Last year, Google's harshest critics said the search giant was ripe to lose ground to growing competition from the likes of Yahoo! and Microsoft. They also said Google's highly publicized and unorthodox initial public offering would be underwhelming. They couldn't have been more wrong.
Google posted first-quarter revenue of $1.256 billion, up 93% over the same period last year. Moreover, net income improved more than 476%, from $64 million to $369 million.
Google's shares started selling last August at $85 and at the end of April were trading at about $200. The billions of dollars the IPO generated have mostly been invested in the company's core technologies and new product development, including extended b-to-b services, said David Hirsch, Google's director of b-to-b vertical markets.
"For one," he said, "our AdSense network, which provides contextual ads on participating Web sites, has continued its rapid growth and now includes a who's who of business publishers, including Reed Business Information, VNU, PennWell and Ziff Davis."
The combination of ads on publishers' Web sites and Google.com enables marketers "to get in front of prospective customers at every step of the research process," Hirsch said.
Adding another wrinkle to the AdSense program, The New York Times recently reported that Google has begun to test display ads-as a complement to Google's text-only ads-on publishers' Web sites.
Google is also working with b-to-b clients to redefine certain success metrics. "We recognize that b-to-b transactions often involve longer buying cycles, so we want to be able to account for all the steps it takes to get to that final purchase, tracking depth of involvement, lead generation, information downloads, requests for proposals and more," Hirsch said.
One telling sign that search advertising has become more important than most analysts expected is that companies are creating new positions dedicated to managing the search function, Hirsch said. "You now have heads of search and search managers responsible for maximizing their companies' search performance," he said.
Media buyers are still amazed at Google's performance for their clients. Said Donna Mercer, partner-media director at ad agency Howard, Merrell & Partners, Raleigh, N.C.: "Google works, and they're a great organization to work with."
Robin Donovan, senior partner-media at Bozell & Jacobs, Omaha, Neb., said, "There's still a group of high-powered business executives that don't even know how to use their own e-mail, but the ones that do are Googling everybody."
But while search and online advertising have grown substantially, Hirsch said, marketers still aren't devoting enough of their budgets to it.
"The time spent online is becoming equal to the time spent watching TV, but TV ad budgets still far overshadow online ad budgets," he said. "That remains a challenge for us and other online advertising venues moving forward." -Roger Slavens