Google Q1 Earnings Up As Shift to Enhanced Campaigns Nears Full Transition

Google reported nearly $3.35 billion in net income on $13.97 billion in revenue, during the first quarter of the year. Excluding the Motorola Mobility business, which accounted for $1 billion in revenue, Google’s revenue from advertising and its other businesses grew almost 18 percent from the previous quarter and 20 percent year-over-year.

Paid clicks rose just 3 percent from the previous quarter, but jumped a steady 20 percent from the year prior. Average cost-per-click rates declined 4 percent on an annual and quarterly basis. Meanwhile, traffic acquisitions costs climbed 15 percent from the first quarter of 2012 to $2.96 billion but as a percentage of advertising revenues the cost remained flat from the year prior at 25 percent.

Google is nearing the end of a full-scale transition from separated advertising channels, campaigns and strategies to a more converged multi-screen platform it calls Enhanced Campaigns. More than 1.5 million campaigns have already upgraded to enhanced campaigns, and the company expects to have all of its advertisers moved over to the new platform by the end of the quarter.

“We’re slowly moving a huge advertising system and ecosystem on a dime,” says Google chief executive Larry Page on the company’s quarterly earnings call with investors.

Separate campaigns for desktop and mobile “makes arduous work for agencies and brands,” he says. “It means mobile opportunities often get missed.” Google wants to simplify advertising for its customers and enable brands to focus on their campaigns and message,” Page explains.

About 95 percent of Google’s clients are already managing campaigns across screens, adds Nikesh Arora, senior vice president and chief business officer at Google. “Our clients are hungry to advertise where consumers are,” he says.

Page also highlighted the momentum that Google is making in voice search, an area where he sees huge opportunity and expects to see a lot of innovation but not one that he worries about placing ads in anytime soon.

“The reason we’ve been successful at advertising is because we view that as another source of information,” he says.

Although much of Google’s business is built around capturing people’s time and attention, Page sees even more opportunity around improving the overall experience and effective use of technology.

“I think that computers are now a pretty big part of peoples’ lives and I think that’s increasing as it gets more useful,” he says. “More importantly, the usefulness of your engagement is going to increase.” More meaningful engagement can make for better business results and happier people, he adds.

Page also took a more defensive stance on Google’s ongoing investment and efforts in non-core businesses like self-driving cars.

“Companies can tend to get comfortable doing what they’ve always done with a few minor tweaks,” he says, but incremental steps will never be enough in the long run, especially in technology.

“The best people often want to work on the biggest bets, and there’s not much competition because no one else is crazy enough to try,” he adds.

“Someday we will all be amazed that computing involved fishing around in our pockets and purses,” Page continues. “We are still at only one percent of what’s possible. We are really just getting started.”

Google ended the quarter with almost $50.1 billion in cash and 53,900 employees.