October 18, 2006

My Prediction for Google Q3 2006 revenues …

Posted in Category: Work — Amr Awadallah @ 6:27 pm | link | | comment (0)

Analysts are expecting something in the range of 6 to 9% sequential quarterly revenue growth, not gonna happen, well barely, here is why:

Comscore is saying that Google organic search pageview volume is flat to down from Q2 to Q3.

Google did not launch any significant revenue boosters. I previously commented on the main changes I saw, and the only one that might boost revenue is the SERP change for domain searches, but that change happened during the last month of the quarter and I do not expect it to make more than a couple of %. The other two changes were negative, not positive, as far as revenue is concerned (they were positive for user experience)

Some folks pointed out to another change that Google did in July, they changed their quality scoring formula and hence essentially started charging more, and increased the minimum bid price for many keywords. These kind of changes lead to immediate revenue boost, but then advertisers quickly adjust their bids to maintain their ROI, or withdraw from bidding on that term completely. Though I am not sure, I think that Google did lose a significant number of listings (and hence coverage and depth) due to this change.

That said, it does also seem that Google increased the number of pages for which they show three ads above the search results, that certainly leads to more money.

I predict that Google will come in at the low side of estimates, if not miss them completely (i.e. 5% or less). However, I am not confident enough to bet my money on it, as comscore data was flaky last quarter (they predicted 20% sequential organic search volume increase for Google’s Q2 over Q1).

— amr

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