Google reported revenues of $3.87 billion for the quarter ended June 30, 2007, an increase of 58% compared to the second quarter of 2006 and an increase of 6% compared to the first quarter of 2007. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs, or TAC. In the second quarter of 2007, TAC totaled $1.15 billion, or 30% of advertising revenues.
My first reaction when reading the release last night was, "only a 6% increase compared to the previous quarter?" That is not Google like, I thought. Soon after, the news coverage began spilling in, Techmeme has a lot of the coverage:
- Google's rapid rise disappoints market
- Google Shares Dive After Search Giant Misses Profit Views
- Google's 2Q profit lets down investors
- Google's Profit Falls Short, Shares Drop
- Google 'spending like drunken sailors'
- and more
The fact of the matter is, Google spends a lot as a company, relative to others. People cite food as the first thing to go, to save the company money. Well, I am not sure about that. But let's look at how this may impact the SEO community.
We have been pushing Google to provide support to SEOs and Webmasters for the free organic side of their business. Google has been investing heavily in Google Webmaster Central. Do they make any money from it? Does it make sense for them to keep making Webmasters happy? Are Webmasters even happy about knowing more or does it just fuel their anger?
I am not saying that Google is going to ditch Google Webmaster Central and the tools and support people that come with it. I doubt it even makes a large dent in their cost structure. But they all add up.
Google cited a major cost were AdSense publisher payments and "certain partners that were less favorable to revenues," via FT.com. But the major reason was hiring and bonuses.