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Sep09 Call: Part 1: Google Mobile Searches Up 30% QoQ; Search UI Changes, Ad Trends, Place Pages

google“There’s uncertainty about pace of recovery, but the worst is behind us. We have the business confidence to invest now. Chrome, Android and mobile are huge opportunities ahead of us. The investment in innovation is core to our growth. We made 120 search quality improvements in Q3. Many of our advertisers would like to find more ways of advetising with Google, and we’d like to give them that,” Eric Schmidt, Google CEO, in conference call in which company executives talked improving advertising trends, growth and investment in display advertising, and most interestingly, Google’s outlook on mobile. Part 1 of notes from the conference call:

Search Advertising Trends

Auto is by far the most well-performing vertical in the U.S. for the third quarter. This is primarily due to the government’s Cash for Clunkers program. The U.S. auto vertical is still poised for growth, and there has been year-on-year growth in the UK for the auto segment.
Travel, Finance Etc: On travel we have seen trades a bit later than usual, and there is customer caution. There’s a back to school effect in case of Retail. Finance continues to be a tough vertical, but there are pockets like insurance which are robust.
— Larger advertisers were faster to cut when the recession began, and stronger and faster to rebound now. In the last quarter, the larger advertisers came back.

— There are now over 1 million AdSense Publishers
Some UI changes helped advertising: For the search results pages on wide screens, we changed the maximum width and decreased the space between the search results and the advertisements on the right side, which increased the click-through rates. We did that around the second week of august.  We did some ad improvements like site-links. The most significant changes ocurred in mid-August.
— Geographical Performance: Major push in the U.S. to further streamline sales processes and go out and meet most large advertising CMOs. Brazil was a stand-out in Latin America, there has been stabilization in Northern and Central Europe and UK has showed strength; Strong performance from Southern and Eastern Europe, Middle East and Africa, particularly Spain; In Asia Pacific and Japan, China was a strong performer, Japan has shown mobile growth. (Nikesh Arora)

— One of the biggest investments this year is the new AdWords Front End and we transitioned pretty much all of our advertisers to the new user interface this quarter. This was the biggest overhaul to AdWords, and advertisers now have new reports, and are running much, much more efficient campaigns. (Jonathan Rosenberg)
— CPC Decline due to low CPC markets: There are two things that to take into consideration – paid clicks continued to be quite healthy with 14% and 4%, both year-over-year and quarter-over-quarter. On the CPC growth, if you go back year-over-year, so relative to Q3 2008, the Euro actually had an 8% difference, the pound a 15% difference, and the Canadian dollar, to take another one, also closed at 8% difference. These numbers are material. There has been a good healthy growth in international markets which are, in many cases, lower CPC but they add dollars. So we’re not worried about lower CPCs and when you get dollars and more performance. (Patrick Pichette)
— Place Pages: Making a big investment push in developing new ad formats and are beta testing a new ad offering which we call local listing ads. With that you basically sign up with just a simple one-page form. You don’t have to deal with key words, you don’t have to deal with bids to manage. There’s a simple flat monthly rate. And if you don’t have a Web page, the ad can link to your place page, and that’s a free page that we generate and you can edit. We’ve launched about 50 million of these place pages, and the phone numbers on the ads go through Google Voice, for which the trial is right now just in San Francisco and San Diego.

— Vertical Search: Strategy depends a lot on the vertical. product search and shopping is one that we’re focused on. we’re also trying to have a much more visual shopping onebox. We’re doing well with checkout as a payment platform there. We’re starting to get more focused on some of the other verticals – images, and books, health. Real estate, finance and travel are where we’re going to focus more. (Jonathan)

Mobile & Android

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— Mobile, a high-growth business for us already: there was 30% quarter-over-quarter growth in mobile searches in the third quarter. In markets like Japan, mobile search is growing twice as fast.
Android adoption is literally about to explode. You have all the necessary conditions. You have the vendors, you have the distribution, and so forth. And this of course is a very critical period with all of everything being delivered and new announcements as well. (Eric Schmidt)
— Android has gone from one device, one carrier, one country to 12 devices, 26 countries, 32 carriers in less than a year. The market is also very robust with over 10,000 applications available.

— Impact of Smart Phones: Smart phones are transformative, and it’s a combination of the Android platform with all the smart phones and the momentum in there, as well as the iPhone and the others. What’s interesting about these phones is there are a lot of new types of searches because you are location-specific, you are activity-specific, you are local-specific: a new set of areas, a new set of monetization opportunities.
Advertisers are just extending their campaigns on mobile, aren’t customizing the ads much because there’s not as much search volume on mobile. As they see more volumes, they’ll customize the campaigns.
— Display Ads on Mobile: In terms of display, it seems to work well on mobile devices. Unlike in case of desktop, they’re less likely to click away from it, and customers tend to notice display ads on mobile more. much more of a dynamic of forced engagement on mobile.

— Mobile Clicks vs Desktop Clicks: the dynamics are different. It all relates to the probability that the user is going to consumate the transaction. If you’re searching locally on mobile for a store or a restaurant, it can be that the user searches, and walks into the store, and you don’t get credit for that. We’re still sorting some that out. if there is an area where we needed to invest in the short term to grow the area. (Jonathan)
— Mobile Cannibalizing Desktop Search? The intuitive way to look at mobile is that it is largely non-cannibalistic. Having search with you all the time opens up new possiblities no matter where you are. The other thing that we see in the data is the complementary aspect of usage patterns across time of day and day of the week, with increase at lunchtime, and on weekends. It appears largely non-cannibalistic, but we need to gather data.
— Gmail Monetization On Mobile: Mail on mobile may be a little more difficult to monetize because you’re dealing with a smaller screen size, and it’s difficult to find adjacent room that isn’t getting in the way of the mail message. “I would be adverse to launching functionality (advertising) that adverses peoples ability to read their mail”


— Sep09: Google Profit At $1.64 Billion; Schmidt Says Worst Is Over

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