For the first time last week, Google pulled back the curtain on what it’s achieving in terms of revenue per click and growth rates for paid clicks, mobile, video and display ad revenues. For anyone in that marketplace, it makes for sobering reading. Google’s annual revenues are running at about $30 billion per year. They have $35 billion in cash sitting on the balance sheet. They hired over 1,000 people in the 3rd quarter alone. But we already knew they were doing okay.

More interesting is what we can derive from what was revealed about what’s driving growth across the Google franchise:

         – Paid clicks are up 16% year on year;

         – Revenue per click is only up 3% (although a 3% price increase in this economy isn’t bad;

         – Mobile search is up 500%;

         – Display advertising across all platforms is up 23% year on year;

So, what conclusions can we draw from these figures? There are three.

  1. Conclusion #1 has to be that the main driver of their PPC growth is the increase in the number of clicks, which also correlates closely to the number of queries they’re handling. This is the point of Google Instant: it vastly increases the number of queries run, and allows for more ads to be served. That funnels into more paid clicks. It’s worth noting that Google denies that their motivation for developing Google Instant was revenue. They claim it was all about improving the user experience. Only a cynic would question the motives of a company with $35 billion in the bank.
  2. Conclusion #2 is a no-brainer: video and mobile are going to be freaking HUGE. We’re accustomed to seeing crazy-seeming statistics from YouTube but the latest ones take the biscuit. YouTube is now monetizing 2 billion videos per week, up 40%. They’re serving 2 billion views per day (which means only 1 in 7 is monetized currently). And 24 hours of video are being uploaded to YouTube every minute.
  3. Conclusion #3 is that Google is well on the way to killing Yahoo on display as it has already done on search. Yahoo also revealed figures this week which show that their annual display revenues can be estimated between $2.3 and $2.6 billion. 

Yahoo’s lead in display, once enormous, has almost completely disappeared. Add in the fact that Facebook is probably achieving annual revenues of $2 billion a year, much of which is display spending, Yahoo looks to be in trouble in the long-term.