July 14, 2011, 3:42 PM

Google ad clicks up 18%

The search engine giant says paid clicks in the second quarter increased 18% year over year, and the average cost per click went up 12%. Revenue increased 32% to more than $9 billion, with net income up 36%.

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Google Inc. reported today that paid clicks during the second quarter ended June 30 increased approximately 18% from the second quarter of 2010, but were down approximately 2% from the first quarter of 2011.

During an earnings call this afternoon, Google chief financial officer Patrick Pichette said visual changes and quality improvements to the user experience helped drive click volume year over year and attributed the 2% drop in volume from the first quarter to seasonal changes.  

In reporting its financial performance today, Google said the average cost per click increased approximately 12% year over year and approximately 6% from the first quarter of 2011.

Google reported revenue of $9.03 billion in the second quarter, up 32.4% from second quarter 2010 revenue of $6.82 billion. Net income rose 36.4% to $2.51 billion, up from $1.84 billion a year ago.

Herman Leung, senior U.S. Internet analyst with investment firm Susquehanna Financial Group, says the 12% increase in cost per click was higher than expected and says quality improvements Google made to search during the first quarter, such as the Panda algorithm update, paid off for the company during the second quarter. He expects the upward trend to continue because Google continues to make quality improvements. "The third quarter will show the impact of the 50 quality improvements Google made during the second quarter," he says. Susquehanna discloses it is a market maker in the securities of Google and the company and its affiliates beneficially own 1% or more of the securities of Google Inc.

“We had a great quarter, with revenue up 32% year on year for a record-breaking over $9 billion of revenue,” says Google CEO Larry Page.

Google-owned sites accounted for $6.23 billion, or 68.9% of revenue in the second quarter, compared with $4.50 billion for the same period last year. That includes the paid search ads on the Google.com search engine placed through the Google AdWords program, a major marketing vehicle for online retailers. Ads Google places on others’ web sites through its AdSense program accounted for $2.48 billion, or 27.5% of total revenue during the quarter, up 20.4% year over year from $2.06 billion.

Revenue generated from outside of the United States totaled $4.87 billion, representing 53.9% of total revenue in the second quarter of 2011.

The company also revealed new Google use metrics during the earnings call.

  • More than 10 million consumers have joined the company’s social network venture, Google + in the first two weeks.
  • The Google Chrome web browser has more than 160 million users, more than double year on year.
  • 550,000 new smartphones with Android are activated daily. More than 135 million Android devices have been activated globally, up from 100 million two months ago.
  • Consumers have downloaded more than 6 billion mobile applications from the Android Marketplace. There are more than 250,000 Android mobile apps available.
  • Mobile display ad traffic is up 350% from last year.

“I see more opportunity for Google than ever before because believe it or not, we are at the early stages of what we want to do,” Page said.

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