Revenue rose 35% to $12.21bn over the three months after a $1.25bn boost following the acquisition of MMH. Revenue at its internet business rose 21%.
The core of Google’s business, Internet search, remained healthy with a 42% surge in people’s clicks on Google’s search ads during the quarter. But even Google isn’t immune to a downward spiral in advertising rates. Consumers are increasingly accessing the internet through smartphones, where ads are cheaper and there are fewer of them. Facebook may also be lapping up online ad spend. The shift meant that the cost advertisers paid per click was down 16% on a year ago.
As well as making money through advertising based on searches, Google has also benefited from its Android mobile phone operating system, which has been gaining steady ground against RIM’s BlackBerry and Apple’s iPhone. Google also acquired MMH in May as it expands into the hardware business, although the company said it was too early to assess the impact.
Google’s results come two days after Yahoo! reported a lacklustre second quarter. Despite the continuing shift of advertising moving to the Internet, Yahoo!'s results suggest the firm is still struggling to capitalise. Revenue is stuck at around $1.08bn – flat compared to the same time a year ago. And Yahoo!’s share of overall US online ad revenues, which reached 15.7% in 2009, fell to just 9.5% last year, according to eMarketer. Hoping to appease long-suffering shareholders, Yahoo! recently poached Google’s Marissa Mayer to be its new CEO, following a corporate shake up which has seen the departure of Carol Bartz and Scott Thompson in less than a year. With a pay package of up to $100m being offered, will it be third time lucky?