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Earnings: Google Q407 Call: Q4 Traffic Good; Poor Performance On Social Net Ads

Without saying much, CEO Eric Schmidt kicked off the call, promising that the company is pleased with its performance in the quarter and the year as a whole: “If you look at 2007, a strong financial performance across the board… I want to call out strong international growth, more than half of our search traffic is now outside of the United States.” In Q4: “Pleased with traffic growth across the board.”

Social ads disappoint: CFO George Reyes: Traffic acquisitions costs were up sequentially, as a percentage of revenue, from 29.1 percent to 30 percent. The reason: poor performance at certain Adsense partners, to whom Google (NSDQ: GOOG) is required to make guaranteed payments. And who were these partners? “Social networking inventory is not monetizing as well as expected.” (That sounds like it has to be MySpace.) This affected margins down the line. Another factor affecting revenue was a change in ads resulting in fewer accidental clicks, but better ROI for advertisers.

Sergey Brin: Ticking off some new initiatives: YouTube presidential debates — claims nearly as many viewers via YouTube as CNN, GMail interoperability, Google Maps on mobile. “We’ve got a lot of increased trial and adoption of Google Apps.” The company will deploy Google Apps at Genentech, as well as a number of universities.

Q&A: (Staci picks up from here.)

YouTube ads: Doing a lot of experimentation, trying a lot of things. Page emphasized about growth. Schmidt’s re-framing: In the case of YouTube, there’s a huge scale opportunity. “It should become very significant; exactly when is difficult to predict.”

UK weakness: Attributed to finance and travel. Won’t say whether they are picking up yet this quarter.

Macroeconomics: Brin says their studies don’t show a real effect. Jonathan Rosenberg said there may be some but Google might also benefit from added clicks produced by cost-cut conscious consumers increasing comparison shopping. Schmidt adds later: “I