Some Thoughts on Google’s Growth Rates as Reported for Q1, 2014

During the Google, Q1, 2014 Earnings Conference Call, Patrick Pichette, CFO, presented a set of headlines on business performance:

  • Google’s revenue grew by 19% year over year to $15.4 Billion, which was down 2%, quarter over quarter.
  • Google Sites revenue was up by 21% year over year, to $10.5 Billion.
  • Network revenue grew 4%, to $3.4 billion.
  • Other business revenue grew by 48%, to $1.6 Billion. In this category, Chromecast sales were a strong performer

Pichette provided his own judgement of the quality of business performance for the first quarter. Interspersed among his remarks were a lot of “good”, “very strong”, adjectives. But are these results typical of a still early stage ISV? Or are they, actually, signs of a maturing ISV struggling to retain the early shine of meteoric growth results.

Perhaps one can argue the performance of the “Other Business” group still retains the growth characteristics of an early stage ISV, but how many Chromecasts will Google need to sell (with an MSRP of $35.00 per Chromecast) to power this vertical to some sort of meaningful stature as a revenue producer for the company? In contrast, a very mature ISV, Microsoft®, recently reported meteoric results for Office 365, a Cloud, SaaS offer requiring no hardware, shipping, etc.

It may be time for analysts and investors to close the book on the question and just treat Google, going forward, as a mature ISV. A check of the GOOGL Class A stock P/E ratio on Thursday, April 17, 2014, reveals near parity with MSFT: GOOGL carries a P/E Ratio for trailing 12 months of 14.99, just 2% higher than MSFT at 14.68 for trailing 12 months.

Despite the recalibration of Google’s stock prices, analysts continue to make a big deal of the pace at which revenue growth has decelerated, perhaps more from a concern over the actual forward potential of the entire online advertising market (of which Google is clearly the leader) than anything else. This concern makes sense given the comparatively poor performance of the display network vs. Google Sites businesses.

If the concern is justified, then one would think the valuations of online businesses like Yahoo, Twitter, and even Facebook may soon experience versions of the same recalibration to better align them with their more mature ISV competitors.

Disclaimer: I’m long MSFT and have no current position in Google, Twitter, Facebook, or Yahoo

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Reducing Online Opacity is a Must do for Tech Businesses

On June 1, 2013, The WorldWideWebSite.com website reported the estimated size of Google’s index of web pages at in excess of 48 billion. It should not be difficult to understand the enormous challenge facing online marketing efforts, given the size of this index. In 2013 the web is a serious obstacle to business promotion. There are simply too many web pages.

Search Engine Optimization (SEO) and Marketing (SEM) techniques rarely deliver on their promise. Despite high Search Engine Results Placements (SERPs), businesses still fail to magnetize the right visitors. Even Google’s promotional collateral for its pay-per-click advertising product now speaks of online purchasing as a complex process. In an eMail we received on May 20, 2013, from Google Analytics, the call to action, to “Better Understand the Customer Journey to Online Purchase”, amounts to an acknowledgement of the complexity–which this piece now claims to be typical–of the purchase process for businesses looking for technical solutions. The collateral reports on a new depth of buyer scrutiny, which can be challenging for advertisers after a simple return on investment in click advertising. “A user may see a display ad, click on a link from a friend, or do a search before buying something from your site.”

When we put this promotional eMail together with another offer we recently received from Google, this one for a credit card for Adwords purchases, we can’t escape an important conclusion. Fewer online advertisers are realizing a comparatively easy return on their investment.

There must be a better way with a meaningful return on investment than those offered by SEO, SEM and pay-per-click advertising for tech businesses after an effective online marketing method. We think a combination of gaining a better understanding of the Internet as a unique medium for marketing communications, a willingness to act on opportunities for market engagement offered by social media, a highly targeted pay per click advertising campaign, and procedures to capture website visitor data (through a tool like Google Analytics) will deliver superior results.

If you would like to hear more about what we have in mind, please contact us.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Keyword Selection is the Most Important Activity for Successful Search Engine Marketing

Selecting the right keywords is the most important activity for successful Search Engine Marketing (SEM). Web page content should be built around keywords. Structuring content to support keywords lends structure to web sites. Tools like Google’s keyword tool should be used to identify keywords worth studying.

The first step in researching keywords is to pick a set that is directly relevant to:

  • your product or service
  • and the most promising application that your product services for your market

Here’s an example, a software training business researches its customers and finds that most customers use its services, but do not make the purchase decision. This business decides to promote products and services online. The SEM expert selects keywords relevant to training and software. But the SEM expert goes a step further and includes keywords specific to the business case for purchasing the software. This extra step opens an opportunity for group orders for the software training business.

Continuing with this example, the SEM expert produces web page content to support the set of keywords selected for the campaign. Search engines will index the text content, thereby providing an organic basis for inbound traffic based on the targeted set of keywords.

To accelerate the process of capturing useful incoming traffic, the SEM expert produces a click ad campaign. The keywords in the campaign are all included in the set of keywords that the SEM expert used to build the web page content. Bids are placed that promise the software training business ad placements on the first page of search results. A budget is established to control the cost of the campaign.

A program built around this example will produce inbound traffic to a web site at comparatively low cost. Once the traffic reaches the web site, the on-page “calls to action” that we discussed in the prior post to this blog should be included to offer visitors a way to engage, while the content should provide them with a reason to engage.

In the next post to this blog we will discuss Google Analytics at greater length.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Search Engine Optimization Continues to be an Essential Component of Online Marketing

We work very closely with our clients on their product marketing requirements. Our staff can, and often does, play the role of an interim senior executive in a marketing organization. The scope of work for one of our engagements frequently has our staff member thinking a lot about marketing communications in a lead generation context.

Of course, in 2013 online media represent the most important venue for our efforts. Just when it looked as if social media (in the following order):

  • LinkedIn
  • Twitter
  • Google +
  • Facebook

and email marketing automation were going to be the object of a lot of our focus in the remaining winter months of this year, we find ourselves, looking, once again, at a very familiar, but nevertheless still challenging task — namely keyword optimization of web site content for search engine marketing.

We came to this realization when we reviewed the progress of a Google Adwords campaign undertaken by one of our clients. We’re members of the Google Engage program for agencies. Before we jump into what we found when our client’s campaign was reviewed (at a high level by our contact at Google and at a detail level by our team), let’s take a few moments to look at what drove our interest in checking up on the campaign.

We need to note that our scope of work for our client hasn’t included day to day management of the Adwords campaign. We do spend a lot of time, daily, working with Google Analytics, but this work is largely a matter of measuring activity resulting from a technical content marketing effort, which we have undertaken through a blog, Twitter page management, and some posting to LinkedIn alerts and Google +.

As we thought about the impact of relatively pricey email marketing automation campaign options for this client we requested permission to review the Adwords campaign. Regardless of whether the method amounts to implementing an email marketing automation program, or an Adwords campaign, or, for that matter, an effort to use organic Search Engine Results Placements (SERPs), the objective is still the same, and completely aligned with the same objective for technical content marketinggenerating leads that can be developed into a sales ready condition.

In fact, the Adwords campaign (as well as the effort to use organic SERPs) were not delivering on expectations. In the next post to this blog we will provide a bit more description to the gap between expectations for our client’s campaign and results.

This is the first of several blog posts on the SEO and Pay Per Click Theme; therefore, please watch coming posts as we add to this information.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Successfully using search engine marketing for brand promotion is a difficult task and not presently worth the effort

In our opinion Search Engine Marketing (SEM) is a low return, high effort undertaking that should be avoided by tech innovators selling software to enterprise markets. We have direct first hand experience in this space. Placing at the number 5 slot for a targeted keyword with Google does not necessarily produce any outreach whatsoever from the marketplace. Further, Google’s “free” online tool for visitor activity analysis, Google Analytics, has grown so arcane as to be useless for anyone without a certificate in the ins and outs related to this software.

We think it makes more sense to simply maintain an underlying understanding that web pages, Twitter pages, etc must all be ongoing activities for a Marketing Communications team. Keep expectations as low as possible as regards a return on investment from electronic media promotion. However, unless your business is operating under the radar, we strongly admonish against simply putting up a brochure as a web site and simply “forgetting about it.” Stale online content does not produce any useful results. Better to periodically post to a blog than to pay for a custom web site that does not lend itself to periodic updates to content.

Nevertheless, if recent research from IDC, the University of Dayton, and SiriusDecisions is to be believed (we think the research is entirely credible), then one should assume that enterprise buyers are making even greater use of electronic media to research purchases than ever before. As we see it, SEM has simply become irrelevant. Further, all the blabber about social media marketing via public venues like FaceBook, Twitter, LinkedIn, etc is also irrelevant. Bottom line, the activities of enterprise prospects online still require further analysis before useful predictions can be made about online behavior. We counsel clients to continue promoting online, but with substantially lowered expectations.

Online promotion ought to lead to some engagement with prospects. Perhaps many more impressions are required to produce targeted levels of engagement. Our jury is still out on this point. We think some companies are onto an effective approach, such as Alinean. A visit to the Alinean web site should be useful. We recommend reviewing their promotional materials, which are available at no charge. Further, we welcome opportunities to engage with businesses that have felt the impact of electronic media on their promotional efforts, but are still skeptical as to how best to capitalize on them while successfully managing their online market message.

Please telephone Ira Michael “Mike” Blonder at +1 631-673-2929 to further a discussion. You may also email Mike at imblonder@imbenterprises.com.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved