Google's First Quarter 2009 Earnings Call, the Cliff Notes

You’ve probably already read the headlines about Google’s first quarter, in which the company reported revenue was up by a measly (for Google) six percent compared to the first quarter of last year and down by three percent (unusual for Google) compared to the fourth quarter. But you probably haven’t waded through the transcript of yesterday afternoon’s conference call, nor should you. Here then, the Cliff Notes of the call, covering some topics of interest to BNET Media readers:

Eric Schmidt, CEO, commenting on the quarter:

So putting it into context, good quarter for Google despite tough sort of overall economic conditions. We’re still in uncharted territory, and I want to remind everybody that we are heading into the Q2, Q3 seasonally weaker quarters. (Ed. note: sounds almost like guidance — which Google doesn’t give — to me.) We see this every year. It’s no change. We expect that will happen as well. The first quarter has demonstrated the resilience of our business model in a very severe global recession and we are going to continue to invest for the long term, as we should and as we will.

Schmidt on the potential of Google’s mobile OS, Android:

Look at the success of Android and the mobile space in general. By improving the mobile web experience people search many, many times more than they did in previous mobile devices. We benefit both in terms of end-user happiness as well as ultimately in strong revenue growth from that area.”

Schmidt answering an analyst’s question about Twitter (though he doesn’t specifically address rumors that Google wants to buy it):

So the question here is how could you make some money at that and without conversing specifically about Twitter, because there are a number of real-time update companies like Twitter, you can imagine that to the degree that they become successful, and obviously Twitter is already doing so, it could be a channel for product information, marketing information, real-time information, for which you can hang advertising products whether it’s a text ad or video ad or so forth off of it.

I don’t know personally their strategy but it strikes me that’s a logical strategy for them to pursue and something that we would be very happy to pursue with them (Ed. note: hint! hint!) and all the other players in that space.

Patrick Pichette, CFO, on the weak performance of AdSense:

AdSense business … was down 3% year-over-year to $1.6 billion, driven by several factors. Year-over-year growth on the AdSense for search was impacting by a continuing clean up of low-quality network partners that began late in Q1 of last year, … and general economic weaknesses, along with other quality and ROI initiatives implemented in Q1 of this year.

On the AdSense for content side, branding-oriented display campaigns remain challenging in Q1 as our advertisers slowed their spend relative to the performance-based advertising. Global aggregate paid-click growth remained relatively strong, however, up 17% year-over-year and 3% quarter-over-quarter.

Jonathan Rosenberg, senior vp/product management, on making buying Google’s search ads more efficient:

The problem that they have is that if you are an advertiser and you have tens of thousands of products, if you want to run an effective campaign you need lists of key words, a creative, and a bid for each product. This takes a lot of effort to manage. So to increase our revenue, as well as theirs, we are investing in tools that make the process easier.

We see that when we build the right advertiser tools it can have an even bigger impact than the ads quality enhancements that we typically talk about on this call. One example is the conversion optimizer and that automates the bid part of the process. For advertisers who have adopted this tool, their cost per action in down 14% while conversions are up 21%.

More recently, we launched the search-based key word tool and that one automates the keyword part of the process. It takes a look at an advertiser’s landing pages and then it matches those up with actual user queries. Since that launch what we’re seeing is cases where keywords suggested by the tool have higher conversion rates and lower CPCs.

The full transcript, from our partner Seeking Alpha is here, if you want to take a gander.