets any type of presence on the Google Video home page at all -- that's a radical departure for Google. It has never to my knowledge given a company any type of preferential treatment of that sort, other than perhaps the deal to use Answer.com as the default dictionary provider. But with Answers.com, Google can at least fall back to say that they've done a review and think they are the best provider. Why would AOL be featured? Yes, they've got great content. But not because they are the best provider. It's because a business deal was struck.

As I said, I'm doing follow up here, to the degree I can during the holiday period. It's easy to speculate and worry now, while my preference is really to see what they actually do. The reassurances from Google are good, and they've got a long history of being careful to protect the user experience and the impartial quality of dealing with content. But having said that, they are having to put out such reassurances now quite simply because they allowed doubts to be introduced when the deal was announced. A statement like this from Time Warner in the release:

A critical piece of this strategic alliance will be our content, which we will be making more accessible to Google users.

is now forcing Google to do damage control in the way we haven't seen since Google CFO declared clickfraud being a big threat a year ago. If Time Warner content is important to Google users, it should have been included already before this deal. It definitely shouldn't have been mentioned as part of it, generating doubts that other content won't be as accessible.

Posted by Danny Sullivan at 8:20 AM | Permalink

December 20, 2005

More On AOL Pushing Google Into Graphic Ads & AOL Promotion

AOL Coaxes Google to Try Busier Ads from the New York Times dives deeper into details that emerged earlier this week about how Google will help promote AOL as part of the bid to retain the company as a Google partner, along with new graphical ads that will be coming to Google search results pages near you.

Google is looking to promote AOL content within a OneBox display area, something familiar to many of our readers, as we've written of them in the past. OneBoxes are where Google promotes other vertical search results that may be of interest to searches, such as news listings or shopping results.

AOL isn't being promised any exclusivity or guarantee to show up in these areas, and including material from other companies isn't even a radical departure. Google stock result OneBoxes already pull from various providers, for example. You can see how that works in a search for goog and the resulting detailed page.

Graphical ads appear to be in the works for Google's search results pages, though traditional banners might not show up except in Google Image Search and Froogle shopping search. The Google home page would remain without graphics. From earlier reports, it sounds like AOL will get some of graphical space to help promote its own sites plus have the ability to resell graphical ads on Google.

AOL is also getting SEO advice from Google. What?!!! Secrets on ranking better? No, it sounds more like the SEO advice Google already gives other large companies as part of the sales pitch and support to get them to buy ads. That's semi-controversial mainly with SEOs who feel the advice Google gives may undercut their oftentimes more detailed and better advice, simply because it comes with Google's own seal of approval. It also does blur the church-and-state divide a bit.

Overall, I'm sitting back until the deal is formally announced and people are talking on the record about it. That's likely to happen today. Then I'll dive back in and look more closely at what's being offered and what lines, if any, are being cross. In the meantime, some further reading and a semi-scorecard to date.

1) OneBox inclusion of AOL content probably doesn't harm Google's reputation for impartial results if AOL isn't promised any particular placement or exclusivity.

2) Graphical ads will definitely cause some purists -- and maybe even some ordinary Google users -- to raise eyebrows and perhaps feel Google has sold out. Expect that Google may likely make the display of these an option, on by default but easy to switch off. That will help, but overall, graphical ads I'd say will be seen as a sign that Google's just like "all the other" search engines and losing some of the magic some feel it has.

3) Google Thinking Flash Ads? covers what may have been some testing in preparation of running graphic ads in search results. Google Offers Banners & Image Ads -- But Not On Google Itself from last year covers the graphic ads that Google rolled out for contextual placement. At the time, Google did say partners might also eventually show these in search results. Whether these ads would come up on Google itself wasn't addressed. I don't think Google has ever completely ruled out the idea of graphical ads, but they do seem to conflict with part of its corporate philosophy:

Google has also proven that advertising can be effective without being flashy. Google does not accept pop-up advertising, which interferes with your ability to see the content you've requested. We've found that text ads (AdWords) that are relevant to the person reading them draw much higher clickthrough rates than ads appearing randomly.

A CBS News interview last year did have Google's director of technology eschewing banners:

"The focus that Google has on our users, you know, a very slim homepage and so forth -- text ads, not banner," says Silverstein. "We do that because we don't want to go to sites with banner ads. We don't like them."The focus that Google has on our users, you know, a very slim homepage and so forth -- text ads, not banner," says Silverstein. "We do that because we don't want to go to sites with banner ads. We don't like them."

Certainly the oft-cited person who diagnosed himself as having a heart attack after doing a Google search might not be thrilled about graphical ads coming. They slowed him down during his crisis and made Google a winner to him for not having them. From what he sent Google:

On Monday morning, as I started my workday as a Web developer and designer, I felt a pressure in my chest. Being 52 years old and somewhat familiar with the early warning signs of a heart attack, I thought I'd go online and check on the early signs of heart attack and stroke. My initial quest lead me to 'Blah, Blah, Blah'" ? which is a different search site which I won't mention the name of ? "wherein I entered the search terms 'heart attack symptoms'.

As I waited for the banner ads to download, and then the content, I became more and more anxious. I turned to Google. I knew from prior experience that I could expect the quickest search results possible, and I was not disappointed. In less than a tenth of a second, the top listing led me to the American Heart Association Web page. Their easy to understand graphics and descriptions lead me to acknowledge my predicament, and I went to the local hospital where I commenced to have a full-blown heart attack.

Thirty-six hours later, just prior to emergency, triple-bypass, open-heart surgery, my doctor told me that had I had a stroke at any time while waiting for the operation, the chances were great that I would not have survived. This was a very sobering thought to me, my wife and our three sons, who thought they may have seen the last of their dad. Simply put, had I putzed around waiting for another website to display interminable graphics and banner ads, I might not be here today. Instead, I wanted immediate results, got them from Google, and for once did the right thing by going to the hospital."

I expect that if graphic ads do appear, you'll see the Google philosophy page be adjusted to structure graphic ads as being relevant in the right situation, just as Google has changed that page in other ways to accommodate portal features it has added. Google's Philosophical Ten True Things Not So True Anymore? and Google's Philosophy: Then and Now cover those adjustments more. But overall, I don't disagree with graphic ads as being useful. They can be, especially for those who are seeking to build brand. Chris Anderson had an interesting post recently on how he's using AdWords not for clicks but to build awareness. Big Guys Crowd Out Little Guys in SEM Arena; Some Branding Focused Advertisers Willing to Spend "Whatever" It Takes, Don't Hate Search, Search May Not Be From Branding, But It Will Still Pull Branding Spend, and Search Ads Used By More Than "New Breed" Advertisers are just some past blog posts that cover how brand owners are looking at search to boost their properties. They aren't necessarily crazy or irrational spenders, either. C'mon In Brand Owners, The Search Water's Fine explains this a bit more. But in short, they're looking for something other than direct conversions, are willing to spend and it's only natural that search engines will have to react to this demand.

What we don't want, however, is a repeat of the days such as when Yahoo was partnered with Amazon. Old timers will recall how every search at Yahoo used to bring up an Amazon box in the right hand column. It was ever present, annoying and quickly ignored. If AOL is promoted this way -- or if brand ads from others aren't targeted well -- they'll also become annoying and ignored.

4) The AOL deal will raise awareness of advice Google is directly giving to some major advertisers, as I covered in my earlier Google SEO Support Given To Advertisers. While that still doesn't appear to be crossing the church-and-state divide, it is blurring the lines more, something that Google may regret down the line unless it can provide more support services to everyone.

Want to comment or discuss? Visit the Google to Hold onto AOL thread in our Search Engine Watch Forums.

Posted by Danny Sullivan at 8:56 AM | Permalink

December 19, 2005

Time Warner Investor Works to "Derail" Rumored Google/AOL Deal

Legendary investor, the 24th richest man in America, and a major holder of Time Warner stock, Carl Icahn, is not happy with the rumored AOL deal with Google and according to this News.com story*, is working to "derail" the deal.

From the article: "Like all shareholders, I am not opposed to Time Warner entering into an AOL transaction that creates long-term value. However, I am deeply concerned that the Time Warner board may be on the verge of making a disastrous decision concerning an agreement with Google if this agreement would make it more difficult in any way or effectively preclude a merger or other type of transaction with companies such as (InterActiveCorp), eBay, Yahoo or Microsoft." Icahn wrote in an open letter to the Time Warner board of directors.

The full text or Mr. Icahn's letter is available here.

The letter includes the following paragraph where Icahn questions of Google is the best partner for AOL: I also question whether Google is the best partner for unlocking the value of the AOL asset. Indeed, a recent Goldman Sachs report concludes, "In contrast to the conventional perspective, we believe that eBay, followed by InterActive Corp, would provide greater incremental benefits to AOL's option value with fewer conflicts of interest than Yahoo while MSN and Google would provide the least incremental benefits."

Icahn has been building support for a proxy fight to split AOL off before last Friday's news.

Icahn's letter goes on to say: The real risk for Time Warner shareholders is that a Google joint venture may be short sighted in nature and may preclude any consideration of a broader set of alternatives that would better maximize value and ensure a bright future for AOL.

Once again, I am not opposed to the Board using its business judgment to enter into a transaction with Google or another suitor so long as the transaction does not destroy or impede Time Warner's flexibility to unlock shareholder value in the near and long term.

We should know more later this week afer the Time Warner Board Meeting.

More coverage of the possible Google/AOL deal is available here.

* Postscript: On Jan. 24, 2006 I noticed that the live version of the News.com story was no longer available. That's why we are now linking to a cached version.

Posted by Gary Price at 4:11 PM | Permalink

December 7, 2005

Google and Microsoft Play "The Price is Right" with AOL

According to a Reuters story (via News.com): Microsoft, Google still vying for AOL: that proposals from both Microsoft and Google have been submitted to AOL to "strike an internet advertising partnership" with the company.

Julia Angwin And Kevin J. Delaney in the WSJ (sub required) write: People familiar with the matter said that under the proposal being discussed, AOL, whose current ad partner is Google, would switch to using Microsoft's search engine, and the two companies would set up a joint venture to sell online advertising across both AOL and Microsoft's MSN portal. The services would remain under control of their respective owners, but their ads would reach many more online customers than they do now, these people said.

But Google remained in its own partnership talks with Time Warner late yesterday and still could emerge on top, these people cautioned. A sticking point so far has been its reluctance to guarantee Time Warner a minimum amount of revenue, which Microsoft has done, said one person familiar with the talks.

Reuters reports that at least another round of negotiations are likely and we might learn of a final decision by Christmas.

In other talks, Comcast Corp., which sources said was considering a joint deal with Google, is now also seeking a separate arrangement with AOL, regardless of the outcome. The top U.S. cable operator is discussing how it can market its high-speed Internet service to AOL's dwindling but still large dialup customer base, among other topics.

Micrsoft CEO, Steve Ballmer, while in DC remained quiet on any sort of deal but said:

Online advertising is of keen interest to us, and I have absolutely nothing to say about the AOL deal or (any) deal whatever," Ballmer said. "If you ask, particularly our consumer-facing businesses, what will be the most rapidly growing revenue stream at Microsoft, it's absolutely going to be advertising.

Posted by Gary Price at 1:34 PM | Permalink

December 1, 2005

Google Builds Anti-Microsoft War Chest, Expect Ads To Keep Booming & Yahoo The Stealth Search Warrior

Three business items I'm throwing into one post, Google explaining it has built up cash to fend of an unnamed big competitor, Google expecting online ad sales to keep booming and Yahoo as the missing third player in the Google-Microsoft battle.

Google Builds Up `Defensive War Chest' from Bloomberg looks at Google's chief financial officer George Reyes saying that Google's recent stock sale was meant to build a "war chest" to fend off attacks by an unnamed major competitor (obviously Microsoft). So what's the war chest being spent on? He didn't specify. They did say they're hiring a bunch of key workers.

Meanwhile, Google advertising sales vice president Tim Armstrong tells Reuters in Google sees advertisers devote more budget online that the good times will keep rolling along, declaring 2005 as the year online advertising has become part of traditional media budgets and expecting spending to rise next year. He touches on expansion of ads into print, which the article cites as that and other moves as "part of Google's long-term strategy to offer relevant advertising wherever possible."

Offering relevant advertising everywhere, such as is print, isn't part of Google's stated mission to organize the world's information. But you gotta pay for that war chest and all those Googlers someway.

Meanwhile, Wharton says in Yahoo's Strategy: Stay Out of Microsoft's Crosshairs? that by accident or intent, Yahoo's managing to avoid Microsoft's ire. Sure, given that it is Google rather than Yahoo's that's been seen as the wunderkind of search over the past few years.

Unfortunately, Yahoo might benefit from being in those crosshairs. Too many of the great things it does don't get enough attention, because people want a two player battle between Google and Microsoft. Yahoo is a starring player, but too often it gets cast as a supporting actor.

I've written before that in search, we're looking at a Google - Yahoo - Microsoft battle, and Microsoft remains really still in third place, as they themselves have said in the past.

Posted by Danny Sullivan at 11:21 AM | Permalink

November 29, 2005

Is Everyone Afraid of Google?

The December issue of Wired, takes a look at Google's many ventures (these days it's a challenge to keep up but we try) and reports on just who might be "scared" of them in the article and chart titled: Who's Afraid of Google? Everyone. From SBC to eBay to Microsoft to Corel, they're all listed.

From the article: Omid Kordestani, the company's global sales guru, said at a recent conference, "We're trying to find ways so we are not viewed as a gorilla." Given its outsize ambitions, that's one search Google might not be able to handle.

Btw, if you're looking for another article and chart that looks at all of Google's projects and their rivals are, News.com published one yesterday titled, Google--what you get for $400 a share.

Postscript: Everyday can't be an up day for shares of Google (although it often seems like it). Shares of Google closed down about 5% today, lower by almost $20.00 at $403.54.

Posted by Gary Price at 4:37 PM | Permalink

November 27, 2005

Mashup Lover and Google's Chief Evangelist, Vint Cerf, Interviewed

Perhaps Google's most famous new hire, Vice President and Chief Internet Evangelist, Vint Cerf, has sat down with Juan Carlos Perez of the IDG News Service for a brief Q&A interview that's posted here. Here are a few selected passages from the interview.

+ On Google loosing its focus as new services are added. Cerf says: Absolutely not. What's happening here is the aggregation of a remarkable collection of people, all of whom have a very visceral and strong appreciation for what is possible to do with software and information. And they are exploring a variety of ways in which to make these computer-driven tools more useful and also more cross functional. The focus isn't simply on search. The focus is on making information discoverable and useful, so all of these things you see happening at Google are side effects of expanding on the original paradigm, which was making search an effective tool. Now we're looking at how to make other information activities more effective and relevant.

+ On Mashups Cerf tells IDG: I can't tell you how excited I am about it. We know we don't have a corner on creativity. There are creative people all around the world, hundreds of millions of them, and they are going to think of things to do with our basic platform that we didn't think of. So the mashup stuff is a wonderful way of allowing people to find new ways of applying the basic infrastructures we're propagating. This will turn out to be a major source of ideas for applying Google-based technology to a variety of applications.

+ On Competition One way to get ahead is to stay ahead, and Google is working very hard to make sure it explores as many new ideas as it can. You won't find Google resting on any of its laurels and letting the grass grow.

+ On Google Book Search/Google Library On the Google [Book Search controversy], I don't think we explained as carefully as we should have how this was going to work and how we would protect the interest of the publishers. And the publishers have leapt to a conclusion which is not supported by what we're trying to do. Part of my job is to articulate that more carefully and I hope we can overcome the concerns that have been expressed.

Posted by Gary Price at 6:04 PM | Permalink

November 15, 2005

Rashtchy: Google Will Be Major Player at E-Commerce 3.0

Highly regarded analyst, Safa Rashtchy, from Piper Jaffey has some powerful words about Google's future in the e-commerce space in comments made to InternetRetailer.com.

He tells the site: ?Google will be a Craigslist on steroids?a very potent and dangerous challenge to where eBay wants to go,? Rashtchy says.

On eBay Rashtchy says: While eBay has brought millions into online commerce, it is still too complicated for sellers who balk at the listing process and for buyers who don?t want purchase from someone located far away, he adds.

On Craigslist and Google ?Craigslist has the limitations that it cannot scale massively as it lacks robust search functionality,? Rashtchy says. ?Google, on the other hand, can create a massive and still highly efficient listing service as it has already done with web search.

More in the InternetRetailer.com article: Google heading toward ?e-commerce 3.0,? analyst says

Posted by Gary Price at 2:02 PM | Permalink

November 14, 2005

Google's Quarterly Report Officially Released by SEC

Although Google publicly announced their quarterly earnings a few weeks ago, those of you who love to and read quarterly reports will be interested (happy?) to know that Google officially filed their 10-Q (Q3, 2005) with the SEC this afternoon. You can find an HTML version here and begin combing over the numbers and narrative. (-:

One section of the report offers a brief roundup of various legal proceedings filed against the company.

See Also: Google Releases Google Q3 2005 Earnings and Pseudo-Transcript Of Google Earnings Call.

Posted by Gary Price at 5:10 PM | Permalink

November 8, 2005

NYT On Google As Threat To Other Businesses

Threadwatch points to Just Googling It Is Striking Fear Into Companies from the New York Times, yet another piece that will fuel the view as Google conquering the world.

Wal-mart is quoted as watching Google closely and described as seeing them as the seed of a threat, since it might be able to tell shoppers if better bargains are nearby. Nope, we can't have that!

We get more irrational exuberance of the type I haven't seen since 2003, when New York Times quoted someone comparing Google to God. This time, Google slips in the view of one to:

Google is the realization of everything that we thought the Internet was going to be about but really wasn't until Google.

Oh, come on! Get a grip. Google offers search results, wasn't the first to do that, did raise the bar and stayed ahead for about two years, but Yahoo and Ask Jeeves in particular deliver a great experience as well. This makes Google the realization of everything the internet was supposed to be?

Yep, Google does cool things. Gmail is cool and an advancement, but again, one that others have caught up with (and don't make you use a flippin' SMS messaging system to sign-up for it). Google Maps is way cool and another advancement, but it's hardly the realization of everything the internet was to be about.

Heck, I don't even know that anyone can agree on what the internet was supposed to be about, but I darn well know that if I grab 10 people off the street, they won't all agree that Google is the sum total of everything. In the end, Google and any search engines aren't everything. They are only pointers to everything, to the actual content that people want.

Rant aside, the story's funny from citing Bill Gates as saying that in a year or so, they'll demonstrate that MSN Search is better than Google. Yep, we'll see. They've still got tons of catching up to do, plus we've yet to see any movement on how the industry will agree on testing that would let us know whether to believe the "proof" that's put out.

The article touches on Google apparently still debating a real estate service, plus revisiting the entire giving internet access away for free idea. Newspapers, telecoms are other industries looking at the Google thread.

Posted by Danny Sullivan at 10:54 AM | Permalink

November 5, 2005

More Google Chatter from Various Sources Including Bill Gates

Yes, it's another story about Schmidt, Brin, and Page (aka the Google Guys) in the latest issue of Forbes. It's titled, Google Thinks Small.

Here are a few key passages: Google is now at $6 billion a year in revenue and $7.6 billion in cash, employing 5,000 painstakingly chosen people. Schmidt and other insiders believe they may have found a world-changing way to run a company. (Then again, nothing Google does, in its own view, is ever average.) Most firms still look like the refining and manufacturing businesses of Rockefeller and Ford. Google founders Larry Page and Sergey Brin, children of the Internet, have built a world where a well-chosen elite accommodates flexibility, shifting roles and, above all else, urgency.

One success in ten tries is okay; one in five is superb. Everyone from a failed venture moves to another urgent project. "If something is successful, you work it in, somehow," Schmidt says. "If it fails, you leave."

On Working at Google One key rule: You can't call any idea "stupid." (Nor is most any idea too wild. On a recent day at the Google campus a bulletin board invited workers to a session on the dream of erecting a 200-mile-high elevator into space.)

You'll also read about the Google interview process.

Finally from Forbes: Marc Meyer, who knew Schmidt at UC, Berkeley and worked with him at PARC, says Schmidt sees a day when Google will hold everyone's data on a "trust me" basis. "He told me, ?If you want it to be private, don't put it in a computer,'" says Meyer, now at a recent tech startup. "Eric has an Anakin Skywalker conundrum. He has absolute power, and it will be hard to resist the Dark Side."

Schmidt counters:"I joined a small company full of smart guys, and it still feels like that. We just have to change outside perceptions."

OK, so that's Google. Now, on to Microsoft.

Via Search Engine Guide, this Computer.co.uk interview with Bill Gates where he spends some time discussing what else, Google.

Gates says (again we've heard some of this before):

?Which Google products are you talking about? Seriously? Other than search, which are you talking about? Google Talk? Wow. A total ?me too? product. Even Gmail ? what is the unique thing?? he says.

?We need to surprise people and do a search that is way better than Google, and we are very on top of that. The idea of development tools, a natural interface, productivity software ? Google is not in any of those categories. People are acting as if they will magically be in these other categories with something more than a ?me too? offering. It is kind of fun that people underestimate what we are going to do here.?

Gates on Google and the Press and Who Should Organize the World's Information

Here's my favorite quote from Bill G: Google is great, they are smart people, the press should continue to feed their arrogance as much as possible,? he says.

?They say they are going to organise the world?s information. Well, we don?t think that is our job. We think you need to get tools to editors and subject experts to let them organise the world?s information. There is a bit of a philosophy difference here. The only sure winner is the consumer.?

Posted by Gary Price at 6:25 PM | Permalink

October 20, 2005

Pseudo-Transcript Of Google Earnings Call

I've just finished listening to the Google Q3 2005 earnings conference call and what follows is a pseudo-transcript of what I heard. In just about all cases, you will NOT be reading exact quotes. Nevertheless, I hope the post gives you a good idea of what was said.

Again, what follows are extended notes of what I found interesting as I listened in. It's very far from being a complete transcript. If you want to hear the entire call (and find out what I didn't cover, listen to the actual questions that were asked by analysts, and pecifically how a question were or WERE NOT answered (Internet News.com lists a few of them at the end of their article), a replay is available here and worth a listen.

ES=Eric Schmidt ES: We had another strong record breaking quarter in terms of revenues and profits...very pleased, even though these are traditionally slower quarters for Net properties.

ES: We are "effectively connecting" with our users and customers. ES: Our focus is still in the long term ES: In the near term, we are attracting a lot more business including Fortune 500 companies. ES: Search and advertising remain in their nascent stages of growth ES: Continuing policy of no forward guidance

GR=George Reyes GR: Explains new accounting procedures (see Google Blog for more) Goes over the numbers GR: Capital expenditures $293 million in Q3 vs. $157 in Q2 2005 GR: Estimating over $800 million in cap expend in 2005 GR: Google sites are growing faster than Google Network GR: Network represented 43% of total revenue vs 46% last quarter GR: Stronger revenues than expected in Q3 primarily because of product improvements GR: In Q3 R&D spending increased from $152 million from $96 million in Q2. GR: Expect to see growth in R&D for the foreseeable future GR: We will invest in our business regardless of short term characteristics GR: Increase of cash primarily from equity offering that raised $4.3 billion GR: Discusses Google Foundation, money will be recorded as an expense in Q4 2005. GR: Google employed 4,989 full time employees as of September 30, 2005, up from 4,183 as of June 30, 2005. 2668 as of Sept 30, 2004.

LP=Larry Page LP: Gaining momentum in last quarter in our goal to make the world's info universally accessible and useful LP: Very happy with progress, new products LP: We celebrated 7th birthday by launching a significantly expanded search index, 1000 times larger than the one we started with. "That makes Google three times larger than any other search engine by our estimates*." Note the last word or two of Larry's comments were garbled, so I'm doing my best with the conclusion of his comment. LP: Release of Desktop 2/Google Sidebar LP: Release of Google Talk LP: Google Maps and Local Combined LP: New data layers for Google Earth LP: Enhancements to Google Video LP: Google Blog Search LP: Lower price of Google Mini LP: Calls San Francisco bid, make opportunity a "test ground." LP: Google Print work

SB=Sergey Brin SB: "Advertising continues to drive most of our business." SB: Site Targeted campaigns. More than 25% of Google's Top 100 advertisers have bought a site-targeted campaign SB: Google Ads in print magazines, "hundreds" of other mags interested in participating SB: New Reseller program in China, Google Local in China SB: Q3, Completed over 20 New Deals including Univision and Sun SB: Q3, Renewed over 20 partnerships to distribute AdSense and search services around the world. SB: Agreement with Sun, looking forward to working with them to find more ways to extend mutual technologies SB: NASA plans are mentioned SB: Google.org and Google Foundation founded with $90 million dollards SB: New employees to Google team include Dr. Kai-Fu Lee, Dr. Vint Cerf, and new Google board member, Dr. Shirley Tilghman

ES: We continue to focus on end users and the quality of info and ads they'll need. ES: We are particular happy at how happy this is working at scale. ES: You need both, access and information ES: People are increasingly demanding the most intuitive and personalized technologies and we are building them. ES: We believe that the most direct way to access the world's information is and will continue to be through Google

On Google Wi-Fi Plan in SF? LP: Excited about extending net access in general. SF is an experiment and provide services in environments where people have good access to the Net. No other cities have been announced.

What do they think of other monetization models, classified ads? JR=Jonathan Rosenberg: Site targeting efforts is biggest way to grow monetization OK=Omid Kordestani: We are trying to really understand how advertisers want to work with us. Pay-Per-Click was asked about but not answered specifically. Nothing on classified ads.

GR: Very robust in growth in Google.com with modest growth in Google Network (see numbers). Cyclical. JR: We're monetizing the business better that lets us reach customers better. Better targeted ads (site-targeting, more effective, increase ROI). We're developing lots and lots of ways to make it easier ways for smaller businesses to come onto the network and monetize.

OK: Trying to simplify for advertisers. Introduction of Smart Pricing. Do it by considering conversion info. Make it simple but also make it as close as possible to the ROI metrics everyone is interested in.

ES: Biggest change is sales force": the verticalization [industry focus] of sales force. OK: Working the way the customers want to work with us. Make it smooth for our customers to work with the best channel for them. JR: Moving into brand budgets with big Fortune 500 customers...big trend that effects Google and others.

OK: Smart Pricing designed to really put a discount in areas that is not converting as well.

OK: Google Mini product doing very well.

On adding a third link LP: It's a very good question. You will see us making very many changes like that, we would like to make very many more changes like that. It's hard to go over specifics.

SB: There have been have lost a handful of accounts, relatively small ones. No particular pattern.

ES: AOL has been one of our longest and tightest partners for many years. That work continues. They are a very very valued partnered. We hope it continues forever. ES: VoIP and Instant Messaging are growing and becoming a significant part of peoples online experiences.

ES: "We don't do the same thing as every else does. And so if you try to predict our product strategy by simply saying well so and so has this and Google will do the same thing, it's almost always the wrong answer. We look at markets as they exist and we assume they are pretty well served by their existing players. We try to see new problems and new markets using the technology that others use and we build."

JR: More money moving into pay-per-click model. Other platforms that we can apply ad network to (ie. print). Main focus on sea change in advertising.

ES: The days of the unified online experience. Google intends to be the primary mechanism for access to all of that info. We have done a large number of deals with mobile operators. Sun is valuable for toolbar distribution and other tech. Give people choices about which platform people want to use.

OK: We are busy building capabilities across the globe. Business model truly working across the globe. UK is our strongest market overseas.

OK: Search network is pretty stable for us. Still tremendous opportunities. Partners are spending.

JR: We're holding or gaining market share in all markets.

SB: We're excited about Gmail but still looking at it as a platform to build/experiment vs. a revenue producer.

ES: When we look at the quarter we see improvements in monetization across the board. It spans all categories. It's not a single product, it's a discipline around of new product development that touches across the entire portfolio of the company.

ES: Things are obviously going very well here. What is great about this business is that it can be extended very very broadly. It's a very very very big space.

Posted by Gary Price at 6:52 PM | Permalink

Google Releases Q3 2005 Earnings

Google has just released their Q3 2005 earnings, as covered in this press release.

"Although this is typically a slower season for Internet properties, we had another exceptional quarter," said Eric Schmidt, Google chief executive officer. "Our focus on end users and on quality of information and advertising worldwide continues to work extremely well. We are very pleased with how well this is working at scale."

From The WSJ/Dow Jones The Mountain View, Calif., company said earnings for the quarter were $381.2 million, or $1.32 a share, compared with a profit of $52 million, or 19 cents a share, in the year-ago quarter. Total revenue reached $1.58 billion, up 96% from $805.9 million last year. Wall Street forecast revenue of $939.2 million, excluding the commissions Google pays to marketing partners. On that basis Google brought in $1.05 billion in revenue, while the comparable year-earlier figure was $503 million.

From the Google News Release + GAAP net income for the third quarter was $381 million as compared to $343 million in the second quarter, an increase of 11%. Non-GAAP net income was $437 million, compared to $381 million in the second quarter, an increase of 15%.

+ GAAP EPS for the third quarter was $1.32 on 290 million diluted shares outstanding, compared to $1.19 for the second quarter, on 287 million diluted shares outstanding. Non-GAAP EPS was $1.51, compared to $1.33 in the second quarter.

+ Google reported record revenues of $1.578 billion for the quarter ended September 30, 2005, up 96% compared to the third quarter of 2004, and up 14% compared to last quarter. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs, or TAC. This quarter, TAC totaled $530 million, or 34% percent of advertising revenues.

Revenues + Google Sites Revenues - Google-owned sites generated $885 million, or 56% of total revenues. This represents a 20% increase over the second quarter revenues of $737 million.

+ Google Network Revenues - Revenues generated on Google's partner sites, through AdSense programs, contributed $675 million, or 43% of total revenues. This is a 7% increase over network revenues of $630 million generated in the second quarter.

+ International Revenues - Revenues from outside of the United States contributed 39% of total revenue, compared to 39% in the second quarter and 35% in the third quarter of 2004.

+ TAC - Traffic Acquisition Costs, the portion of revenues shared with Google's partners, increased to $530 million. This compares to total payments to partners of $494 million in the second quarter. TAC as a percentage of advertising revenues decreased to 34.0% in the third quarter from 36.1% in the second quarter, reflecting the continued shift in our revenue mix from Google network revenue to Google site revenue.

+ Employment: 4,989 full time employees as of September 30, 2005, up from 4,183 as of June 30, 2005. Google had 2,668 as of Sept 30, 2004.

Listen to replay of conference call here. See our post, Pseudo-Transcript Of Google Earnings Call.

Additional Coverage via: + Bloomberg ``The strength is from a lot of areas,'' said Rick Summer, an analyst with Morningstar Investment Services Inc. in Chicago. ``There was tremendous growth in online advertising, which is not abating at all.''

+ Reuters "Google is still top of mind for folks doing Web searches and that shows up in these results," said Rick Summer, equity analyst at Morningstar in Chicago.

+ InternetNews.com Executives deflected questions about how or when they might try to monetize these non-search offerings. Co-founder and president Sergey Brin said the company saw Gmail not as a moneymaker, but as a platform on which to build more services. "Advertising continues to drive most of our business, and we continue to expand our advertising products," he said....They [Google execs] also blew off queries about rumored moves into classified listing search, VoIP and thin-client computing, also known as the Google operating system.

Posted by Gary Price at 3:56 PM | Permalink

October 16, 2005

The Top 100 Global Brands: Where Do Google and Yahoo Place?

BusinessWeek has released their ranking of the Top 100 global brands.

What's the criteria to be considered for the list: The table that follows ranks 100 global brands that have a value greater than $1 billion. The brands were selected according to two criteria. They had to be global in nature, deriving 20% or more of sales from outside their home country. There also had to be publicly available marketing and financial data on which to base the valuation.

So, where do Google and Yahoo place?

+ Google comes in at number 38 (new to the list this year) with an estimated brand value of $8.46 billion. + Yahoo appears at number 58 (up from 61 last year) with an estimated brand value of $5.25 billion from $4.54 billion in 2004 (up 16% over last year).

Other companies on the Top 100 list include: + Microsoft in 2nd position + Apple in 41st position + Amazon.com in 68th position

The Top 5 Companies on the 2005 list are:

1. Coca-Cola
2. Microsoft
3. IBM
4. GE
5. Intel

Posted by Gary Price at 9:44 PM | Permalink

October 5, 2005

Google Names Princeton President Shirley Tilghman To Board

News from Google that it has appointed a new member of its board of directors, Shirley M. Tilghman, president of Princeton University and professor of molecular biology there. She's not yet been added to the full board list, which you will find here. Tilghman brings the board up to 10 people, and she becomes the first and only woman on the board.

Posted by Danny Sullivan at 10:18 AM | Permalink

September 22, 2005

Googlers Tapped To Forecast Launches

Putting crowd wisdom to work on the Google Blog covers how the company uses its own staff as a predictive market to forecast things like launch dates for products, office openings and other things of "strategic" importance to Google. Apparently it works pretty well, though there's not really near enough details to tell. At first, I thought it was a far more interesting idea that Googlers might actually have to bid against each other to determine who gets to next launch their pet project when there are upteenmillion going on. But the idea that Googlers might contribute in this way to help shape when and where the company goes in particular directions still sounds kind of cool. What would be really cool is if people outside Google could play.

Postscript: Sure, Google may have a fancy-schmancy forecasting tool, but it also has the big master plan white board where Googlers contribute to what the company should do, as well. We wrote about that before in the The Illustrated Google Master Plan. Niall Kennedy has just posted a new shot of it. I keep forgetting to take my camera and fully map it out properly. Next time!

Posted by Danny Sullivan at 9:03 AM | Permalink

September 16, 2005

Google Execs Lunch With Investors and Analysts

The Bloomberg article: Google may expand in China, buy faster computers, offers a bit about what Google's Eric Schmidt and Sergey Brin "hinted" about yesterday with stock analysts and investors at an invitation only lunch at the St. Regis Hotel in New York.

'All that people care about is what are they going to use the money for,' said David Schiller, a portfolio manager at JPMorgan Chase & Co who attended the meeting and doesn't own Google shares. 'Best-case scenario is they want to buy a bunch of search companies or online gaming companies in China.' The meeting didn't blunt one common criticism of Google and its executives: they're secretive.

Posted by Gary Price at 9:47 AM | Permalink

September 13, 2005

Gates Talks Google

Bill Gates sat down with CNET for an interview today about a variety of topics including web search and Google. The complete interview is posted here.

Here are a few quotes from Bill Gates:

On API's Our search API is way better than their search API. Clearly, they are working in that area. They haven't done as much on the server piece. They had a Google server, but it was very bad at corporate search.

On Organizing all of the Worlds Info ...they have this slogan that they are going to organize the world's information. Our slogan is that we are going to give people tools to let them organize the world's information. It's a slightly different approach, based on the platform-ization of all of our capabilities and not thinking of ourselves as the organizer.

On the Honeymoon Period You do me-too Google Talk, and it's a big deal. But we had our honeymoon phase, and it was fun from maybe 1985 to 1995. And we've had lots of competitors in their honeymoon phase. But I'd say, in some ways, this is the biggest honeymoon I've ever seen.

Posted by Gary Price at 9:01 PM | Permalink

August 31, 2005

France To Fund European Search Engine; Replay Of Boeing-Airbus In The Search World?

Reading my copy of the Daily Telegraph today, I came across news that French President Jacques Chirac has pledged funding a new European search engine to challenge Google, Yahoo and other Anglo-Saxon search threats.

I guess Chirac sort of forgot about French-based Voila, which I believe still uses its own Francophone technology and which also apparently is number two in France. How about Seekport, the European-based search company that runs several multi-language editions? Fireball's an old favorite, a German-based service that had its own technology, though I'm not sure what it's using now. FAST is the Norwegian-based company that gave birth to AllTheWeb, now owned by Yahoo, but which still has web search technology it provides to others like Miva.

Chirac backs eurocentric search engine is the Telegraph article with a few more details. Specifically, Chicac doesn't seem to want to fund an actual web search engine. Instead, he wants to give loans so a French-German partnership between Thomas and Deutsche Telekom can build a "multimedia search engine for the internet." A Bloomberg story says the loans would be about 2 billion euros.

In short, there's plenty of search savvy in Europe that seems to have been OK without governmental support. But if the loans go ahead, it will be interesting to see if we're about to have a trade war emerge in the search space and over government backing, similar to the arguments that are made about government support given to aircraft makers Airbus in Europe and Boeing in the US.

The article has a few more details on the plans for a French-backed library digitization project, as well, as does France pushes for European books online. For past coverage on that from us, see:

• France, Google & The Need for Digitization Project Cooperation
• German Publishers Plan Major Book Digitization Project
• European Libraries Back Alternative To Google Library Project

Want to comment or discuss? Visit our forum thread, French Loans To Back European Rival To US Search Players.

Postscript: See also my later post, Hey President Chirac - French-Based Thomson Sold Off Search Technology You Now Want To Fund

Posted by Danny Sullivan at 8:56 AM | Permalink

August 26, 2005

Google vs. the World

In the article: Google's Grand Ambitions, BusinessWeek's Ben Elgin and Arik Hesseldahl, take a look at what Google might be up to. Sure, we talk and read these days about Google vs. Micrsoft but this article also speculates about possible Google vs. Motorola, Google vs. Verizon, and Google vs. eBay scenarios.

Posted by Gary Price at 11:37 AM | Permalink

August 18, 2005

Google To Sell $4 Billion In Shares

Google Files to Sell 14.2 Million Shares from the AP covers how Google is to float more shares to raise money for "general corporate purposes, including working capital, capital expenditures and possible acquisitions of other businesses or technologies." The sale coming a year after Google initially went public will earn about $4 billion, based on the current share price. One analyst is surprised saying Google doesn't need the money and that the sale will depress the stock price. The company currently has about $3 billion in cash on hand, according to the AP story.

Posted by Danny Sullivan at 9:19 AM | Permalink

August 15, 2005

Google's Q2 Financial Report Hits EDGAR Database

Number crunchers might be interested to learn that Google's Q2 2005 official quarterly report (53 pages) hit the SEC EDGAR database today. The report is loaded down with numbers and some narrative. It offers more detail as compared to what was announced a few weeks ago when Google released their Q2 2005 earnings.

Non-Financial Highlights That Caught My Attention:

Certain companies have filed trademark infringement and related claims against us over the display of ads in response to user queries that include trademark terms. The outcomes of these lawsuits have differed from jurisdiction to jurisdiction. Courts in France have held us liable for allowing advertisers to select certain trademarked terms as keywords. We are appealing those decisions. We are also subject to two lawsuits in Germany on similar matters where the courts held that we are not liable for the actions of our advertisers prior to notification of trademark rights. We are litigating or recently have litigated similar issues in other cases in the U.S., France, Germany, Italy and Austria. Adverse results in these lawsuits may result in, or even compel, a change in this practice which could result in a loss of revenues, which could harm our business.

From the Factors That Could Affect Future Results Section Note: Some/Much of this has been mentioned in previous Google filings.

We face formidable competition in every aspect of our business, and particularly from other companies that seek to connect people with information on the web and provide them with relevant advertising. Currently, we consider our primary competitors to be Microsoft Corporation and Yahoo! Inc. Microsoft recently introduced a new search engine and has announced plans to develop features that make web search a more integrated part of its Windows operating system. We expect that Microsoft will increasingly use its financial and engineering resources to compete with us. Both Microsoft and Yahoo have more employees than we do (in Microsoft?s case, currently nearly 14 times as many). Microsoft also has significantly more cash resources than we do. Both of these companies also have longer operating histories and more established relationships with customers. They can use their experience and resources against us in a variety of competitive ways, including by making acquisitions, investing more aggressively in research and development and competing more aggressively for advertisers and web sites. Microsoft and Yahoo also may have a greater ability to attract and retain users than we do because they operate Internet portals with a broad range of content products and services. If Microsoft or Yahoo are successful in providing similar or better web search results compared to ours or leverage their platforms to make their web search services easier to access than ours, we could experience a significant decline in user traffic. Any such decline in traffic could negatively affect our revenues. We generate our revenue almost entirely from advertising, and the reduction in spending by or loss of advertisers could seriously harm our business. We generated approximately 99% of our revenues in 2004, and in the six months ended June 30, 2005, from our advertisers. Our advertisers can generally terminate their contracts with us at any time. Advertisers will not continue to do business with us if their investment in advertising with us does not generate sales leads, and ultimately customers, or if we do not deliver their advertisements in an appropriate and effective manner. If we are unable to remain competitive and provide value to our advertisers, they may stop placing ads with us, which would negatively affect our revenues and business. We are migrating critical financial functions to a third-party provider. If this transition is not successful, our business and operations could be disrupted and our operating results would be harmed. We have entered into an arrangement to transfer our worldwide billing, collection and credit evaluation functions to a third-party service provider, Bertelsmann AG, and are currently in the process of implementing this arrangement. Proprietary document formats may limit the effectiveness of our search technology by preventing our technology from accessing the content of documents in such formats which could limit the effectiveness of our products and services. A large amount of information on the Internet is provided in proprietary document formats such as Microsoft Word. The providers of the software application used to create these documents could engineer the document format to prevent or interfere with our ability to access the document contents with our search technology. This would mean that the document contents would not be included in our search results even if the contents were directly relevant to a search. These types of activities could assist our competitors or diminish the value of our search results. If we fail to detect click fraud, we could lose the confidence of our advertisers, thereby causing our business to suffer. We are exposed to the risk of fraudulent clicks on our ads from a variety of potential sources. We have regularly refunded revenues that our advertisers have paid to us that were later attributed to click fraud, and we expect to do so in the future. Click fraud occurs when a person clicks on a Google AdWords ad displayed on a web site for a reason other than to view the underlying content. If we are unable to stop this fraudulent activity, these refunds may increase. If we find new evidence of past fraudulent clicks we may issue refunds retroactively of amounts previously paid to our Google Network members. This would negatively affect our profitability, and these types of fraudulent activities could hurt our brand. If fraudulent clicks are not detected, the affected advertisers may experience a reduced return on their investment in our advertising programs because the fraudulent clicks will not lead to potential revenue for the advertisers. This could lead the advertisers to become dissatisfied with our advertising programs, which could lead to a loss of advertisers and revenues and potentially litigation.

Posted by Gary Price at 5:26 PM | Permalink

August 14, 2005

What Should Google Learn From Netscape?

Industry experts tell Elizabeth Montalbano from the IDG News Service that Google should never underestimate the power of Microsoft.

Never take Microsoft for granted," says Joseph Laszlo, a research director at Jupiter Research. "Google is kind of a funny company in a lot of different ways, and one of them is it tries to run itself as if it's not a typical company. But I think where Microsoft is concerned, it's worth thinking as much like a big company as possible in order to understand why Microsoft does what it does and to effectively compete with them. [Google] should try to put itself in Microsoft's head."

Posted by Gary Price at 3:39 PM | Permalink

The Google IPO: One Year Later; Details of Correspondence Between Google and SEC Revealed

As we approach the first anniversary of the Google IPO later this week (Friday, to be precise), expect to find LOTS of stories that review Google's first year as a public company. Today, Verne Kopytoff has two very noteworthy reads in the SF Chronicle.

First, Google's growing pains: A year after its IPO, despite soaring stock, firm adjusts to growth, includes quotes from Marissa Mayer and Peter Norvig.*

Second, and really interesting is Kopytoff's article: How SEC held search engine's feet to the fire in its IPO filing.

After filing a request, The Chronicle got access to letters between the Securities and Exchange Commission and Google that, "reveal the many hoops the company had to jump through to become publicly traded." Verne's article offers highlights from the letters.

* In the article, Kopytoff mentions how Google recently began (actually it was officially launched in February and began as a test in October 2004) including inline images from their image database at the top of a web results page. Google was not the first to offer this feature. Inline images on a web results pages were first offered by Ask Jeeves in 2003 and continue today.

Posted by Gary Price at 3:01 PM | Permalink

July 26, 2005

Google's Brin On Keeping The Googlers Happy

Can Google Stay Google? from Fast Company, spotted via John Battelle, does the usual "can they stay ahead" type of thing we've seen before but with some fresh quotes from Google cofounder Sergey Brin, who disarms the interviewer with his bare legs after a volleyball game. Brin still thinks Google is the type of place he'd like to work at, if being asked to join now, because of the challenges and opportunities it offers to scientists who want to solve problems. And while Google has tons of employees now, he's still like to see new ones get the big time -- or at least semi-big time -- compensation as if Google still was a start up. Hence the Founders Awards we've blogged abut before, plus "bonuses and refreshers."

Posted by Danny Sullivan at 2:06 PM | Permalink

July 21, 2005

Pseudo-Transcript Of Google Earnings Call

I've just finished listening to the Google Q2 conference call and what follows is a pseudo-transcript of what I heard. In all but two cases, you'll not be reading exact quotes. Nevertheless, I hope the post gives you a good idea of what was said. Below, read about the latest Google views on working with content partners, tagging/structured data, click fraud and Google's rapidly expanding work force.

Again, what follows are extended notes of what I found interesting as I listened in. It's far from a complete transcript. If you want to hear the entire call (and find out what I don't cover) a replay is available here.

Click Fraud mentioned in the disclaimer at the beginning of the call as something that might change Google financial results in the future.

ES=Eric Schmidt

ES: All business very strong (U.S./International)

ES: We don't give guidance but Schmidt reminds listeners that Q3 is a slower quarter, seasonality issues

ES: "We see very big opportunity ahead of us."

George Reyes (GR) discusses the numbers

GR: Many new talented engineers joining Google this summer

GR: GR: R&D spending was $96 million in Q2 vs. $79 million in Q1

GR: Expect to see continuing growth in R&D

GR: 4,183 full-time employees at end of Q2 2005. 3,482 at end of Q1 2005. 2292 employees as of 6/30/04

GR: Reitertates click fraud has never been a material problem for Google and we're working hard to make sure it stays that way

LP=Larry Page

LP: New Services: Google Maps (integraton with satellite), Google Maps API, Google Earth, Google Personalized Home Page, My Search History. Mentions Google Web Accelerator. We want to make more video available online that's why we started upload program. Google Video Playback. Google Print and Library programs progress. We take a conservative approach on how we handle other peoples content. Concern is not unexpected. It's a healthy part of Google's pioneering work. "We will continue to consult and work with our industry partners to make sure we fairly balance the needs and rights of content providers with the value we believe these new forms of content will offer to users."

SB=Sergey Brin

SB: We have been working to meet the needs of brand focused advertisers

SB: We have opened new offices in Brazil and Mexico

SB: Latin America is an important market for us

SB: New office in Shanghai

SB: Euro partnerships with Thomson and T-Mobile

SB: Awarded $20 million in Founder's Awards in Q2

ES: We are the same core company a year after the IPO

ES: Organization and ACCESS to info is part of our mission

ES: Google is innovating as lives move online

ES: We are going to be the leading providing of access to the world's information.

ES: We are working on ways to pay video content owners, working to develop DRM solutions. New stuff in the next 12 months.

ES: Changing minimum bid requirements means better quality

GR: International is performing well, would not break-out numbers

SB: We are focusing on building the local business like we built the web search business

SB: On RSS and Tagging. We are excited by all the web developments going on out there including RSS since because these are great things that can improve our comprehensiveness and freshness. "You [conference call participant] mentioned tagging and the various forms of more precise user generated kind of structured data that we're able to get, I think the better the search experience will be able to produce. Now, today, the amount of the latter that's out there is fairly small but it's indicative of potential in the future."

SB: Orkut's growth in Brazil is phenomenal

LP: We have a significant market share in China. Tremendous opportunity in China

LP: Getting significant use of mobile services. New stuff coming in the next few months

SB: Large percentage of local searches happening on our main site

LP: All of our services are open to other companies

GR: Q2 and Q3 are difficult quarters. Last year Q3 masked by our IPO

SB: Advertising: we started to support richer media types (ie image ads)

LP: Maps and Google Earth exceeded expectations. RSS support for home page? Not aware of details

ES: Google Wallet? Market well served by PayPal. Working to ways to make merchants even happier

LP: We have interesting meetings about monetization. Make everyone happy.

GR: We made an explicit decision to incease hiring this quarter

ES: We have found ways to stay focused on users and innovation. We are just beginning to make it happen.

Posted by Gary Price at 6:28 PM | Permalink

Google Releases Q2 2005 Earnings

Google has just published its Q2 2005 earnings, as covered in this press release "Google had another solid performance," says Google CEO Eric Schmidt. Here are the basic numbers:

Revenues

• For Q2, 2005 $1.384 billion, up 98% year over year
• Google-Sites Revenues -- Google-owned sites generated $737 million or 53% of total revenues. This represents an increase of 115% over the second quarter of 2004.
• The Google Network -- Revenues generated on Google's partner sites, through AdSense programs, contributed $630 million, or 46% of total revenues, an 82% increase over the Network revenues generated in the same quarter last year.

Income

• Net income on a GAAP basis in the second quarter of 2005 was $343 million or $1.19 per share on a diluted basis vs. net income for the second quarter of 2004 of $79 million or $0.30 per share on a diluted basis...

Via Marketwatch.com: "Analysts expected Google to earn $1.21, excluding certain items."

• TAC - Traffic Acquisition Costs, the portion of revenues shared with Google's partners, increased to $494 million. This compares to total payments to partners of $277 million in the second quarter of 2004.

Listen to replay of conference call here. See also our post, Pseudo-Transcript Of Google Earnings Call.

Posted by Gary Price at 3:07 PM | Permalink

June 27, 2005

Google Insiders Sell and Make Huge Profit

The Mercury News article: Bonanza from Google stock's rise, reports on the more than $2.1 billion Google "insiders" have realized since the company went public last August.

In May, Googlers sold just shy of $400 million of stock, second nationwide only to the $515 million in sales by Microsoft insiders, according to Bloomberg News data.Since the Mountain View company's IPO, Page and Brin have sold stock worth $619 million and $589 million, respectively, while Schmidt's sales have totaled about $191 million. In May, Page and Brin sold 400,000 shares each, fetching $93 million and $90 million, respectively. Schmidt sold $29 million. Page and Brin have sold similar numbers of shares in June, too. Thanks to the stock's steady rise, the sales totaled nearly $116 million for Brin and $111 million for Page.

Posted by Gary Price at 3:53 PM | Permalink

June 21, 2005

Comparing The Google & Yahoo Business Cultures

Google vs. Yahoo: Clash of cultures is similar to other stories we've seen before, looking at culture differences in how Google and Yahoo operate. In the end, the story concludes Yahoo is more in tune with Madison Avenue big brand types, while Google is more of a mega-classified ads company. Of course, the analyst saying Google's all search sounds like he buys into the "contextual is search" argument. When you're contextually delivering CPM-based graphic ads on web sites, that's hardly "all search" in my book. For those other similar stories, check out Google vs. Yahoo Story on CNBC and More on Google vs. Microsoft and The Google/Yahoo Rivalry in 2005 and Yahoo Has Google's Mojo: Round Two.

Posted by Danny Sullivan at 10:23 AM | Permalink

May 24, 2005

A Google Ad Exchange Service? Domains Suggest It Might Happen

The Google Exchange from MarketWatch looks at the possibility of Google offering some type of advertising exchange service. In other words, beyond putting its own ads across the web, Google might also serve as an AdBrite-like ad broker for others:

But imagine a more automated world in which online publishers place their inventory on Google's exchange. Online advertisers could choose, in an a la carte format, where they wanted to place their ads -- whether they wanted to buy keywords across a number of sites, or if they wanted to simply choose a specific site. Google would sit in the middle and take a cut of all the transactions.

The article is all pure speculation, of course. A Google rep is quoted, but declined to comment on whether Google would do this. But let me add some fuel to the fire in the way of domain registrations by Google.

About two weeks ago, a holding company that Google has used to register names with in the past before moving the registration over to Google registered the following domains that sound like they have some type of advertising exchange in the works.

Googlebuyers.com also .info, .net, .org

Googlesellers.com also .info, .net, .org

Googlelisting.com also .info, .net, .org

Googlespaces.com also .info, .net, .org (This one seems a bit odd given that MSN's blogging service is named MSN Spaces)

Posted by Gary Price at 11:24 AM | Permalink

May 20, 2005

Google Factory Tour Recap

So Google's first Google Factory Tour has ended. Overall, I'd say it was a great success on the PR front -- at least if you weren't that familiar with Google. One reporter I corresponded with told me that seemed the case for plenty there, many of whom were overseas reporters. For them, Google trotted out real live people doing interesting things. While it was very stage managed, kudos for the plentiful Q&A periods that let some good questions (and sometimes answers) get out.

Gary and I watched and instant messaged each other throughout the night, offering each other commentary on what was being said. If the tour repeats (or when Yahoo and gang inevitably decide to do the same), we might do some live alternative commentary for everyone as a sort of Pop-Up Video or Mystery Science Theater 3000-type of thing.

Most of what was said was old ground for us -- and will be for many of our readers. But here are the highlights I found interesting. Before diving in, a reminder. A webcast of the event is here. You can also view all the slides at once here. Be aware it's a big page, not for the broadband challenged.

• Schmidt & Brin Do Q&A: Near the end was a long period where Google CEO Eric Schmidt and Google cofounder Sergey Brin answered questions. Andy Beal of Search Engine Lowdown diligently blogged live coverage of some of the answers. I think it's worthwhile for anyone interested in Google to watch the webcast of this. I'm also hoping Google will make an actual transcript available.  
• Google: We Are French: I especially liked Eric Schmidt getting a little riled over the suggestion that France and all "continental Europe" are viewing Google as a dark force in the wake of print. He pushed back especially on Google supposedly favoring English language books, asking for proof Google said they would do this or are actually doing so. Sergey Brin scored the real goal, however, pointing out that about half the Google Print team is French.  
• Google Goes Portal: Yes, Google launched a personalized home page, essentially making it official that it is a portal. News from us on that here: Google Launches Personalized Home Page. Reaction from across the web here: Reactions To My Google Personalized Home Page.  
• Google's Master Plan: Google's come under accusations of not having some master plan, which in part it helps to perpetuate. Just see yesterday's post about Google engineers being encouraged to run "rampant" and "wander around," according to Google's Schmidt. Still, Google's been pushing back on the idea that it's not focused enough. One slide was used to illustrated Google's view that all this creative activity happens in the non-core stuff they do. The core search+ads effort still takes up apparently 70 percent of the engineering time. And more to the point, that's work all done according to some master plan, Google says. You see this push back again in today's post from Google on the launch of its new personal home page.

  Does Google have a strategy, or are we just a bunch of mad computer scientists running around building whatever we want? Today this question gets an answer: we've launched our personalized homepage via Google Labs. It's part of a strategic initiative we refer to as 'fusion' to bring together Google functionality, and content from across the web, in useful ways.

• Google & Endless Betas: John Battelle reports on Google repeating what they've been saying recently -- expect products to start coming out of beta and perhaps stop seeming to be endless. He also has Eric Schmidt commenting that the Google mission isn't just web search. It's about organizing information anywhere.  
• Lesson On Web Accelerator: Again from Andy, comments from Google on having learned products perhaps need to be more aggressively tested internally, before releases. However, Google also says that some things you don't find out, until they are released. Oh, and some site owners got blamed again for problems in not knowing how to set up their servers. I hope the fix isn't some idea that everyone will magically solve that problem. Not gonna happen.  
• Click Fraud: From Andy, Google saying it is pro-active in trying and stop click fraud and yes, we will look around to see if a refund given one advertiser means others are entitled to the same.  
• Google Employee Heroes: Frankly, this started off with Gary and I rolling our eyes, a slide on the amount of food eaten by engineers. Sort of funny, but who cares? And why just the engineers? Are they the only people of any import at Google? Do any of those ad people who earn all the money eat? If so, how much chicken? Fortunately from a PR angle, things picked up with a rundown on various people behind the scenes that create and improve Google products. Matt Cutts, who is known to readers for his many comments over the years on webmaster issues, got highlighted as one of the heroes. In the end, it served well to put a human face on an increasingly growing and dominant company. Andy's got a rundown on slides here.  
• Ads, Ads, Ads: A big chunk of time was spent on how wonderful it is that Google has devised a way to monetize the entire web. Seriously. And that organizes the world's information how? OK, I know -- it funds it. But the backslapping of how clever Google was figuring out how to make all the world is its billboard felt, I dunno, a little dirty to my ears. But it was honest, I suppose.  
• Google & Privacy: It was raised, addressed but this new News.com article on the subject also out the same day goes into more depth: Google CEO defends privacy policies. In short, Google doesn't reveal stuff not already public and wants to safeguard information. If I spot something more in depth detailing what else was said, I'll update.  
• Mash Ups With Google Maps: Everyone's mixing everything with Google Maps from crime stats to apartment rentals (hey, put both of those together!). Google said they want to make that easier, so people don't have to hack it. Ah, but what about those who license the maps to Google. Are they cool about that? There wasn't a clear answer -- Google just hopes it won't be an issue. SiliconBeat has comments on that.  
• Google Earth: We already knew earlier that Google's Keyhole software had been given upgrade maps. Soon, the software itself will be upgrade and gain a new name, Google Earth. And better maps will come to Google Maps, as well. Postscript: More from eWeek here.  
• Google Translations: Apparently the company has been greatly increasing its abilities in this area, including having just won what was said to be some important award in the area. Key takeaway was that if it really could do good automatic translations, it makes information even more accessible to everyone, given we all speak different languages. Postscript: Google Blogoscoped has more on this here.

Some Related Material:

• CNET's Charles Cooper in Growing pains at Google? comes away finding the event a pure PR snowjob and thinks Google needs to open up even more to win the hearts and minds of journalists. Cooper also looks at Google's continued success and wonders when it will tumble, like every other tech company does. Oh, it will tumble -- but can we please, please stop having people call it a tech company? Geez, CNET even just had a story out with Schmidt himself saying they're an information company, not a tech company. Google's not a tech company, folks! What's the main product, the breadwinner? It's ads.  
• Google Hones Cutting Edge from The Street is a very nice read and balanced roundup of the day. But another story, A Walk Through the Google Search Factory, by the same author shows where Cooper is wrong about the PR impact. "Others outlined in relatively deeper detail how Google has leveraged its superior search algorithms in ways that are beginning to transform how advertisers connect with customers on the Internet," the story says. Actually, what was outlined was how Google has leveraged WHAT IT BELIEVES is its superior search algorithms. But have enough people tell you something as if it is a fact, rather than their opinion, and slips like this come through, from me, from other experienced journalists and even more likely from those newer to Google.  
• Ten Things I Didn't Know About Google from PC World has Harry McCracken commenting on what his eyes were opened to.

Posted by Danny Sullivan at 11:51 AM | Permalink

May 16, 2005

Google Files Complete Quarterly Report With SEC

Those of you who like to pour over Google's financials might be interested in having a look at their latest quarterly report (68 pages) that was just filed with the SEC.

Posted by Gary Price at 6:17 PM | Permalink

Slides, Transcript Of Google Investor Day & Google's 70 Percent Core Time Didn't want to listen to the webcast of Google's first shareholders day last week? Hey, I tried. But it kept repeatedly dying repeatedly right before the Q&A period! Nevermind. Here come Findory's Greg Linden and and BuyGoogle.com to the rescue.

Greg has posted slides shown from the event. Stats and charts galore. I especially like the 70-20-10 pie chart that I first heard being touted earlier this year at Google's first analyst day.

I got some calls from reporters after that asking me to comment on how Google devotes 70 percent of its resources to the core product of search. Search, I asked -- meaning unpaid results? Or search meaning paid and unpaid?

While the chart then clearly showed that 70 percent "core" effort to be labeled "Core: Search & Ads," it was amazing to me how three or four different reporters I talked with came away thinking it was all search.

So just to stress, that 70 percent core effort is a mix of paid and unpaid -- as the latest slides show again. And AdSense contextual ads -- which like a parrot I keep repeating are not search -- are nonetheless considered part of the company's "core" mission of organizing the world's information. Got it? Putting banner ads on web sites, which AdSense has been doing for over a year, is part of the core information organizing missing.

By the way, everyone knows about the famous Google 20 percent time for employees to explore whatever they want. So where's that 20 percent slice on the chart? Ah -- remember -- it's 20 percent for Google engineers, not everyone at Google. That's kind of sad, actually -- who says only engineers can be creative or come up with great ideas, if they're given time to explore.

Greg comments briefly about the investor day slides compared to the analyst day slides here: Google shareholders meeting. Over at The Long Tail blog, Chris Anderson takes a closer look at the long tail slide and comments Google CEO Eric Schmidt gave about addressing working out from the well-served middle (Google's view) to the extremes at either end. For more on the long tail and search, see my past Search's Long Tail post.

Meanwhile from buygoogle.com, there's a short unofficial transcript of some comments made at the meeting. Interesting to me is cofounder Sergey Brin saying Google's strength over Yahoo is technical execution -- ie, bringing out technically different and unique products. In other words, doing what I call pulling a Google, bringing out Google Maps or Gmail and causing traditional views of a particular service to get rethought.

Posted by Danny Sullivan at 12:47 PM | Permalink

May 12, 2005

Report from Google's First Annual Shareholder Meeting

After the year that Google has had with their IPO and the success of their stock, I would have thought that Google's first annual shareholder meeting would be one big one event that every shareholder would want to attend. A chance to hear from the Google Guys, a chance to visit the Googleplex, and free food. Well, it appears I was wrong.

Perhaps the biggest news coming from the meeting is not what was said but that very few shareholders decided to attended the meeting.

Google Inc. shareholders got a free lunch Thursday at the online search engine leader's first annual meeting as a public company. There were plenty of leftovers. Fewer than 200 people attended the meeting at the company's Mountain View headquarters ? a high-tech mecca known as the "Googleplex."

More in Michael Liedtke's article: Few Attend 1st Google Shareholder Meeting. This CNN/Money report notes that Google has no plans at the present time to split its stock.

Note: A webcast of the shareholder meeting is still available online.

Posted by Gary Price at 10:39 PM | Permalink

May 11, 2005

After More Than A Year, Google Remains Without Chair

Over a year ago, Google CEO Eric Schmidt gave up his other title, that of chairman. Why? It's a growing trend that good corporations should have a chair who ideally looks after the interest of shareholders, rather than company insiders. Despite this, Google's chair seat remains unfilled. Google chairman's seat sits gathering dust from the San Francisco Chronicle looks at how the Google board has been "really busy" and so far unable to attend to the matter. Google's strong performance is noted as one reason why investors might not be concerned.

Posted by Danny Sullivan at 1:18 PM | Permalink

May 5, 2005

Time Warner Sells 5.1 Million Shares of Google Stock

Both Searchblog and Reuters report that Time Warner has sold the remaining 5.1 million shares of Google stock the company owned. Time Warner made about $925 million from the sale of the GOOG shares. The sale of TW's Google stock is discussed on page 7 of this SEC filing.

Posted by Gary Price at 10:35 AM | Permalink

April 28, 2005

Google Gets Closer to Opening Technology Center in Oregon

We posted an entry in February about Google planning to open a technology facility in The Dalles, Oregon.

Today, we came across this new story the reports that the deal is almost done and ready to move forward. Recently, the Wasco County government (where The Dalles is located) has agreed to Google's request for a tax exemption.

According to the article, the Google tech center will create about 100 new jobs with an average salary of $60,000 per year.

Another article has more details about the property and some of the things Google has asked for.

Here's an approximate satellite image of the location. Unfortunately, you're limited how close you can zoom in. )-:

Posted by Gary Price at 5:45 PM | Permalink

April 27, 2005

Google Considers 'Innovative" Philanthropic Options

About a week ago Danny and others posted about a new page, a placeholder really, for Google's "coming soon" philanthropic efforts. Today's USA Today article: Google foundation may invest in for-profit firms, has info about possible plans for how the Google Foundation will operate. Google's Global VP of Sales, Sheryl Sandberg, told the USA Today, "We want to do something that is innovative." What does that exactly mean? Google is considering investing in, "for-profit firms that also pursue worthy causes" opposed to only giving donations to non-profits. The article goes on to say that Google is considering many options including a more traditional approach. Sandberg also told the paper that Google is continuing to interview executive director candidates to lead their philanthropic efforts.

Btw, I did a quick search of the California Charitable Organization database hoping to learn more about the Google Foundation but came up empty handed.

Posted by Gary Price at 2:05 PM | Permalink

April 25, 2005

Google Trademarks: TrustRank & The Neighborhood Wide Web

When reviewing the Google AdWords site today, I noticed the trademarked phrase, "It's All About Results." New? As it turns out, they've been using that phrase last year. But my search of US Patent and Trademark Office database turned up two other phrases I haven't seen Google use publicly before: "TrustRank" and "Advertise On The Neighborhood Wide Web."

"TrustRank" was filed with the USPTO about a month ago. Interestingly, members of the Stanford Database Group have written a paper about the use of "TrustRank" to combat web spam that we blogged about in early March. Makes you wonder if the implementation of TrustRank™ will be something coming soon from the GooglePlex. Stay tuned.

"Advertise On The Neighborhood Wide Web" was filed for less than a year ago. Perhaps it will be used to try to convince local businesses to advertise with Google. Needless to say, many local business people care little about reaching the "world" and more about finding potential customers in their neighborhood or village.

Well, if it's village they want, it's village Google's got. Google registered the domain name GoogleVillage.com, less than a year ago.

By the way, that other trademark, "It's All About The Results" that I mentioned? SEM firm iProspect also uses "It's All About Results" on their site.

In all, my search found Google has registered and found more than 25 words and phrases. Among some of the others are:

• Picture Simplicity
• I'm Feeling Lucky
• AdSense

Posted by Gary Price at 1:13 PM | Permalink

April 22, 2005

Shares of Google Reach All-Time High After Company Reports Q1 Earnings

In case you haven't heard, Google's Q1 earnings were released yesterday and like Yahoo, they were even better than what analysts were expecting. As I post this item shares of GOOG are at an all-time high, up almost $15 at $219.20.

Here's a quick review of Google's Q1 earnings.

Facts and Figures + Google earned $369.2 million, or $1.29 per share in Q1 2005 vs. $64 million, or 24 cents per share in Q1 2004.

+ Revenue totaled $1.26 billion vs. $651.6 million in Q1 2004.

+ After subtracting commissions that Google paid to other Web sites in its advertising network, the company's first-quarter revenue was $794.5 million.

From the WSJ (reg req.): "The results far exceeded the estimates of Wall Street analysts, who had projected earnings of 92 cents a share, excluding certain stock-based compensation, according to Thomson First Call. Revenue excluding commissions Google pays to marketing partners totaled $794 million, compared with analysts' estimate of $731 million."

+ "Google's staff rose 15% to 3,482 employees as of March 31 from 3,021 at the end of 2004."

From the AP: "Google is an amazing place," company CEO Eric Schmidt said during a Thursday interview. "I see no sign of things slowing down."

+ "Google also is making more money internationally. The company generated 39 percent of its revenue overseas in the first quarter, up from 35 percent in the previous quarter."

The full text of Google's news release with all of the numbers is here. A replay of yesterday's news conference will remain online for the next few days.

Posted by Gary Price at 10:55 AM | Permalink

April 20, 2005

Behind The Scenes Of Yahoo Takes On Google

Yesterday I noted a Fortune story giving a behind-the-scenes look at Microsoft waking up to the challenge Google presented. The search engine that could from the San Jose Mercury News (reg. required) does a similar look at Yahoo getting search religion. Seeing the revenue Overture was generating from an initial partnership push got the lightbulbs going off. New CEO Terry Semel helped refocus the company, and it ultimately decided search had to be technology it owned, rather than outsourced. It touches a bit on the issue of uniting search technology from three different players -- plus the brand new rewriting Yahoo said it also did leveraging all the new talent it had purchased.

Posted by Danny Sullivan at 1:31 PM | Permalink

April 19, 2005

Behind The Scenes Of Microsoft Takes On Google

Search and Destroy from Fortune (paid subscription required) has some nice details on the war between Google and Microsoft, with a nice lead-off on Bill Gates wondering why back in 2003 that Google was hiring people with skills not for search but for products similar to what Microsoft makes. "We have to watch these guys," he emailed execs.

Yahoo's also in that war, but Google still occupies the high ground that Microsoft wants. It revisits the much discussed issue of Google as operating system, or at least as a software rival to Microsoft, with more quotes of worry on this from Gates. One reason might be the Microsofties heading to Google, including crashing the invite-only affair when its office near Microsoft was opened last year.

Very nice details on MSN Search's Chris Payne making a pitch back in Feb. 2003 that outsourcing search was a bad mistake for Microsoft to make -- instead, it needed to build its own Google-killer technology. Gates, of course, signed off on the new direction, project "Underdog," it was dubbed.

The story revisits what I'd agree was a bad mistake, not to buy the search technology, causing development to take even longer. Then there are more comments and observations on what a challenge the battle has been so far, and how it is far from over.

Posted by Danny Sullivan at 2:27 PM | Permalink

April 17, 2005

Largest U.S. Corporations: Where Do Google and Yahoo Rank?

The 2005 Fortune 500 and Fortune 1000 rankings of America's largest corporations (ranked on revenues) have just been released. Most of the material is only available to Fortune subscribers but since I've access I was interested to see where two of the companies that we're always discussing rank. Yes, I'm talking about Google and Yahoo. Here's what I learned.

Neither company made the Fortune 500 (Microsoft does at #41) but both are found on the list of the Top 1000 companies. Yahoo is ranked at #502 and Google is found at #541 (based on revenues).

More about Yahoo and Google (based on Fortune research): + Both companies are part of Fortune's "Computer and Data Services industry" category of 20 companies. In the category, Yahoo ranks at #8 while Google comes in at #12 based on revenues.

Other companies in this category include: + EDS (#1) + Affiliated Computer Services (#7) --Yahoo-- + SunGard Data Systems (#9) + eBay (#12) --Google-- + Sabre Holdings (#14) + Earthlink (#20) + D&B (#19)

Yahoo $3.575 Billion in Revenues Up 120% from 2003 - $840 Million in Profits Up 253% from 2003 Yahoo ranks #3 for profits in the "Computer and Data Services" category.

Google $3.189 Billion in Revenues Up 118% from 2003 - $399 Million in Profits Up 278% from 2003 Google ranks #8 for profits in the "Computer and Data Services" category.

Note for Researchers: I like business lists and rankings. In fact, I like them so much that about eight years ago I started a compilation of links to web accessible lists called Price's List of Lists. The site is still online and being managed by my friend Trip Wyckoff.

Posted by Gary Price at 5:43 PM | Permalink

April 8, 2005

Google Files Proxy Statement with SEC; Brin, Page, and Schmidt Salary Set at $1.00

Hot off the press is the Google's Definitive Proxy Statement. Info about executive compensation, Eric Schmidt's employment agreement (he is currently receiving a salary of $1/per year, the same as Larry and Sergey) options, proposals to be voted on at the annual meeting, total voting power amongst owners, and other info. More about the Google filing in this Reuters story.

Posted by Gary Price at 4:39 PM | Permalink

April 4, 2005

Google: We Do Have A Grand Plan

Living by Google Rules from Newsweek is a revisit to the challenges Google faces against stiff competition. Revisit? Sure, because we saw these types of articles before last year, as people were dubious about Google's IPO and worried that Microsoft would simply sweep Google away. But it's a good big picture review.

No, Google's not going after eBay, it says. Yes, it's still focused on search -- spending 70 percent of its time on it -- though crucially, that 70 percent effort includes both paid and unpaid search. What chunk is going to the core web search service, vertical unpaid services like local or its massive fleet of ad reps isn't disclosed.

Google's often accused of being scattered, having no grand plan for staying strong it its space? That's dismissed. "We definitely have a grand plan," says Google Marissa Mayer, apparently in terms of how all things Google will eventually integrate and support each other.

That plan apparently didn't include putting ads into Google News, which CEO Eric Schmidt says is why they aren't there today. OK, ads have managed to be added to other products that didn't have them in the past, so you'd think that could happen here, as well.

Posted by Danny Sullivan at 3:08 PM | Permalink

March 30, 2005

Google Files Annual Report With SEC

Here's one hot off the press.

We haven't had time to give it the time it deserves (yet) but about twenty minutes ago Google filed their first annual report (10-K) with the Security and Exchange Commission. You can find the full text here. Supporting documents are linked on this page and include a list of Google's subsidiaries. Happy Reading!

Posted by Gary Price at 7:47 PM | Permalink

March 23, 2005

Bonuses For Several Google Executives

I just spotted a new SEC filing containing info about the cash bonuses several top Google execs received for their work in 2004.

Omid Kordestani Senior Vice President of Worldwide Sales and Field Operations $ 700,000

George Reyes Chief Financial Officer $ 605,000

David Drummond Vice President of Corporate Development and General Counsel $ 600,000

Wayne Rosing Vice President of Engineering $ 600,000

Eric Schmidt, Sergey Brin, and Larry Page did not receive a cash bonuses. However, all of the execs mentioned earlier as well as Schmidt, Brin, and Page each received a $1566 holiday bonus in 2004.

Posted by Gary Price at 3:01 PM | Permalink

March 17, 2005

Google Insiders Share More than $500 Million Worth of Stock

The Washington Post's David Vise takes a look at insider selling of GOOG shares in his article: Google Leaders Selling Shares.

Google Inc. co-founders Sergey Brin and Larry Page, and other senior company executives, have sold more than $500 million worth of stock in the Internet search firm over the past several months, according to regulatory filings.

Posted by Gary Price at 11:34 AM | Permalink

March 12, 2005

Keyhole: Another Google Revenue Stream

Since Google purchased Keyhole (a 3D satellite imagery product) last October there has been plenty of talk about how Google will use the technology. While that talk continues, Google is growing a team to sell the product to people/companies in various industries. I was just perusing new job openings at Google and came across one for an "inside sales rep" (aka telephone and email work) selling Keyhole to the real estate, architecture/engineering/construction, telecommunications, transportation and other markets.

Posted by Gary Price at 12:39 PM | Permalink

March 4, 2005

Google: The Business

Ben Elgin at Business Week asks if Google is a one-trick pony?

...a handful of analysts increasingly are questioning whether Google's laser-like focus on search may be something of an Achilles' heel. Google remains almost entirely dependent for growth on search -- a business that's poised to slow. In the maturing U.S. market, Forrester Research Inc. predicts growth will drop from 45% to 30% this year.

Posted by Gary Price at 9:16 AM | Permalink

February 25, 2005

The Boys Versus The Adults: Google Goes Public Story

Spotted via John, Journey to the (Revoltionary, Evil-Hating, Cash-Crazy, and Possibly Self-Destructive) Center of Google from GQ is a great, great long read about "the boys" versus "the adults" journey Google has made to being a public company, one where the boys of founders Larry Page and Sergey Bring are still firmly in control.

Posted by Danny Sullivan at 8:38 PM | Permalink

February 18, 2005

Google Files Senior Executive Bonus Plan Info with SEC

Those of you who keep close track on the business side of Google might be interested in a "current report" (aka 8-K) the company just filed with the SEC. It discusses Google's 2005 Senior Executive Bonus Plan. You'll find the two documents here and here.

Posted by Gary Price at 6:10 PM | Permalink

February 10, 2005

Insiders Sell Some Google Shares

Brief articles from both AFX News and Marketwatch.com report about some recent selling of GOOG shares by company insiders. On Tuesday, Sergey Brin sold 67,500 shares worth about $33.3 million. Google director, John Doerr sold roughly 150,000 shares worth about $30 million. Next week, 103 million Google shares held by insiders become available for sale. Google shares closed down $3.60 at $187.98 on Thursday.

Posted by Gary Price at 5:15 PM | Permalink

Things We Learned From Google's Analyst Day

Plenty of press coverage (even though the press wasn't invited to attend in person) of Google's first Analyst Day. Among things discussed? Google cofounder Larry Page seeing no problem with beta going for five years, Google denying again browser plans, a worker shortage slowing plans to expand mobile search, growth of a Google that "knows more about you" and eyebrows raised over an event where when the CFO spoke, it was the chief food officer rather than the chief financial officer. A webcast of the event (with slides) is available online. Here's a look at some of the press coverage.

Google details strategy for analysts San Jose Mercury News

+ On the "so many betas" issue that Danny recently discussed: Larry Page said, "The engineers generally like to have beta on there when they are about to make major changes and improvements," Page said. "If it's on there for five years because they are going to make major changes for five years, that's fine."

+ On Google's future plans: Schmidt said Google will be focused more on international content and services, making its services more personal to users and available on more devices, and developing a "much deeper" advertising network.

Google's big day unusuall San Francisco Chronicle

On being an uncoventional company: "One of the great secrets of Google is that we are not quite as unconventional as we say we are," Schmidt said.

A Door Prize For Analysts? The company did court analysts by offering one of them a free scooter in a drawing. However, many investment companies prohibit analysts from accepting such gifts from firms they cover because of the potential conflict of interest. A Google spokesman did not know who had won.

For first time, analysts get inside glimpse of Google AP (via Seattle Times)

On Hiring Issues Google co-founder Sergey Brin said the company would like to hire employees at a more rapid rate but has trouble finding enough applicants that meet its high standards.

On the Neverending Google Rumor Mill Page downplayed recent media reports that the company is preparing to branch into new directions by introducing a Web browser, a service for registering Web domains and telephone service over the Internet. "Most of the things we read are a surprise to us," Page told analysts.

Google's Missing Piece Washington Post

Hiring Problems A Reason for Few Mobile Services Brin said the company's inability to recruit more top-tier computer scientists and engineers abroad is slowing its plans to make Google available to users of cell phones and other portable devices.

Page Works on Google Maps Page said he spent time with an engineering team to make GoogleMaps more readable, searchable and useful prior to its release.

We Need to Improve "We know we should improve all of our products, which tends to be true for software generally," Page said.

On Profiting from Every Service Google Offers "We will eventually make money from Google News," Page said, "but we don't want to make money from all the things we have."

Google's Chef Speaks, but Not Its Finance Officer New York Times

Worries for Privacy Advocates? "We are moving to a Google that knows more about you." -- Eric Schmidt

Unusual analysts day? "They had a formal presentation by their chef but not their chief financial officer," said Mark S. Mahaney, an analyst with American Technology Research. "I have never been to an investor day where the C.F.O. didn't speak."

It's the Food, CFO Doesn't Speak But Chef Does "...Google's top chef, Charlie Ayers, spoke to the assembled analysts and investors about the lunch he had prepared, featuring entrees like grilled pork tenderloin."

Posted by Gary Price at 10:10 AM | Permalink

February 9, 2005

Gmail is "Very Profitable" for Google

BBC Online looks at web-based email services in the article: E-mail is the new database. Comments from Google's Georges Harik include the fact that Gmail is "very profitable" for Google. How profitable? Harik doesn't say. Yahoo Mail (which is also searchable), Hotmail, and AOL Mail are also mentioned. Two charts containing the Top 10 e-mail services (by audience) in Europe and the US are included. The rankings use Nielsen/Netrankings data.

Top Three Email Services--Europe 1) MSN Hotmail 2) Yahoo Mail 3) GMX

Top Three Email Services--U.S. 1) Yahoo Mail 2) AOL Email 3) MSN Hotmail

Posted by Gary Price at 3:48 PM | Permalink

Google The Registrar

We first blogged about Google becoming an authorized domain registrar about a week ago. Since then, lots of speculation but nothing about Google's exact plans with its new status. Bob Tedeschi offers a review of what we do and don't know about "Google the Registrar" along with comments from people in the domain name business in the article: A New Direction at Google.

Posted by Gary Price at 10:57 AM | Permalink

Google's Skyrocketing Value & Today's First Analyst Day

In case you missed it, Google has now overtaken eBay as the highest-valued internet company out there. Google Surges Past eBay as Valuation Debate Rages from Reuters looks at what people thing about Google now being worth $56 billion -- making it nearly as large as people like Walt Disney and bigger than companies like GM and Alcoa.

Some analysts think that's fine -- others find it too much. Of course, Boggled by Google: Wall Street Way Off Mark explains that the analysts themselves have trouble accurately predicting how Google.

Perhaps the company's first "Analyst Day" being held today will help them. The press apparently aren't allowed, one media outlet trying to get in told me. But anyone can hear a webcast via the Google Investor web site.

Posted by Danny Sullivan at 9:18 AM | Permalink

February 6, 2005

Google's Believers vs. Google's Doubters

The NY Post article: Googley-Eyed, offers a solid roundup of comments from stock market analysts about Google. One group of comments comes from Google "Believers" while another set of comments comes from Google "Doubters." Here are just two examples from the article.

The Believers "Google continues to be the leader in the paid search business, which is still in the early innings," said John Janedis, an analyst at Banc of America Securities, in a research note. "Importantly, management indicated that it does not anticipate a significant ramp up in marketing expense, which had been a major concern for us." Janedis' 12-month price target: $206.

The Doubters "Google faces competition from a number of high-profile, well-financed companies, including Yahoo!, Microsoft and Ask Jeeves," said Derek Brown, an analyst at Pacific Growth Equities. "The competitive landscape is likely to increase rather than decrease in the future. Nobody heard of Google five years ago. Perhaps the next new, new thing is around the corner.

Posted by Gary Price at 12:02 PM | Permalink

February 4, 2005

Time-Warner Owns More than 5 Million Shares of Google

The Reuters article: Broadband boosts Time-Warner profit discusses the media conglmerates latest earnings and also points out that T-W is a major shareholder of Google stock. If you check the SEC filing you'll find a section about Google.

Further, in relation to Google, in May 2004, America Online exercised a warrant for approximately $22 million and received approximately 7.4 million shares of Series D Preferred Stock of Google Inc. Each of these shares converted automatically into shares of Google’s Class B Common Stock immediately prior to the closing of Google’s initial public offering on August 24, 2004. In connection with this offering, America Online converted 2,355,559 shares of its Google Class B Common Stock into an equal number of shares of Google’s Class A Common Stock. Such Class A shares were sold in the offering for $195 million, net of the underwriters’ discounts and commissions, resulting in a gain of approximately $188 million. Following this transaction, America Online holds 5,081,893 shares of Google’s Class B Common Stock...The Company does not consider its remaining interest in Google to be a strategic investment.

Two major "institutional shareholders", Fidelity Management and Capital Research & Management own approximately the same amount of shares.

Posted by Gary Price at 10:02 AM | Permalink

Google Annual Shareholders Meeting On May 12

The Buygoogle blog has news that even though the Google Investors Relations FAQ doesn't yet have the date of its annual shareholders meeting posted, the first one will be May 12 in Mountian View. Nathan at InsideGoogle has a copy of an email sent out from Google confirming the date.

Posted by Danny Sullivan at 8:18 AM | Permalink

February 2, 2005

Google's Stock Soars One Day After Earnings Announcement

It's likely you've heard about Google's earnings announcement that beat all estimates. Today, shares of GOOG closed up more than $14 (7.33%).

Here are some numbers: + Earnings Q4 2004: 204.1 million or 71 cents per share, compared to net income of $27.3 million, or 10 cents per share, at the same time in 2003. + Revenue Q4: $1.03 billion, more than doubling from $512.2 million in the prior year. + For the Year 2004: Revenues were $3.2 billion, resulting in net income of $399 million, or $2.07 a share. More numbers in the article listed below. The complete SEC filing is summarized in this news release.

Press Review: Google Hits Record Revenue Levels (via Clickz) On AdSense: Co-Founder and President of Technology Sergey Brin would only say, 'We've obviously started in that market very, very recently and I think we're going to see big improvements -- we're working on big improvements -- which will improve the monetization rates there. In the fourth quarter, the company spent just $76 million on both sales and marketing.

Google's Q4 Profits Soar (via Media Post) "The fact that they're continuing to do so well emphasized their dominance in the paid search space," said eMarketer Analyst David Hallerman. "That the name has become a verb describes how strong Google has become. That gives them the traffic."

Google sees profits surge (via News.com) "Google had an exceptional quarter," company CEO Eric Schmidt said in a statement. "Revenues and profits increased significantly, our execution was solid across the company, and, most importantly, our relationship with our users, partners and advertisers became even stronger."

Google Tops Views, But Big Challenges Await Search Giant (via Investors Business Daily) "Historically, there has been demand for the stock," said Youssef Squali, an analyst for Jefferies & Co. "But you're talking about 100 million shares that could potentially hit the market. The stock could fall. The jury is out."

The company, which gets nearly all of its revenue from ads, continues to cash in on the growth of paid search, or ads strategically placed on search results pages.

Some say Google's service and its founders Sergey Brin and Larry Page have become cultural icons. Add in the success of the stock -- it went out Aug. 19 at $85 a share and trades near 192 -- and Google shows no signs of slowing, says Squali. "These guys continue to benefit from unbelievable free publicity," Squali said.

Posted by Gary Price at 4:44 PM | Permalink

February 1, 2005

Keeping Them On The Google Farm When The Millions Have Gone

Google's got a tough problem. Now that hundreds of its employees are struck new found wealth, keeping them around is going to be a lot harder, as covered before. After all, the new hires aren't going to be getting rich off an IPO that's already happened. Solution? One appears to be a new Founders' Awards program that can be worth millions to Google employees who've been deemed to do outstanding work. The New York Times has more in New Incentive for Google Employees: Awards Worth Millions.

Posted by Danny Sullivan at 2:45 PM | Permalink

Another Web Search IPO in the Works

The Reuters article: China search engine eyes IPO informs us that Chinese search provider Baidu.com has plans for a U.S. IPO sometime this year looking to raise $200 million. In June 2004, Google became a minority investor in Baidu.com.

Posted by Gary Price at 12:05 PM | Permalink

January 30, 2005

Google Ousted from Top Spot in Global Brand Rankings

A Reuters article: Apple Edges Google as Top Brand, reports that Apple is now the "most influential global brand" in a survey just released by Brandchannel. Google is now at number two on the Global list and North American lists. The complete results are posted here.

From Brandchannel: Largely based on functional attributes, which offer clarity in a complex field, Google is by no means invincible. It faces competition on many fronts including Yahoo’s Overture search engine and other solutions like Vivisimo’s Clusty, and MSN Desktop Search, all of which hope to build a better mousetrap.

Most Influential Brands GLOBAL 1. Apple 2. Google** 3. Ikea 4. Starbucks 5. Al Jazeera ** A move down from the 2003 rankings

North America 1. Apple 2. Google* 3. Target 4. Starbucks 5. Pixar * A move up from the 2003 rankings

Posted by Gary Price at 1:11 PM | Permalink

January 26, 2005

Standby: Google Q4 Earnings Coming Tuesday

This press release from the Mountain View reminds us that Google's Q4 earnings will be released on Tuesday, February 1, 2005 at 4:30PM ET / 1:30PM PT. The conference call will be webcast here.

Posted by Gary Price at 6:09 PM | Permalink

Google Employee Blog Goes Back Up

Mark Jen, the Google employee whose blog content disappeared after he made some criticisms of the company, is back up and blogging again. In a new post, he explains that he had some stuff "that's not supposed to be there" and removed the entire blog as the "quickest way for me to fix the situation."

What stuff? Doing a quick comparison using Microsoft Word between what's up now and what was there, this is what was removed from a post on this day, the removed portions shown in bold:

they started off the day with a financials presentation, which was actually quite interesting. of course, i understand that they obviously will put a positive spin on everything, but the weight of the raw numbers is undeniable. both google's profits and revenue are growing at an unprecedented rate even while they are increasing their expenditures on capital and human resources. not to mention that google has been primarily focused on the u.s. market and is now turning their full attention to the global marketplace.

so after the interesting financials, the products team gave presentations reviewing product performance in 2004. and giving sneak peeks of the products we'll unveil in 2005. if you guys thought gmail and google groups were cool, you ain't seen nothing yet!

Google is just a few days from releasing its latest financial figures, and you can imagine that the company is understandably sensitive about anything coming out from it relating to earnings -- especially after a recent knuckle-rap from the SEC relating to issues with its IPO (see SEC Will Not Pursue Case Against Google) for more.

Add to that the fact that Jen also says in his explanation, "I'm learning that google is understandably careful about disclosing sensitive information, even vague financial-related things," and it sounds like it was suggested that this type of financial disclosure could potentially harm the company, so consider carefully what you release.

Jen specifically notes that he was not told to remove anything in particular, however. And Google tells me that he was not told or forced to remove anything from his blog. In fact, plenty of the critical remarks he made about the company remains.

So -- sounds like the blog removal all revolved around those comments on financial performance, and that he did decide to remove the material in retrospect.

One other entire post is also missing, his very first one, which you can still find on Bloglines. It's about his first day on the job and has nothing really financially-related at all. My guess is that he just hasn't gotten to putting it back up.

Finally -- what about the site going missing from Google itself? Well, we actually never knew if it was in Google in the first place. It seemed likely that it was, given that Yahoo also had it -- but that wasn't a guarantee. But now it's official. Google tells me it did not remove the site from the index.

Posted by Danny Sullivan at 4:22 PM | Permalink

Google Employee Pulls Critical Blog Posts

"Life @ Google From The Inside" is the subtitle of new blog ninetyninezeros by Mark Jen, who says in the site he's a former Microsoft employee now working for Google. But the blog may already have died, after Google Blogoscope reported on a post with a couple of critical comments aimed at Jen's new employer:

Microsoft's health care benefits shame Google's relatively meager offering....

Google demands employees that are 90th percentile material, so what's with the 50th percentile compensation? The packages would've been decent when the company was pre-IPO, but let's be honest here... a stock option with a strike price of $188 just doesn't have the same value as the ones of yesteryear."

The posts are now gone, apparently pulled shortly after Google Blogoscope spotted the blog. Jen's past blog during his Microsoft time is here.

John Battelle notes that that the Google cached copy of the site is gone -- taken out manually by Google, he wonders? I agree, it's odd. It has been up long enough that you'd expect it to have been indexed. Instead, not a page at all from the site is showing as present.

Google does have an automated fast page removal service that authors can use. That could explain how the previous posts were taken out -- but it doesn't explain why the home page itself isn't being cached. Of course, neither MSN or Ask Jeeves show the blog -- but neither of them are as robust as Google in crawling, either.

Never fear, John spotted that Yahoo's not only indexed the page but makes it still available in cached form. Picking up some other comments from that:

i had a bunch of liquid capital in my checking account last time i checked, and now all of a sudden i have nothing....i realized the root problem was that google's relocation process requires the employee to pay all the expenses up front and then get reimbursed for them later....on the plus side, this first paycheck is going to be huge

the "benefits" package at google. as i thought about it, i realized that most of the "benefits" actually seem to be thinly veiled timesavers to keep you at work...if you think about the fact that the employee now probably only takes a half hour lunch break and also stays late working, the company actually realizes far more than an $8 gain in employee output. not to mention that most people think this is a great "benefit" and google gets a ton of positive press on it. in short, this "benefit" is designed benefit the company, not the employee.

despite these rants, i still chose to come to google. the work environment, projects and risk/reward equation were all more enticing than up in redmond. but just like when you look for apartments in SF, no option is ever perfect.

And an earlier post shares information that came out of a large Google sales conference that happened last week:

i understand that they obviously will put a positive spin on everything, but the weight of the raw numbers is undeniable. both google's profits and revenue are growing at an unprecedented rate even while they are increasing their expenditures on capital and human resources

the products team gave presentations reviewing product performance in 2004 and giving sneak peeks of the products we'll unveil in 2005. if you guys thought gmail and google groups were cool, you ain't seen nothing yet!

So what happened to the blog? I'll see if I can get an answer. It wouldn't surprise me if Jen's new employers expressed dissatisfaction with him venting through the blog. As for the missing pages, I suspect Jen probably asked Google for special help in getting them out of the index fast -- which they no doubt would have been happy to do.

Postscript: Bloglines reproduces all the posts that were on the original site here. Apparently, the blog sent out the full-text of posts in its feed, causing this to happen.

Posted by Danny Sullivan at 8:39 AM | Permalink

January 21, 2005

Page Sells Shares, Joins XPrize Board, Honored at Demo@15

Here are a couple of items about Mr. Page and Mr. Brin that have recently crossed our desks.

+ If I added it up correctly, Larry Page sold about 330,000 GOOG shares (filings here and here) in a planned sale on Tuesday. Shares sold in the $202-$204 range for about $67 million.

+ Last week, Page was named to X Prize Foundation Board of Trustees.

+ Larry and Sergey will be recoginized at the DEMO@15 conference next month as two of the top innovators of the past 15 years. Six Apart, TiVo, and Marc Andreessen are some of the members of this group.

Posted by Gary Price at 12:43 PM | Permalink

January 18, 2005

Google Heading Into Telecommunications?

A job ad for a fiber optic contract negotiator has some wondering if Google's planning a jump into telecommunications. Details in Google wants 'dark fiber', from News.com.

Posted by Danny Sullivan at 11:08 AM | Permalink

Revenue Model For Free Products? We'll Figure It Out Later, Says Google

The new version of Picasa that Google rolled out today is offered for free -- and the old version lost its $30 price tag soon after Google acquired Picasa. So how's it making money? That's not something Google's worried about, for the moment.

Free-for-All Could Pay Off for Google from the LA Times looks at this Google model of building a quality product and figuring out how to monetize it later. Locking people into an array of Google services may prove profitable for Google's current ad-driven model, down the line.

Covering similar ground, Entrepreneur lets Google fly with his creation from USA Today looks at how Picasa general manager Lars Perkins was freed by Google not to worry about the revenue side of things. Google units include social networking, photos, maps from USA Today also recaps some of Google's many services that don't cost users but also don't necessarily earn money for Google right now.

Posted by Danny Sullivan at 9:16 AM | Permalink

January 13, 2005

SEC Will Not Pursue Case Against Google

We've learned from an SEC 8-K filing that the Securities and Exchange Commission will not pursue a case against Google regarding the pre-IPO publication of a Playboy interview with Sergey Brin and Larry Page.

The filing also points out that Google has also settled with the SEC "relating to its stock option practices." Google will not be fined. These three documents offer details. + Cease and Decist Order from the SEC + Google's Offer of Settlement + Consent Order for Violations Of Section 25110 Of The California Corp. Code

Posted by Gary Price at 12:55 PM | Permalink

January 12, 2005

Google At $235 Per Share?

RBC analyst Jordan Rohan thinks that expansion in Western Europe, more spending on search advertising, and more searches generated through broadband growth means Google is going to be worth more. His previous target price was $200. Details from The Street: Google Target Rises. Thanks for the tip from Search Engine Guide.

Posted by Danny Sullivan at 9:38 AM | Permalink

January 11, 2005

New Google Garb for Sale

Those of you who like to "wear" Google will be interested to know that a couple of new items are now for sale in the Google Store. Now available: + Chill Fleece Gaitor Cap + Two different types of bike shorts. Regular or bib style complete with a Google doodle for the Tour de France.

Postscript (from Danny): Russell Shaw has an interesting post in the Industry Standard on how despite having a Google Store, Google didn't follow through with a trademark application for it: Why Did Google Let The "Google Store" Trademark Die?

Posted by Gary Price at 2:28 PM | Permalink

January 6, 2005

Sergey and Schmidt Sell Shares

Since many of you follow Google very closely, a quick note to point out that both Sergey Brin and Eric Schmidt have sold shares of GOOG shares in the past week.

According to Bloomberg, Brin sold about 200,000 shares for approximently $40 million on Monday.

Bloomberg also reports that Eric Schmidt sold about 113,000 shares on December 31 for about $22 million.

These sales are part of the "prearranged" sales announcement that Brin, Schmidt, and Page announced in November. The three planned to sell 16.6 million shares over 18 months.

Posted by Gary Price at 12:25 PM | Permalink

January 5, 2005

Video Of 60 Minutes Google Story Available

Missed the 60 Minutes story on Google? Now you can download it here in AVI format. Be aware it will be a big download. For background on the story, see Gary's previous posts: Google on 60 Minutes  and Google Will Be Featured on 60 Minutes this Sunday.

Posted by Danny Sullivan at 3:08 PM | Permalink

Google Breaks $200; Time For Stock Split?

Spotted via SearchEngineGuide.com, this CNN/Money article Google sticker shock looks at Google breaking the $200 per share barrier this week and asks if it's time for a stock split to better lure individual investors.

Posted by Danny Sullivan at 10:33 AM | Permalink

January 4, 2005

Google: The Little Search Engine

The SmartMoney.com article: The Little Search Engine That Could is a review of the author's 2004 investments. Like many people, he did well with GOOG. What gave me a smile and why I'm mentioning this article, is its title: "The Little Search Engine That Could." Google, a little search engine in 2004? (-: That's news to me.

Posted by Gary Price at 3:54 PM | Permalink

The Google Charity

News.com's Paul Festa reports that the Google charitable foundation as described in the Google's "owners manual" (aka the first portion of Google's IPO filing) is getting ready to launch. The foundation will give 1 percent of Google's equity and profits to charity. "This is going to be a key area of focus for the company in 2005," said Cindy McCaffrey, who ended her position as Google's vice president of marketing with the new year and will stay on to work part time on the foundation. "We're working now to get all the pieces in place."

More in the News.com article: Google readies charitable foundation.

Posted by Gary Price at 9:20 AM | Permalink

January 2, 2005

Update: Google on 60 Minutes

The Google story on 60 Minutes just aired and a summary of the story is now available here. This summary was posted on the CBS web site for for a few hours on Friday. I posted a couple of comments here.

Two additional notes: 1) The 60 Minutes correspondent, Lesley Stahl, called paid keyword ads "revolutionary." OK. However, the fact that the concept didn't originate at Google isn't included. Sorry Overture/GoTo!

2) As noted in my Friday post, the story also points out that Google is developing mechanical translation software. They've offered some of these services for a while. No mention that Babel Fish (orginally part of AltaVista) and others have also these services for many years. Babel Fish has been around since December 9, 1997. See: AltaVista Debuts Translation Service.

Like I've said before, Google's competitors need to continue developing and offering great technology while also trying to challenge the Google pr juggernaut. This is no easy task.

Posted by Gary Price at 7:39 PM | Permalink

December 30, 2004

Google Will Be Featured on 60 Minutes this Sunday

2005 will get underway with something we saw a lot of in 2004, media attention for Google.

At the moment, the company is scheduled to profiled in a 60 Minutes (a top-rated news program in America) segment this Sunday.

A "text version" with highlights from the 60 Minutes piece was posted this afternoon on the CBS News web site. However, I just noticed that the text of the article is no longer available online. Perhaps it was first posted by mistake.

Here are a few of my notes from the now unavailable article.

Searchblog's John Battelle offers comments throughout the article.

+ How after the IPO Sergey purchased a new car and t-shirt.

+ That Brin and Page still share one "tiny" office.

+ How Sergey wants to finish his Ph.D.

+ What's Eric Schmidt's daily worry? Managing a company that's growing as fast as Google. Human resources issues at Google were recently blogged about in this post.

+ Schmidt is also quoted saying that the search business isn't a zero-sum game.

+ The company has never run a television commercial. Btw, Danny mentioned about a week ago that Cindy McCaffrey, one of the key people in Google's marketing/branding success, has decided to leave the company.

+ The good food at the Googleplex. Note: Google is looking for chefs!

+ Brin and Page?s breakthrough was a series of algorithms -- software code -- that created a ranking system by relevance for the Internet. Yes, the Google Guys deserve plenty of credit but so do Jon Kleinberg, Eugene Garfield, and others.

+ A mention of Google's "don't do evil" philosophy.

+ Google has teams working on all sorts of change-the-world ideas. "Change-the-world ideas" include machine translation and video search. Yes, of course, many other companies have also been working on these types of technolgies for many years. It will be interesting to see if they mention this fact during the broadcast.

Posted by Gary Price at 5:56 PM | Permalink

December 21, 2004

The Google/Yahoo Rivalry in 2005

The AP's Michael Liedtke offers a look at what 2005 might bring to the Google/Yahoo rivalry.

"We are compiling this collection of very cool technologies and taking our sweet time figuring out what to do with them," Google chief financial officer George Reyes said during an investment conference in early December.

The strategy has produced an exotic casserole that includes e-mail, shopping and news services, three-dimensional maps, digital photography, tools for creating Web logs, or blogs, and software for searching the information stored on computer hard drives.

Yahoo takes a more practical approach to technology, first identifying what people want and then building or buying a product designed to give visitors one less reason to leave its Web site — already the world's most popular online destination.

Posted by Gary Price at 11:05 AM | Permalink

December 14, 2004

More on Google vs. Microsoft

Almost immediately after finishing my post below about the new Technology Review article that focus on Google vs. Microsoft, I came across David Coursey's column from today that also takes a look at G vs. M.

Coursey's: Google, Microsoft in Search Showdown: A Must-See for 2005, appears on the eWeek web site.

Posted by Gary Price at 5:40 PM | Permalink

Google Gets Another Magazine Cover

The new issue of Technology Review is out and guess who's on the cover?

Yes, it's Google. Two covers in less than a month.

The full text of Charles Ferguson's excellent Technology Review article: What’s Next for Google is available here.

The article has a focus on Google vs. Microsoft. Good portion of time spent discussing API's.

One Comment/Minor Gripe. I would have liked if Ferguson spent some time discussing the marketing issues Microsoft and others also face when competing with Google. Yes, of course, great technology is important but so is getting people to try it and use it again. This is where marketing and branding come into play and as I've said many times, few do it better than Google. Just look at the coverage and attention Google's announcement today likely deflected away from yesterday's release of the MS desktop search product.

Here are a couple (of many) passages from the eight page article that caught my eye:

Despite everything Google has—the swelling revenues, the cash from its initial public offering, the 300 million users, the brand recognition, the superbly elegant engineering—its position is in fact quite fragile.

Eric Schmidt and Microsoft’s Bill Gates will be competing against each other for the third time. For both men, the contest is personal as well as financial.

The emergence of search standards would encourage tremendous growth and provide many benefits to users. But standardization would also introduce a new and destabilizing force into the industry. Instead of competing through incremental improvements in the quality and range of their search services, Microsoft, Google, and Yahoo will be forced into a winner-take-all competition for control of industry standards.

One Google manager, who preferred not to be named, said his company understands the need for proprietary control, and that future products would prove it...But the Google executive declined to com­ment on future plans, noting that his employer had become secretive to the point of paranoia

Google?s sole Web API is laughably limited, offering little functionality and contractually restricting users to 1,000 queries per day.

Two Google employees (both of whom prefer not to be named) told me that Google?s leaders believe that the company?s expertise in infrastructure?knowing how to build and operate those 250,000 servers?constitutes a competitive advantage more important than APIs or standards. This could be a major, even fatal, error.

The article concludes with the author's suggestions about what Google should do.

Posted by Gary Price at 4:48 PM | Permalink

December 10, 2004

Pay-Per-View Media at Google?

Susan Kuchinskas at Internetnews.com takes a look at how a patent application titled, "Method for searching media" authored by Larry Page, might offer clues about Google offering access to magazine articles, CD's, DVD's, and other media using a pay-per-view revenue model.

The proposed permission protocol would request authorization from the publisher -- and that protocol could be used to track page views and share some revenue with the publisher, or to enable pay-per-view. One idea Page includes in the patent application is to permit "subscription-like access" to the electronic content.

Google is looking not only to news, but also to to CDs, DVDs and audio books, as well as magazines, newspapers and journals, according to the application. As Google points out, much printed media isn't available online, but rather "sold in hard copy for profit." That makes it hard for search providers to get a piece of the action.

You can read the complete patent app here.

Btw, Google registered the domain name Googlemusic.com in 2003. (-:

Posted by Gary Price at 9:28 AM | Permalink

December 8, 2004

New Google Metrics on Searchblog

Searchblog has posted some new Google metrics from Majestic Research.

They include: + 98 percent of GOOG revs are from paid search. 65% of revs are domestic. + Overall US searches grew 6% quarter to quarter, Google powered searches grew by .2%.

Danny has a few comments about some of these numbers. You'll find them in the comments section below John's post. Danny's main point is the fact that their is a difference between paid search and contextual advertising. As Danny puts it, "Contextual is not search," and these numbers don't specify what is paid search and contextual.

Posted by Gary Price at 2:03 PM | Permalink

December 7, 2004

Google CFO Say Clickfraud Needs Fast Fix

Gary blogged earlier about a Financial Times article on clickfraud. Here's a related one from CNN, inspired by Google CFO George Reyes telling an investor conference recently, "I think something has to be done about this really, really quickly, because I think, potentially, it threatens our business model." For more, see Google CFO: Fraud a big threat.

Reyes later comments accurately that clickfraud is not just a Google problem. Others such at Yahoo, eBay and Amazon also are impacted. But as for a solution, nothing was offered.

Jessie Stricchiola, one of our regular speakers at Search Engine Strategies on the topic, is quoted saying the search engines aren't doing enough about the problem -- and she says despite the refunds Google issues, they are the most "stubborn" and "least willing" to work with advertisers.

For more on the topic, see also my past blog post Clickfraud: Whose Problem, FTC, Search Engines Or Advertisers?. FYI, our Auditing Paid Listings & Clickfraud Issues panel returns to Search Engine Strategies next week in Chicago. Once again, both Google and Overture have declined to take part.

Posted by Danny Sullivan at 11:26 AM | Permalink

December 6, 2004

Google vs. Yahoo Story on CNBC

CNBC just ran a Cory Johnson piece about coporate arch rivals. Today's story looked at Google vs. Yahoo. Here are a few quotes:

"The corportate cultures at Google and Yahoo show you just how different these companies are." -- Cory Johnson, CNBC

"It is a driving force in the way we approach things here, not what is whiz bang but what is helpful and useful an exciting." -- Scott Gatz, Yahoo Engineer

"Great products drive great business and if we focus on delivering for the users the products they want the business works itself out and it has proven to be true." -- Scott Gatz, Yahoo Engineer

"I think our approach is a lot more intergrated, i think our approach is more about, how do we take different parts of our net worth and enhance a more seamless experience." -- Jerry Yang, Yahoo

"The idea at Google is to invent something first and then figure out how to market it." -- Cory Johnson, CNBC

On Google and Yahoo: "Two fundamentally different approaches, Yahoo! comes at search at a way to monitor traffic and google goes at sponsored search as a way to monitor an interesting technology they've developed." -- Mark Mahaney, American Technology Research

No one from Google was quoted or featured in the story.

UPDATE: The complete text of Cory's story is up on the MSNBC site.

Posted by Gary Price at 5:26 PM | Permalink

December 3, 2004

Video: Eric Schmidt Lectures at Stanford's Business School

I just discovered an archived version (RealVideo) of a lecture E.S. gave at the Stanford Graduate School of Business in April 2004. It runs about 21 minutes.

Here's a rundown: + Opens with slides of early Google computers and servers. + At 4:45, On how much electrical power Google uses (about 10 megawatts) + At 4:50, "All of Google's Data Centers have gone bankrupt" + At 5:14, Linux vs. Windows + At 9:20, Gmail + At 10:10, "We're trying to make Google a place where people live online." + At 10:20, The Google workplace and product cycle + At 11:15, "Google can also be understood as being built on a platform of the last 20 years (cheap fiber, silicon from Intel, large disks, free software) + At 15:20, "Why can't we just take an IPod and put everyhing that is known on it and have you carry it around?" + At 17:29, "Hiring really defines a company." + At 18:22, "A much better way of running a company is by consensus." + At 19:40, The long term goal of a CEO is to build a great and duarable institution." + At 20:45: The average age of a Googler is about 28.

Yesterday, Fortune published an interview with the Google CEO.

Posted by Gary Price at 3:21 PM | Permalink

December 2, 2004

Schmidt Begins Selling, Rosing Sells More

The conclusion of the Fred Vogelstein Fortune article I just blogged discusses insider selling at Google.

Well, it looks like the planned sale of shares (first reported on a couple of weeks ago) by Schmidt, Page, and Brin is underway. Recent SEC filings show that Eric Schmidt sold some shares (over 100,000 last week) and Wayne Rosing, Senior VP of Engineering, sold shares on Monday. You can review the SEC forms for both Schmidt and Rosing either on the SEC site. MSN Investor also has a total amount of shares sold by E.S. but not sure if this takes into account the amended filings.

Posted by Gary Price at 6:30 PM | Permalink

Google: Fortune's Cover Story

The December 13, 2004 issue of Fortune arrived today with Brin and Page on the cover. It asks the question, "Is this company worth $165 a share. The full text of the article is also online but requires a Fortune subscription.

John points out that a "web only" interview with Google's CEO Eric Schmidt, is available to non-subs.

Here's a quick review of the article and a few quotes:

Fred Vogelstein's opens the article explainig that one reason many people like Google these days, it's making them money.

The next section looks at how Google is able to innovate. "[Google is] constantly tweaking its signature search product and all its offshoots at a rapid rate. It might not have the impregnable wall against competitors that its blue-chip peers in tech have—digital auction house eBay with its network effect or Microsoft with its desktop monopoly—but it's trying to build something comparable through quick and easy-to-use innovations that keep surfers coming back."

+ A look at what Yahoo, MS, and Amazon are up to.

+ Overview about how Google makes money with both paid ads on search result pages and contextual advertising. SeatGuru.com is mentioned. AdSense ads have made it a $120,000 year business.

"Google's goal is to get as deeply meshed as possible with advertising customers. It already handles online advertising for most of the FORTUNE 100, corporate giants with multimillion-dollar ad budgets like Citigroup, Sony, and Wal-Mart. Its ambition is to go further, cataloging every product a big company has and then advertising each one of them with unprecedented efficiency on the web."

Vogelstein offers up a few graphs about how Brin, Page, Schmidt, and the Google culture. He writes, "there seems to be a method to the madness.

A list of a few Gogleplex perks: + Food (we read about this one all of the time) + Free Laundry + Banking

We read about Google starting meetings at 7 minutes past the hour. Why? "It was my {Eric Schmidt] idea because that's how college works," Schmidt says. Classes often begin at 9:05 or 9:10."

Next, a look at Google's recruiting efforts: "A team of nearly 50 recruiters divided by specialty combs through résumés, which applicants must submit online, then dumps them into a program that routes those selected for interviews to the proper hiring committee and throws the rest in the electronic trash. Interviewing for a job is a grueling process that can take months. Every opening has a hiring committee of seven to nine Googlers who must meet you. Engineers may be asked to write software or debug a program on the spot. Marketers are often required to take a writing test. No matter how long you have been out of school, Google requires that you submit your transcripts to be considered. The rigorous process is important partly for the obvious reason that in high tech, as on Wall Street, being the smartest and the cleverest at what you do is a critical business advantage."

Vogelstein then offers a pagagraph or two about how the company has deals with customers. "Some customers still complain. One says that doing a simple deal with Google is harder than doing a complicated deal with Microsoft. But others who used to gripe about Google's disorganization say there's actually been some improvement....Says another executive who has done business with Google: "They're less arrogant, and they listen better."

Near the end of the article Vogelstein writes, "For all its impressive technology and verve, Google, as noted earlier, has no such clear competitive advantage. That may help explain why?as was true during the late, great dot-com bubble?many insiders are rushing for the exits. Three top executives, engineering chief Wayne Rossing, general counsel David Drummond, and human resources chief Shona Brown, said in SEC filings at the end of November that they had sold blocks of stock worth millions of dollars."

Posted by Gary Price at 5:27 PM | Permalink

Most Of Google Remains In Beta

Google's release of a new Google Groups service today ironically causes the majority of features offered via the Google home page to be in beta status.

Overall, 4 of the 6 major services on the home page -- 66 percent -- are in beta. If you don't use Google Desktop, then it's 3 out of 5 services in beta, or 60 percent of them.

My article for Search Engine Watch members takes a longer look at this: Breaking Out Of Google's Beta Limbo. It's complete with a chart showing all the major Google services, when they launched and how long to emerge or remain in beta. For things like Google News or Froogle Shopping, we're talking two years or longer in beta.

Overall, that article concludes that at some point, it's time for these services to either emerge from beta or be dropped as ready for promotion to the general public.

Posted by Danny Sullivan at 7:59 AM | Permalink

Google Management Doing Lots of Talking

Lot's of comments from Google's management in the past day or so on a variety of issues. Here's a roundup:

+ We already blogged about Urs Hoelze commenting about the mobile phone industry.

+ Google's CEO, Eric Schmidt, tells a group that teaches entrepreneurship to kids about how he's proud of the auction-style IPO format.

This SF Business Journal article also offers more. ++ "We're working hard to integrate local search and local advertising" ++ "One of the greatest growth businesses is before us," Schmidt said. "The whole world is getting online." ++ Asked what hot growth area he'd recommend young people go into today, Schmidt said, "Folks should do what they want. "The best way to change the world is for you yourself to participate at your highest potential."

+ Google's CFO, George Reyes, tells a group of analysts that his company "obsesses" over "key constituencies." He also says, "We have very smart, well-financed competitors," he said. "What we have learned is people value the trust of our brand. It's going to be very hard for some of our competitors to compete on that basis." He also said click-fraud is a big threat. "I think something has to be done about this really, really quickly, because I think, potentially, it threatens our business model."

Posted by Gary Price at 2:51 AM | Permalink

November 26, 2004

And More Insider Sales at Google

The AP reports that three more Google "insiders" sold shares on earlier this week

Those selling stock on Monday: + George Reyes, CFO, sold more than 300,000 shares SEC filings + Jonathan Rosenberg, Vice President of Product Management, 42,525 shares SEC filings + Omid Kordestani, Senior Vice President, sold 243,526 shares. SEC filings

Posted by Gary Price at 9:39 PM | Permalink

November 23, 2004

More Insider Sales at Google

Plenty of press attention (and an SEW Blog post) last weekend about Brin, Page, Schmidt, and others selling some shares.

We just learned (via EDGAR) that Google's VP of Business Operations, Shona Brown, also sold a bunch of stock last week (11/18 to be precise).

You can review the EDGAR docs here: #1 #2 #3 #4

Posted by Gary Price at 9:19 AM | Permalink

November 20, 2004

Sergey, Larry, and Eric Announce Plans to Sell Some Stock

Michael Liedtke at the AP reports that Sergey Brin, Larry Page and Eric Schmidt plan to sell some shares of GOOG.

The co-founders of Google, Larry Page and Sergey Brin, each plan to sell as many as 7.2 million shares of their stock during the next 18 months - divestitures that would give them more than $1 billion apiece at current prices. Eric Schmidt, the company's chief executive, filed to sell as many as 2.2 million shares.

Based on Friday's closing price, "Mr. Page and Mr. Brin would each pocket $1.2 billion from the sales while Mr. Schmidt would collect $373 million."

If/when the sales are completed, Brin and Page will still own about 31 million shares each. Eric Schmidt will still own about 12.2 million shares.

Here's the EDGAR filing with the details.

Liedtke also reports that Google venture capital firm Kleiner Perkins Caufield & Byers sold 5.78 million shares on Wednesday for $997 million. KPC&B invested about $12.5 million in Google in June 1999.

Other Google "insiders" selling shares during the past week included: + Wayne Rosing + David Drummond + Shriram Kavitark Ram

Posted by Gary Price at 8:38 PM | Permalink

November 18, 2004

Google Says Growth is Slowing

The AP article: Google Says Growth Is Slowing Down, that the search leader says that the growth that the company has seen so far this year, might not be sustainable.

In a regulatory filing with the Securities and Exchange Commission, the Internet search engine said that although its revenue grew faster in the third quarter, which ended Sept. 30, than in the second quarter, its revenue growth rate has generally declined...Google also said it expects its operating margin will be slightly greater in 2004 compared with 2003, mainly because it expects its stock-based compensation costs will continue to decrease as a percentage of revenues, at least in the near term.

Posted by Gary Price at 9:28 AM | Permalink

November 16, 2004

Google CEO: The Next Killer Device Is A GooglePod

At a tech summit at Google HQ yesterday, Eric Schmidt talked about a "killer" info tool he's thinking about, let's call it the GooglePod.

The next killer device is a clearly a personal one,'' Schmidt said. "The one I personally favor is putting all the world's information into the equivalent of an iPod, which will be possible in the next five to 10 years. And if you can't quite do that, your wireless connection will help you get what you need.

More about the summit (which is scheduled to air on tv) in this article by Michael Bazeley.

Postscript: Merc story is no longer online, but see a copy here.

Posted by Gary Price at 11:09 AM | Permalink

November 15, 2004

Google Publishes Quarterly Report

Although Google's earnings announcement was a couple of weeks ago, the GOOG 10-Q (quarterly report) was unavaible until today. If you like numbers, here's the filing.

Posted by Gary Price at 7:24 PM | Permalink

October 23, 2004

Google More Profitable - But Why?

Google's stock price has been hitting new heights, with some financial analysts speculating it will reach $200 per share. Why the excitement? Google had a great third quarter. Revenues doubled compared to the same time period in 2003 -- a 105 percent increase, to be exact.

What amazes me is that no one seems to be acknowledging that Google also had a great second quarter. Google's revenues in the second quarter of this year rose 125 percent compared to the same time in 2003.

In other words, the phenomenal growth when comparing quarterly revenues this year to the same time last year isn't new. Analysts could see this way back in July before Google went public. And despite this, many didn't even think Google was worth $100 per share.

Forget revenue. How about income, the profit Google is actually making? Google's net income in the third quarter this year versus the same time last year rose 154 percent. Impressive. But again, not surprising. After all, Google's second quarter net income this year rose nearly the same, 146 percent, compared to the same time last year.

Of course, there's a big qualification to the income figures. Google took a big charge in paying off Yahoo to settle a patent dispute over paid listings. If that charge wasn't included, Google's net income in the third quarter would have been a stunning 512 percent increase over the same time last year, if I'm doing my math right.

Wow. Now that's exciting. And to see it another way, let's shift gears and consider the change between the second and third quarters of this year, rather than looking back to last year.

Revenue for the third quarter of this year rose 15 percent over the previous quarter. But net income, excluding the one time charge, rose a dramatic 58 percent.

In other words, Google doesn't seem to be doing well because it's selling more ads. Instead, it's managing to somehow make much more profit off those sales. How? I wish I knew. I've yet to see that explained in the various pieces I've read.

Some reading materials:

• Google's First Report Is a Goodie from BusinessWeek has a good rundown on figures.
• Gaga for Google from CNN Money also has lots of good quotes and observations.
• Google shares go crazy from the San Jose Mercury News has quotes all around, with analysts thinking Google will get stronger and those who are dubious.
• Google Investor Relations has links to a release with the most current third quarter figures plus the second quarter ones in the June 30, 2004 10-Q filing.

Posted by Danny Sullivan at 2:28 PM | Permalink | Comments (0)

October 21, 2004

Google Reports Q3 Earnings

Google has reported earnings of $.19/share for Q3 2004. Revenue rose 105 percent from a year ago to $805.9 million.

Google-Sites Revenue-Google-owned sites generated $411.7 million or 51 percent of total revenue. This represents an increase of 99 percent over the third quarter of 2003.

The Google Network-Revenue generated on Google's partner sites, through AdSense programs, contributed $384.3 million, or 48 percent of total revenue, a 120 percent increase over the Network revenue generated in the same quarter last year.

On a worldwide basis, Google employed 2,668 full time employees as of Sept. 30, 2004, up from 2,292 as of June 30, 2004.

Here's the complete news release and some analysis from CNN/Money.

I've posted some random notes from the conference call below.

+ Eric Schmidt: Google remains committed to remaining an unconventional company. Very pleased with performance.

+ Larry Page: Business strategy solving problems for many on a global scale. Prepetually working on ways to grow indexes. Quarter Highlights: Google Print, Google SMS, and Google Desktop. Began testing image ads. Top 50 advertisers represented only 15% of growth 70% of engineering resources focused on enhancement of core services 30% focuses on emerging businesses (GMail, Picasa, Blogger)

+ Brin: Higlights AOL Europe announcement New business with Google Search Appliance (Morgan Stanley and British Library) International Operations account for 35% of revenue

Eric Schmidt: Continues Q3 highlights including Picasa "Google is delivering on it's commitments."

Q. What level do beta products (Froogle, GMail) contribute to revenue? A. A small percentage. They do contribute to brand loyalty.

Q. How will you monetize desktop search? A. Monetization occurs after a product becomes successful with end users. We will deal with it as it emerges.

Images ads are an important new product and have a very exciting future.

Q. What features are advertising customers most excited about. + Improved targeting + Conversion tracking

Image ads are "fairly broadly" available and they are getting more publishers.

How does branded/image/display ads fit in your plans? Images ads are somewhat less targeted but they are more interesting for users.

Are users getting fatigued with sponsored links? We have not seen this. Much more stringent requirements for ads.

Q. Google portal or platform? Not a portal and don't have a portal approach. We look at each piece of what an end user needs. Then we build it (or by it) and integrate it. GMail is an example. Solve a problem in a new and better way.

Posted by Gary Price at 4:20 PM | Permalink | Comments (0)

October 20, 2004

Google Advertising Forecasts Obtained by the SF Chronicle

Verne Kopytoff at the San Francisco Chronicle has once again gotten access to some internal Google documents. These dccs show that the company is planning to to add 372,000 new advertisers during the next four years.

The internal Google documents obtained by The Chronicle give unusual detail about the matter. They include advertising forecasts that have not been publicly disclosed.

Google predicted that the number of advertiser accounts will jump from 280,000 this year to 378,000 in 2005, according to the documents. From 2004 to 2008, the number of accounts is expected to more than double to 652,050.

Google expects its advertiser accounts to grow 35 percent between 2004 and 2005, according to the internal documents. However, Google estimates that the growth rate will decline to 15 percent between 2007 and 2008.

More in the article: Google forecasts growth Search engine sees 372,000 new ad accounts in 4 years A chart showing estimated advertiser growth is also available.

Posted by Gary Price at 11:13 AM | Permalink | Comments (0)

Google: Fastest Growing Tech Company in North America

Deloitte and Touche has just released their annual "Fast 500" rankings of the fastest growing technology companies in North America (based on percentage revenue growth over five years, fiscal year revenues 1999-2003) and Google is at the top of the list. Google had a revenue growth rate over five years of 437,115 percent, moving from revenues of $220,000 in 1999 to $961,874,000 in 2003.

You can find a summary of the Fast 500 in this news release and download the complete list of 500 here.

Others + Coming in at number five, is comparison shopping engine, PriceGrabber. With 2003 revenues of $26,909,000, 51,648 percent higher than its $52,000 in revenues in 1999.

+ FindWhat is at number 21 on the list with a five year growth rate of 15,878 percent.

Posted by Gary Price at 9:22 AM | Permalink | Comments (0)

October 18, 2004

Google's Q3 Earnings Coming Thursday

Google will release their Q3 2004 earnings this Thursday at 4pm ET/1pm PT. The announcement will be webcast at http://investor.google.com/webcast.

Many analysts are predicting a strong quarter. More in this Reuters article.

Posted by Gary Price at 2:12 PM | Permalink | Comments (0)

October 5, 2004

Legg Mason Owns Lots of GOOG

Reuters reports in: Legg Mason owns large stake in Google common stock that the Baltimore-based asset management firm owns about 13 percent (4.3 million shares) of Google's Class A common stock.

Three weeks ago it was reported that Fidelity Investments owns about 16 percent of Google's Class A shares.

Posted by Gary Price at 8:01 PM | Permalink | Comments (0)

Google Investor Relations Site Opens

No, don't get excited -- investor.google.com is not a new feature where you can build your custom stock portfolio at the Google stealth portal. Instead, it's the new Google Investor Relations area, for those who now hold stock in the company. Nice catch from the InsideGoogle blog.

Posted by Danny Sullivan at 1:52 PM | Permalink | Comments (0)

September 29, 2004

And Now We're Bullish About Google

Google's now selling for well within the initial price range it had for its offering but was forced to lower from after Wall Street dogged its value. Now its underwriters are apparently bullish on Google and think it will go even higher.

Hmm. Do you think that if Google had just done a traditional IPO, where a few banks made tons of cash, they have supported it going out higher? I sure do.

The New York Times has a good article looking at this today: Google Shares Just May Be Winners After All. I like the part where worries that Internet growth was slowing in August are cited for a reason for some analysts being shy of the stock then. Now growth appears to be accelerating, so everything's OK. In other words, we're valuing a company's long-term prospects off a one-month trend?

Predicting the value of a company is definitely a mystery to me. But sadly, it's stuff like this that doesn't leave me with a lot of faith in the predictions of those who are supposed to know how.

Posted by Danny Sullivan at 12:05 PM | Permalink | Comments (0)

September 28, 2004

Google's Revenue Is Not All Search-Derived (AKA Gmail Isn't Search)

So Gmail ads might be bigger than search ads for Google, we learn in this New York Post story: You Got Mail (& Ads). How about an important correction? Almost all of Google's revenue does NOT come from placement on its search engine.

Go back to my write-up on the Google IPO filing: Google IPO To Happen, Files For Public Offering. See the chart on ad revenue sources about mid-way down. In 2003 and 2004, the share of revenue earned off the Google site itself rose dramatically. As the article explains, this was almost certainly due to growth in AdSense contextual revenue.

In short, rather than search placement making up nearly all of Google's revenue, it seems closer to making up about three-quarters of it. And AdSense is nearly two years old now -- so the quote about Google realizing they need to do more than search overlooks entirely the fact that contextual ads ARE NOT SEARCH.

Gmail ads, by the way, are simply contextual ads. It is new that Google now has an entirely new distribution area for these ads through Gmail, and in a place where it needn't share revenue. But Gmail placement is simply an extension of Google turning the entire web into billboards for its non-search advertising that began in 2003.

In some related tangents, nice comments on John's blog about how one SEM firm finds AdSense contextual placement not performing as well as AdWords but is positive on contextual offerings from other players: Fathoming Context: Much More to Come.

And, a nice catch by Andy Beal, a CNN article with the first Google comment I've seen about the entire browser issue (No plans to "reinvent the wheel," which certainly doesn't rule the idea out).

The article suggests that when some firms begin coverage of Google today, that -- along with the need to report third quarter earnings next month -- will make Google more open about plans and activities. Article here: Google's veil of secrecy.

Perhaps. Even if so, will Google break out search revenues from contextual or continue to play the game of mixing the two together, which confuses everyone. Nor are they alone in this, as this recent blog entry from me explains: Search Spending Continues To Rise -- But Is Contextual Lumped In?.

Want to discuss? Join our forum thread: Will emails ads be bigger than search ads?

Posted by Danny Sullivan at 7:43 AM | Permalink | Comments (0)

September 22, 2004

$130 Million For Finding Google's CEO

<Wow> Executive search firm Heidrick & Struggles International helped find Google find its CEO Eric Schmidt and got stock as part of its efforts. Now that Google's public, the firm made $130 million selling that stock. </wow> More details from the AP: Search firm cashes in on Google warrants.

Posted by Danny Sullivan at 9:19 AM | Permalink | Comments (0)

September 16, 2004

Google Stock Survives First Big Test

Overture's stock price, especially in the year before it was purchased by Yahoo, went up and down like a yo-yo. Google might gain a new partner or feature, and Overture's stock would plummet over the course of a day way out of proportion to the news. Then Overture would gain in some way, and the stock would shoot skyward.

Now Google potentially gets to enjoy the same fun. Last month, I asked several search executives what impact the Google IPO would have on the industry. Yahoo's Jeff Weiner, senior vice president of search and marketplace, smiled knowingly and quipped that being publicly traded would be a "very different experience" for Google. In other words, welcome to watching your stock yo-yo!

Yesterday, Amazon (a Google partner) got tons and tons of major coverage for pulling the "beta" moniker off its new A9 search site and adding some additional features (see Gary's write up for more). This was Google's first test. Would potential competition from Amazon cause investors to freak out?

Apparently not. Google ended yesterday nearly $2 higher ($112) than it began. I still suspect the yo-yo factor will still rear its ugly head in the future. But for this first challenge, Google came through just fine -- as did Yahoo, as well.

Posted by Danny Sullivan at 9:45 AM | Permalink | Comments (0)

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