Mobile Discussion on the Google Q1 Call

Google announced financial results from another very strong quarter yesterday. Here's the top-line:

Google reported revenues of $6.77 billion for the quarter ended March 31, 2010, an increase of 23% compared to the first quarter of 2009. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the first quarter of 2010, TAC totaled $1.71 billion, or 26% of advertising revenues. 

Google didn't give any specifics around mobile revenues (which are right now minuscule) but there was a fair amount of talk about mobile on the earnings call. Below I've excerpted several relevant parts of the transcript of the call.

Susan Wojcicki – Vice President of Product Management 

We want to make it easy for advertisers to extend their existing campaigns to mobile rather than having to start from scratch. When advertisers run on desktop and mobile we enable them to separate their campaign staff by desktop or mobile to understand their mobile performance. Many of them are surprised by how much mobile activity they have received. Based on this information they can decide how to customize their mobile campaigns going forward.

We also rolled out new formats and targeting options specific for mobile. This quarter we launched a Click to Call feature that automatically puts the phone number in the ad that is running on a Smart Phone. So if you are looking for auto insurance and do that query from your Android or iPhone the ads will include a number to call.

Jeff Huber – Senior Vice President of Engineering

Our open platforms, Android and Chrome, are gaining a lot of momentum. Android is now powering 34 devices which is up 70% quarter-over-quarter from 12 different OEMs and over 60,000 Android devices are sold and activated every day. Our whole mantra with Android is “open.” First the Android OS itself is open for partners to modify and extend on their own. Then the Android market for apps is open for apps is open for all developers which is driving a lot of growth and great apps. We are now at over 38,000 apps, up 70% quarter-over-quarter. The net effect is to make web-ready Smart Phones more widely available. It is helping drive a lot of mobile search and apps usage . . .

We are not disclosing the specific number of Nexus One devices sold. We are very happy with the device uptake and the kind of impact that has had across the industry of raising the bar and people’s expectations of what a great Smart Phone can do. I did earlier mention that across the Android landscape we are seeing more than 60,000 devices sold and activations daily. On stores, sorry we can’t comment anything about that right now. 

Patrick Pichette -- CFO

On the Nexus One it is a profitable business for us.

Susan Wojcicki

On the mobile component I will say we do give advertisers the option. The default is for advertisers to be on search, content and mobile and the reason we do that is because we want to make it as easy as possible for advertisers to get as much reach and reach as many potential users as possible and we try to do the right thing for those advertisers.

So the default is for them to be opted into both. However, we do offer the ability for advertisers to run a mobile only campaign and under that mobile only campaign we give them the option to target, for example, a specific mobile OS. We give a lot of options within the mobile category. But I really think about that more for advertisers who have the capabilities and are advanced enough to know these are the capabilities they want to do and customize their campaign in order to make it worthwhile for them.

There are a few interesting things being said above. Google is trying to grow mobile revenue and advertiser participation by removing friction from mobile ad buying and combining it with the PC. It's also saying that analytics will drive more mobile advertising and that's a big area of focus for that reason: "When advertisers run on desktop and mobile we enable them to separate their campaign staff by desktop or mobile to understand their mobile performance. Many of them are surprised by how much mobile activity they have received."

Advertisers can run mobile-only search campaigns by "unchecking" the "desktop and laptop computers" box in the AdWords UI (Google has also added the ability to target the iPad since I took this screenshot):

Picture 205

On Android and the Nexus One . . . The latter is "profitable," according to Google, which was widely reported yesterday. Google also said there were "60,000 [Android] devices sold and activations daily." That sales pace would equal roughly 20 million devices annually if it holds. By comparison, Apple has sold roughly 28 million mobile devices on an annualized basis (including the iPod Touch) in the three years since the iPhone became available.

And there are now 38,000 Android apps, which was also explosed widely yesterday.

Google's now-aggressive push into mobile (as a growth driver) will add further "credibility" and greater momentum to mobile advertising bringing more more marketers into the medium. Apple "made" the mobile Internet and apps market with the iPhone and Google is in a position to "make" mobile advertising -- certainly mobile search -- because of its visiblity and footprint.