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Goog earnings miss by augustine fou


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huge earnings miss reveals downside risk to companies whose revenues rely solely on ad dollars.

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Goog earnings miss by augustine fou

  1. 1. GOOG: -9% on earnings 51% higher revenue ($11.33B from $7.51B) BUT still … 5% lower profits ($3.01B from $3.18BOctober 18, 2012 1
  2. 2. Evidence from Google Source: BusinessInsider Google Earnings Call October 18, 2012 1. Aggregate paid clicks growth declined 2. Cost-per-click growth remained negative for 4th straight monthOctober 19, 2012 2
  3. 3. Traffic acquisition costs Traffic acquisition costs (TAC) has been trending up; and as a % of revenue has been up for last 4 straight months; dragging on profit margins.October 18, 2012 3
  4. 4. Greater efficiency … • Good for the advertisers in general – they get more bang for their ad dollar • But, bad for companies relying on advertising revenue, including Google (GOOG) and Facebook (FB) • Downward pressure on CPMs and CPCs have led to lower marginsOctober 18, 2012 4
  5. 5. Dr. Augustine Fou – Chief Digital Strategist “I study trends and implications for companies operating in the advertising and marketing space.” FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM) MCKINSEY CONSULTANT CLIENT SIDE / AGENCY SIDE EXPERIENCE PROFESSOR AND COLUMNIST ENTREPRENEUR / SMALL BUSINESS OWNER PHD MATERIALS SCIENCE (MIT 95) AT AGE 23 ClickZ Articles: Slideshares: LinkedIn: 18, 2012 5