THE GOOGLE INVESTOR: Mobile Advertising Is Google’s Next Frontier

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GOOG Up With Tech
Stocks are rising as the Fed vows to keep interest rates low, jobless claims spike although still point to recovery and one of the world’s best bellwethers announces smashing earnings and construction outlook for 2012. Shares of GOOG are up after being battered the last week. Investors continue to look for Android momentum in the smartphone and tablet markets worldwide; Motorola acquisition approval and integration; regaining ground in China; resurgence of Google TV and continued growth of YouTube; expansion of social network Google+; and progress in other newer initiatives (location-based services, mapping, gaming, daily deals, Google Wallet, Google Music, etc.). The stock trades at approximately 10.9x Enterprise Value / EBIT.

Google Drives U.S. Mobile Ad Market Beyond Expectations (eMarketer)
The US mobile advertising market is growing far faster than expected, driven by the rapid ascension of Google’s mobile search advertising business, advertisers’ growing attraction to display inventory on tablet and smartphone devices, and the growing roster of mobile ad networks, according to eMarketer. Highlights include:

  • Mobile advertising spending in the U.S. reached an estimated $1.45 billion in 2011, up 89%.
  • In 2012, U.S. mobile ad spending will grow 80% to $2.61 billion. This is up significantly from previous estimate of 47% growth to $1.8 billion.
  • The most significant adjustment in this forecast comes as a result of Google’s mobile advertising performance.
  • Google’s share of overall U.S. mobile ad revenues reached 51.7%, or about $750 million, in 2011.

As a comparison, Apple’s iAd platform generated just over $90 million in revenues last year, or 6.4% share.

Smartphone Usage Up Globally, But Is This Good For Mobile Ads? (ZDNet)
New research from Google shows that smartphone usage is surging globally, especially in the U.S. and Western Europe. Beyond just device sales, this could mean bigger things for advertisers. Consumers are “clearly shifting from feature phones to smartphones,” according to Nicole Leverich from Google’s mobile ads marketing department. With this many more people in the world’s leading economies on smartphones, one could argue that most advertisers are already missing a huge opportunity here. And Google stands to profit.

The Panic Over Google’s Privacy Policy Is Ridiculous (Business Insider)
Google announced some big changes to its privacy policy that lets the company share information between different services. Instead of collecting information on Gmail and YouTube and Google+ and storing them in different silos, Google is now acting like a single Internet service to make its products better. This made a couple of bloggers very angry. Which is ridiculous. Google is turning into a portal, or a collection of integrated services.

Google’s Real Challenge Is Creating Transactions (Seeking Alpha)
In terms of revenue, Google is just an advertising company. Google’s new privacy policies are yet-another attempt to get over that, to make ad space as much of a service as its content. The idea is that if Google knows what you’re interested in buying, and if it has an advertiser who wants to sell you just that thing, then the ad becomes a service rather than an intrusion. Finally Google is hungry enough to define markets in such a way that it becomes a client’s marketing partner. So, the real questions is: is Larry Page the next Steve Jobs or the next Jerry Yang?

Google Expands Its Groupon Killer, Expands To Five New Cities (Mashable)
Google’s daily deals service, Google Offers, is coming to five new locales: Charlotte, Kansas City, Milwaukee, San Antonio and Tampa. These five cities bring the total number of locales where Google Offers is available to 38. Furthermore, this number will soon be 40, as two more cities (Oklahoma City and Omaha) are on the “coming soon” list.

Google authorised Motorola To Seek Injunction Against Apple (FOSS Patents)
The latest hostility in the patent wars is a new lawsuit filed by Motorola, with green light from Google, seeking an injunction against the iPhone 4S and the iCloud over a package of six patents previously asserted against older Apple products in the same court. All six Motorola patents-in-suit are asserted against the iPhone 4S. All but two are also asserted against the iCloud.