Google has recorded a 22% rise in revenue year on year, an achievement analysts have pinned to the success of its paid search offering.
The Silicon Valley-based firm generated nearly $15.96 billion in revenue over Q2 2014. Experts had predicted the company to hit $12.32 billion in earnings during the second quarter, but rapid growth in paid search clicks enabled Google to exceed the expectations.
Now representing the majority of Google’s revenue, paid clicks in Q2 2014 rose 25% from the same period in 2013 and 2% on the total in Q1 2014.
Unfortunately for Google the cost of these ads are continuing to fall year on year. A 6% decline in the average cost-per-ad – or cost-per-click – from 2013 contributed to an overall profit of $3.42 billion from the quarter, a modest increase from the $3.23 billion posted last year.
This in turn resulted in adjusted earnings per share of $6.08, slightly lower than the $6.24 predicted by analysts.
Paid search looks to set record straight
If Google can take anything out of the declining worth of its clicks, it is that business is not too far away from the dizzy heights of 2013.
The 6% decrease for its cost-per-click from Q2 2013 showed an improvement on the tally for the first three months of this year. It was here that the average value per click fell 9% compared to the same period in 2013.
Google’s shares rose 1.2% in after-hours trading, an event which caused CFO Patrick Pichette to share positives from the company’s progress in Q2.
“Google had a great quarter with revenue up 22% year on year, at $16.0 billion.
“We are moving forward with great product momentum and are excited to continue providing amazing user experiences, with a view to the long term.”
Wearables to earn their keep?
Aside from its success in paid search, the company can also look to buzz surrounding the wearable technology market as a positive from Q2.
Google introduced the Android Wear smartwatch software operating system over this period, providing a platform for devices including the LG G, Samsung Gear and the yet-to-be released Moto 360.
The software is designed to provide “information that moves with you” by displaying context-sensitive data based on both time and location. These include traffic updates for a user preparing for their morning commute, or the names of nearby streets as they travel on a bus.
Given that each user requires an Android compatible phone for displaying their applications, there’s a chance that Google’s commitment to wearable technology will boost two revenue streams in Q3 and beyond.