Google Shows Thin Skin, Pushes Back on Criticism

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Google today broke out some numbers on its quarterly earnings call that it doesn’t historically give (and doesn’t promise to give in the future): revenue and monetization rates for display, video and mobile advertising. Those are Google’s big non-search, growth businesses, and the intent was clearly to show that Google is not purely a search company.

Here are the specifics: display advertising is now worth $2.5 billion in revenue; YouTube is selling 2 billion views per week (50 percent more than last year); and mobile ads are now adding $1 billion in additional revenue.

Those three areas are still a sliver of the company’s business; Google brought in $7.29 billion in total revenue in the third quarter alone. But what I found interesting was the way Google disclosed them, with Jonathan Rosenberg, SVP product management saying that display is already Google’s next billion-dollar business, and that mobile is the future of search.

Google is explicitly responding to criticism that it needs to diversify. It’s also responding to the fact that it’s no longer universally considered the most interesting and influential technology company (a banner which many people are now handing to Facebook — where more than 200 former Google employees now work).

With regard to Facebook, and the data it’s giving Microsoft to power the new social search features on Bing, Google basically said it aims to improve social search without those kind of deals. The company will soon add more social signals to its search rankings, said executives, and will ramp up efforts to try to persuade users to log into their Google accounts where they can be provided with personalized results.

Google CEO Eric Schmidt (who made a surprise appearance after not speaking on the last few earnings calls) dismissed the idea of getting exclusive or preferential access to data, which is what Facebook is giving Microsoft (at least for now). That’s a little hypocritical, since Google has paid Twitter for real-time data.

“The web continues to grow at such a blazing pace that anyone who would be private is completely swamped in this wave of the Internet,” said Nikesh Arora, Google president of global sales operations and business development. Added Schmidt, “We’ve taken a position from a religious and business perspective that the world is better off if you take the information you’re producing and make it searchable.”

Google executives flat-out admitted they’ve begun shaping the tidbits they release on earnings calls specifically to address criticism, saying that the only reason they’d talked about YouTube profitability on past earnings calls was “because there was so much distortion in the market we just thought it was an OK time to set the clocks properly,” and warning analysts not to count on any further specific numbers about YouTube.

Please see the disclosure about Facebook in my bio.

Photo courtesy Flickr user ElbtheProf.

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