Google's 1st quarter results smell like bad news for us

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Google's 1st quarter results smell like bad news for us

scottb

9:02 pm on Apr 14, 2011 (gmt 0)

Google today reported that first quarter revenue was up 27% versus a year ago while profit missed expectations.

However, Google-owned sites had a revenue increase of 32% while partner sites had an increase of only 19%. Partner sites have a much lower profit margin for Google because of payouts.

In another announcement on this site, Bing broke through the 30% market share in search for the first time while Google lost share.

If Google is starting to have a harder time maintaining its stellar profit growth and search market share, doesn't it stand to reason that it would shift some of its more lucrative advertisers onto Google-owned sites and the less lucrative ones on partner sites? And wouldn't that explain why so many sites are reporting a drop in revenue?

scottb

9:11 pm on Apr 14, 2011 (gmt 0)

Update:

TAC (Traffic acquisition costs) "includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $337 million in the first quarter of 2011."

The press release left out a few interesting growth numbers, including the one above. That number was up 27% versus 2010, which means that of the money Google paid out to its partners, a much larger portion is now going to "certain distribution partners" and less to smaller Web sites that can't help Google maintain its market share with Bing.

So .. premium partners get more money and non-premium partners get less money going forward.

g1smd

9:20 pm on Apr 14, 2011 (gmt 0)

If you're a "less premium partner" receiving "less revenue" now sounds about the right time to be looking elsewhere other than Google for revenue growth.