After turning in strong earnings for the fourth quarter of 2012, Google's stock is up more than five percent in after-hours trading. The company attributed its performance to growth in advertising on both mobile and YouTube. Larry Page was on the earnings call, and while his voice sounded noticeably worse than last quarter, he seemed eager to talk, and answered dozens of questions over the course of the hour.
Google grew revenues ten percent in the US, eight percent in the UK, and 15 percent around the rest of the world. The company said on the earnings call that it changed it policies in order to improve its cost-per-click, a key measure of its online advertising business. CPC was down six percent year-over-year, but it rose two percent this quarter, a big reversal from last quarter, when it was down nine percent. If these new policies truly have reversed the negative trend of Google's CPC, that could be a long term tailwind for the company.
Page talked about the opportunities to improve the mobile experience. Battery life is still a huge issue, he said, pointing to the need to continually recharge mobile phones. He also called out flimsy hardware: "When you drop your phone, it shouldn't go splat." Google, Page noted, has a "real potential to invent new and better experiences. I expect mobile to revolutionize how people do marketing. So we'll be able to make a lot more money than we do now." Nikesh Arora, the chief business officer at Google, dove into some details. "Mobile allows us all kinds of new opportunities, such as click-to-call and click-to-map, which clients like RadioShack have been using."
"When you drop your phone, it shouldn't go splat."
The other big story Google was pushing on the call was YouTube. "Video is a key language that brands speak. Youtube is well positioned for the changing habits of today's multi-screen viewing world," said Arora. He pointed out the success of artists, noting that the Korean pop star Psy was able to generate over $8 million in advertising revenue around his viral video hit, Gagnam Style. "YouTube is also good for big brands," said Arora. He stated that the top 100 global companies advertising with Google, "spent 50% more on YouTube in 2012 than the year before."
Page ended on a high note. "The rate of innovation in the world is increasing. Some of the things that seem like science fiction are becoming reality," He was particularly excited about Google Now and the ability for algorithms to predict queries, and teased the financial analysts listening in. "Wouldn't it be great if we could answer all your questions on the earnings call before you even asked them?"