Google Growth to Come From Traditional Media

In its earnings conference call today, Google laid

out ambitious plans to create a unified advertising platform that could sell

and deliver ads to print, radio, television and streaming media, including

podcasts and Google Video.

Google reported revenues of $1.919 billion for the quarter ended

Dec. 31, 2005, an increase of 86 percent compared to the fourth quarter of

2004, and an increase of 22 percent compared to the third quarter of 2005.

But quarterly earnings of $1.54 a share were 22 cents below

estimates. The company said that because the bulk of its expenditures and

operations was overseas, it was taxed at 41.8 percent, a higher rate than it

had expected.

Google CEO Eric Schmidt promised analysts that the company’s extension into traditional media would fuel tremendous revenue growth in the future.

Advertisers would like to get the same kind of accountability and

tracking that search advertising provides in other media, said Google

cofounder Sergey Brin, The technology that came with the recent acquisition of dMarc Broadcasting could do it.

DMarc’s technology automatically schedules and places radio advertising,

and Google plans to integrate the dMarc platform with the Google ad-serving


“It requires lot of testing and development of each specific market,”

Brin told analysts, “so we can’t forecast success in any of them, but we

have great optimism.”

Schmidt later said that down the line, the extension of

Google ads into other media should supply significant growth. The company

plans, over time, to offer different inputs into the advertising system that

are better tailored for various media forms.

With dMarc’s system already serving audio ads, music is a likely

candidate for Google’s ad expansion.

In a recent research note, Bear Stearns analyst Robert Peck said he

expects Google to roll out a music download service competing with Apple’s

iTunes in three to six months. A Google spokeswoman told

“associated Press” that the company had no plans to develop such a service.

Sales and marketing costs were higher than expected. CFO George Reyes

said that the increase was a logical extension of Google’s expansion abroad,

and that the company would continue to invest at the same rates in order to

take advantage of “extraordinary opportunity” overseas.

International operations contributed 39 percent of total revenue.

Schmidt added that the company would continue to spend heavily on hiring


He pooh-poohed recent reports that Google would develop a PC or the

“Google Cube.”

“People are projecting the last war, not the next opportunity on us,” he

said. “Those are not very interesting business opportunities. We’d prefer to

deepen partnerships with companies that already make hardware, rather than

go into competition with them.”

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