Latest Google Earnings Report for Q4

When Google released their most recent 2011 Q4 earnings report on January 19th, investors were disappointed. The latest Google earnings release showed that the search giant failed to meet expectations, falling short of analyst predicted estimates.

Wall Street was taken aback – usually Google beats expectations with impressive quarterly reports that blow predictions out of the water. The Google earnings reports from Q1 in April, Q2 in July, and Q3 in October were fairly positive, and while this more recent earnings call is far from disastrous, many analysts predicted a more positive earnings report. The GOOG stock price fell 10% on the stock market after the release of the Q4 Google earnings report, demonstrating the general disappointment in Google's 2011 earnings. 

Why is Google Earning Less Than Predicted?

Analysts were especially curious as to why Google's average CPC (cost-per-click) in its AdWords advertising platform had decreased by 8%, resulting in Google making less revenue per click than in previous years. Analysts were so anxious to have this oddity explained that Google CEO Larry Page had to specifically ask for no more questions to be asked related to CPC after being bombarded during the subsequent company conference call.

Larry Page explained that foreign exchange was one major factor that affected CPC. Another factor was the numerous ad format changes that were introduced in Q3 and Q4. Those changes had a number of positive results, such as making Google ads easier to read. This in turn increased the number of clicks on advertisements in general, and more clicks mean lower costs for each click. While this might result in lower Google earnings, it means the Google AdWords and AdSense advertising systems are working successfully. 

Google Earnings Q4 Financial Summary

• Google reported earnings of $10.58 billion for the 2011 Q4, a 25% increase compared to the 2010 Q4.
• GAAP operating income in the Q4 2011 was $3.51 billion, or 33% of revenues. This compares to $2.98 billion, or 35% of revenues, in the Q4 of 2010.
• Non-GAAP EPS in the fourth quarter of 2011 was $9.50, where the prediction was that Google would be reporting earnings of $10.49 per share.

Read Google's full financial summary or view the Google earnings calendar for 2011.

Who Are the Biggest Contributors to the 2011 Google Earnings Call?

While the latest Google earnings call might have disappointed investors, there's no reason to pity Google – they generated $37.9 billion, largely due to advertising, which continues to grow.

We decided to conduct our own Google earnings report and discover what are the top 10 industries contributing to Google's earnings.

1. Finance & Insurance – $4.0 Billion
2. Retailers & General Merchandise – $2.8 Billion
3. Travel & Tourism – $2.4 Billion
4. Jobs & Education – $2.2 Billion
5. Home & Garden— $2.1 Billion
6.  Computer & Consumer Electronics – $2.0 Billion
7. Vehicles – $2.0 Billion
8. Internet & Telecommunications – $1.7 Billion
9. Business & Industrial – $1.6 Billion
10. Occasions & Gifts – $1.2 Billion

The biggest contributors to the GOOG earnings are the finance and insurance industries. They seem to have it the worst, paying as much as $43 per click for industry keywords. While these CPCs seem ridiculously high, the ultimate financial gain from even a single client in the finance and insurance industries often make it worth the pricey clicks.  

We also discovered the largely unnoticed fact that Lowe's alone spent an estimated over $59 million on Google AdWords, making them Google's best and favorite pay-per-click advertiser.

How Did You Obtain Data For the Google's Top Revenue Infographic?

We obtained the data for this study by using WordStream's trillion-keyword database, combined with data from the Google Keyword Tool, to determine the top 10 million most popular searches of 2011. We also used this information to discover the average CPC prices paid by advertisers bidding on these popular keywords.

Next we sorted these most popular keywords into industry lists, then used a model that weighed the relative percentages of each industry's revenue to Google's 2011 revenues (not including non-advertising revenues).

The top five advertisers in each industry and their estimated spend was obtained by using SpyFu.com's data, and then applying our own categorization analysis.

Which Kind of Businesses Should Use PPC?

Just about any kind of business can take advantage of the opportunities provided by Pay-Per-Click Marketing. We've written previously about what types of businesses find the most success with PPC, but really it's a great option for all businesses.

Where did the Estimated Spend Data For This Study Come From?

We used data made available by Spyfu.com, and we organized the domain names into categories using our own proprietary keyword categorization algorithms.

How is this Study Different From Your Infographic on the Most Expensive Keywords?

Our previous study last year was an analysis of the most expensive keywords on Google. We looked at the most expensive 10,000 keywords and organized those keywords I catagories based on what themes they had in common (such as "credit" keywords and "rehab" keywords). This study focused primarily on the questions, "What are the most expensive keywords on Google AdWords in terms of cost per click?"

This new study focused on a different questions, "What industries spend the most on PPC advertising?" This study was much more in-depth than our previous one – for this study we took the top 10 million most popular keywords of 2011, found out their estimated CPCs, then weighted and categorized the data into different industries. Some of the results are different because certain industries (such as retail) spend a lot in aggregate, but don't pay a lot for each individual keyword.

Who Actually Clicks Google ads?

Many people are skeptical of how so many ads on Google are clicked. Some comments express confusion on how industries pay billions for PPC ads when many individuals purport that they themselves never click PPC ads, or don't even see such ads.

We've discovered that oftentimes, people do not realize that they may be clicking PPC ads. Google continues to give increasingly more prime SERP real-estate to PPC ads. These ads are often so well camouflaged with natural results, that many users may not recognize the difference.

How did you calculate the Example Keyword Cost Per Clicks?

To calculate the example keyword CPCs, we used Google's Keyword Tool and set the targeting options to US and English. Next we set the keyword match type to broad.

The resulting CPC was the estimated price for the top spot. If these CPCs look higher than what you are use to, you are probably targeting a different location, different language, different match types, or are not targeting the top spot. Cost-Per-Clicks for the top PPC spot can be significantly more expensive than CPCs for the second or third spots.

Who Were the Top Spenders In Finance & Insurance?

The top spenders in the Finance and Insurance category were:

1. State Farm – Spent $43.7 Million on AdWords advertising
2. Progressive – Spent $43.1 Million on AdWords advertising
3. Geico – Spent $23.7 Million on AdWords advertising
4. Quicken Loans – Spent $21.1 Million on AdWords advertising
5. eHealthInsurance – Spent $20.6 Million on AdWords advertising

What Were Some of the Top Keywords for the Finance and Insurance Industry?

1. "Self Employed Health Insurance"
2. "Cheap Car Insurance"
3. "Affordable Life Insurance"
4. "Credit Cards for Bad Credit"
5. "Refinance Mortagage"

Who Were the Top Spenders In Retailers & General Merchandise?

The top spenders in the Retailers & General Merchandise category were:

1. Amazon - Spent $55.2 Million on Google AdWords
2. Ebay - Spent $42.8 Million on Google AdWords
3. Macys - Spent $35.6 Million on Google AdWords
4. Sears - Spent $34.3 Million on Google AdWords
5. JC Penny - Spent $30.9 Million on Google AdWords

What Were Some of the Most Expensive Keywords for Retailers & General Merchandise?

1. "zumba dance DVD"
2. "preform treadmill"
3. "weber grill accessories"
4. "lego activity table"
5. "barbie doll"

Who Spent the Most in Travel & Tourism?

The top spenders in the Travel & Tourism category were:

1. Booking.Com – Spent $40.4 Million for Google ads
2. Expedia – Spent $28.9 Million for Google ads
3. Kayak – Spent $28.7 Million for Google ads
4. Marriott – Spent $20.9 Million for Google ads
5. Priceline.com – Spent $19.6 Million for Google ads

What Were Some of the Highest-Priced Keywords for Travel & Tourism?

1. "new york hotels"
2. "plane tickets"
3. "cheap hotels"
4. "rental car deals"
5. "last minute flights"

Who Were the Biggest Spenders In Jobs & Education?

The highest ad spenders in the Jobs & Education category were:

1. University of Phoenix – Spent $46.9 Million on AdWords advertising
2. ITT Technical Institute – Spent $29.9 Million on AdWords advertising
3. DeVry – Spent $19.7 Million on AdWords advertising
4. Capella University – Spent $17 Million on AdWords advertising
5. classesUSA – Spent $16.3 Million on AdWords advertising

What Were Some of the Top Keywords for Jobs & Education?

1. "accredited online college degrees"
2. "online nursing degree"
3. "online certificate degree"
4. "unemployment benefits"
5. "entry level jobs"

Who Were the Highest Spenders In Home & Garden?

1. Lowe's – Spent $59.1 Million on Google ads
2. The Home Depot – Spent $50.3 Million on Google ads
3. Service Magic – Spent $21.4 Million on Google ads
4. Sears Home Services – Spent $20.7 Million on Google ads
5. Lighting Universe – Spent $15 Million on Google ads

What Were Some of the Most Popular Keywords for Home & Garden?

1. "Home Air Conditioners"
2. "Replacement Windows Cost"
3. "Appliance Repair"
4. "Cabinet Refacing"
5. "Window Installation"

Who Spent the Most in Computer & Consumer Electronics?

1. Hewlett Packard (HP) – Spent $33.3 Million on Google AdWords
2. Dell – Spent $26.3 Million on Google AdWords
3. Best Buy – Spent $23.7 Million on Google AdWords
4. Apple – Spent $17.9 Million on Ad Words
5. Microsoft – Spent $16.3 Million on AdWords

What Were Some of the Top Keywords for Computer & Consumer Electronics?

1. "Online Video Conferencing Software"
2. "Ink Cartridges Discount"
3. "Email Marketing Software"
4. "PC Memory"
5. "Anti-Virus Programs"

Who Were the Top Spenders In Vehicles?

1. Cars.com – Spent $21.3 Million advertising with Google AdWords
2. Auto Trader – Spent $20.4 Million advertising with Google AdWords
3. Firestone – Spent $16.9 Million advertising with Google AdWords
4. AAA – Spent $16.3 Million advertising with Google AdWords
5. Chevrolet – Spent $15.5 Million advertising with Google AdWords

What Were Some of the Highest-Priced Keywords for Vehicles?

1. "cheap hybrid cars"
2. "certified used cars"
3. "bridgestone tires"
4. "discount tires"
5. "emergency roadside assistance"

Who Were the Biggest Spenders In Internet & Telecommunications?

1. AT&T – Spent $40.8 Million on Google advertising
2. Verizon – Spent $22.9 Million on Google advertising
3. Go Daddy – Spent $21.7 Million on Google advertising
4. Comcast – Spent $19 Million on Google advertising
5. Direct TV – Spent $18.4 Million on Google advertising

What Were Some of the Most Competitve Keywords for Internet & Telecommunications?

1. "High Speed Internet Deals"
2. "Pre Paid Cell Phones"
3. "Domain Registration"
4. "Fios Availability"
5. "Cable Internet Providers"

Who Were the Largest Spenders In Business & Industrial?

1. Uline – Spent $35.1 Million on Google AdWords
2. VistaPrint – Spent $26.9 Million on Google AdWords
3. Office Depot – Spent $17.3 Million on Google AdWords
4. Staples – Spent $15.2 Million on Google AdWords
5. United – Spent $14.3 Million on Google AdWords

What Were Some of the Top Keywords for Business & Industrial?

1. "Custom Business Cards"
2. "Cheap Office Supplies"
3. "Label Printing Companies"
4. "Foam Packing"
5. "Office Furniture"

Who Were the Top Spenders In Occasions & Gifts?

1. 1-800-Flowers – Spent $30.8 Million with AdWords
2. FTD – Spent $30.7 Million with AdWords
3. Proflowers.com – Spent $27.2 Million with AdWords
4. Teleflora – Spent $24.8 Million with AdWords
5. Gifts.com – Spent $10.1 Million with AdWords

What Were Some of the Most Competitive Keywords for Occasions & Gifts?

1. "Funeral Flowers Arrangements"
2. "Flower Delivery"
3. "Wedding Gift Registry"
4. "Gift Baskets"
5. "Bridal Registry"

How Much Did the Finance & Insurance Industry Spend on Google PPC Ads?

The Finance and Insurance industry spent a total of $4.0 Billion on Google pay-per-click ads.

How Much Did the Retailers & General Merchandise Industry Spend on PPC Ads?

Retailers & General Merchandise industry spent a total of $2.8 Billion on pay-per-click ads.

How Much Did the Travel & Tourism Industry Spend on AdWords Advertising?

The Travel and Tourism industry spent a total of $2.4 Billion on PPC advertising through AdWords.

How Much Did the Jobs & Education Industry Spend on Google AdWords Ads?

The Jobs & Education industry spent a total of $2.2 Billion on Google AdWords ads.

How Much Did the Home & Garden Industry Spend on Ads Through AdWords?

The Home and Garden industry spent a total of $2.1 Billion on AdWords advertising.

How Much Did the Computer & Consumer Electronics Industry Spend on PPC Ads?

The Computer and Consumer Electronics industry spent a total amount of $2.0 Billion on AdWords pay-per-click ads.

How Much Did the Vehicles Industry Spend on Google AdWords ads?

The Vehicles industry spent a total of $2.0 Billion on Google advertising.

How Much Did the Internet & Telecommunications Industry Spend on Google Ads?

The Internet and Telecommunications industry spent $1.7 Billion on Google ads.

How Much Did the Business & Industrial Industry Spend on PPC Ads?

The Business and Industrial industry spent $1.6 Billion on Google pay-per-click ads.

How Much Did the Occasions & Gifts Industry Spend on Pay-Per-Click Advertising?

The Occasions and Gifts industry spent $1.2 Billion on PPC ads.

If Most of Google's Revenue Comes From AdWords, Where Do the Other Parts Come From?

Google's revenue sources also include: Larger Gmail storage subscriptions, enterprise level Google's web analytics, Google Fiber, Google's Motorola unit, Google Glass, Google Play (previously known as the Android Marketplace), and many other miscellaneous sources. However, the largest revenue generator for Google is still advertising which runs on top of their search engine and services.

What Industry Is Google In?

Based on Google's revenue sources, Google is mainly in the online advertising space business like Yahoo! but with the acquisition of Motorola, Google is also in the mobile phone business. There has been a lot of speculation on whether Google is transitioning from software to hardware in the same manner Apple has - and at WordStream we think it's an eventuality.

The Google Earnings Infographic is Property of WordStream, Inc.

WordStream is a pay per click company providing of PPC management tools, and a FREE keyword research tool for discovering profitable keywords (key words) for PPC and SEO.