October 18, 2012, 1:32 PM

Google paid clicks jump 33%

Revenue increased 19% for the search giant in the third quarter of 2012. 

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Google Inc.’s paid clicks during the third quarter ended Sept. 30 increased 33% compared with the same period last year, the search giant reported today. Paid clicks also increased 6% in the third quarter compared with the second quarter of 2012.

But the search advertising and e-commerce services provider reported a 20% drop in net income, according to Google’s third-quarter financial statement, which was released earlier than expected this afternoon. Google reportedly blamed the release on an error by the company that prints Google’s financial documents.

Google’s average cost per click dropped approximately 15% in the third quarter compared with the same period on 2012. The average cost per click decreased 3% from the second quarter of 2012.

Google’s revenue reached $11.53 billion in the third quarter (excluding Motorola Mobility Holdings, acquired earlier this year), up 18.6% compared with $9.72 billion in the third quarter of 2011. Revenue from outside the United States totaled $6.11 billion in the third quarter. That represents 53% of Google revenues, compared with 55% in the same period last year, and 54% for the second quarter of 2012.

Google also reported a 20.1% year-over-year drop in net income in the third quarter, to $2.18 billion from $2.73 billion. Google reported a 34% year-over-year increase in operating expenses, to $4.81 billion, along with a 223% increase in other costs of revenue (such as data center operating expenses and credit card processing charges), to $3.78 billion.

Google-owned sites, such as the Google.com search engine and YouTube, contributed 67%, or $7.73 billion of revenue, up 14.7% from $6.74 billion for the same period a year ago.

Google today also reported a 20.3% increase in Google network revenue to approximately $3.13 billion, up from $2.60 billion a year ago. This is revenue Google receives from clicks on ads it places on the web sites of other companies.

Google’s traffic acquisition costs, or TAC—that is, the portion of revenue Google pays to web sites that host Google ads—increased to $2.77 billion in the third quarter, up 25.4%  year over year from $2.21 billion. TAC as a percentage of advertising revenue was 26% in the third quarter of 2012, up from 24% a year earlier.

Google offered no immediate comment on its earnings report before its conference call with analysts scheduled this afternoon. The company’s shares dropped some 9% today after the report was leaked.


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