YouTube Is Crushing Cable TV, According To Google

21 Jul 2015 | Author: | No comments yet »

Google wants to be God’s mind: The secret theology of “I’m feeling lucky”.

The shares are up 27% since Ms. Google shares are at record highs, but advertising with the search giant is cheaper than ever—or at least that’s what the company’s own numbers indicate.

Google (GOOGL) shares are down $16.50, or 2.4%, at $683.10, following its huge run-up on Friday, on the heels of its Q2 report and encouraging words from CFO Ruth Porat.Shares of Google Inc.’s stock closed at a record $699.62 last week, adding $66.9 billion to its already enormous market capitalization in just one day — a record for Wall Street.Google reported net revenue of $14.35 billion vs. the Street’s estimate of $14.28 billion (net revenue removes the Traffic Acquisition Cost or TAC) from the company’s total revenue of $17.7 billion so net revenue didn’t beat expectations by very much (0.5%).

Sergey Brin famously suggested that “the perfect search engine would be the mind of God.” This half boast, half ambition puts Google into a long line of hieratic readers of the sky, and has a nice a touch of Kabbalah as well. The stock has gotten yet another price target increase this morning, from Argus Research’s Joe Bonner, who has a Buy rating on the shares, raises his target to $850 from $675, above the Street average of $730.60 according to FactSet. What is written in Google’s press release and reiterated by most of the analysts is that total revenue grew 11% year over year and 18% when the currency impact is removed on total revenue (and ignored by at least one sell-side analyst in his summary note).

During the earnings call, Google’s chief business officer Omid Kordestani said that YouTube is now bigger than any individual U.S. cable network for the key demographic of 18-49 year olds. Brian Wieser, a New York-based analyst at Pivotal Research Group, tried to fill in the blanks, starting with Google’s indication watch time on YouTube has risen 60 per cent on an annual basis and mobile watch time has more than doubled in the past year.

While Ruth Porat, the company’s new chief financial officer, reassured investors by promising to reduce expenses and generate more capital returns down the road, she’s also maintained the company’s ambitious growth goals for the future, by re-iterating CEO Larry Page’s view on spending: 70% on the core business, 20% on adjacent areas, and 10% to do research dealing with “more distant opportunities” like robotics, self-driving cars, as well as health, wellbeing and longevity. However I believe this analysis understates Google’s revenue growth in the quarter and is one reason (along with better click growth and cost discipline hints) that the stock increased by almost $100 per share to $699.62 on Friday. Let’s take a look at Google’s corporate philosophy to see how the company is trying to solidify its current success, while simultaneously taking the moves that will transform its business. Google inherits the narrative of the priestly class that discerns the universe, renders order out of chaos, answers our entreaties, and invites us to take part in mantic acts of divination.

While executives initially blamed foreign exchange costs, and later a mix of factors including emerging markets and ad quality changes, analysts wondered if the shift from desktop to cheaper mobile ads was gradually undercutting the company’s core business. Rather, it used portions of its insane cash proceeds to (a) roll out an impressive array of new online services to complement its massively successful search business, (b) acquire many established companies (e.g. From the unaccountably vast array of possibles Google provides the answer you seek, rather like fortunetelling and haruspicy or the priests who stood in the templum watching the sky for augurs and omens. Investors have been enthusiastic over the notion she might instill greater spending discipline, and possibly dislodge some of its $70 billion in cash.

But the CPC is an average across Google’s diverse advertising options, and it doesn’t give a clear picture about how individual businesses are performing. Finally, she seems to have an open mind about dividends or share buybacks, though we think some recent news reports may have exaggerated her enthusiasm. Executives have repeatedly said that looking at the CPC by itself is misleading, and trying to pin down one individual cause—like mobile—is misguided. “The key thing to understand is that we believe that shifts in CPC, or paid clicks taken independently, simply don’t reflect the fundamental health of our business,” said Patrick Pichette, Google’s CFO in 2011, when the drop began. As Google has transitioned to a unified advertising model across both desktop and mobile devices, we have seen a decline in cost per click, though the decline has been moderating.

The first layer of the onion to peel is to look at the hedging impact on Google’s revenue since the company’s hedges mitigated $471 million or 30% of the dollar’s impact. Digital Trends also pointed out that the number of publishers that are generating a six-figure sum from YouTube has increased 50% year-over-year. “We’re also seeing great adoption of our video ad formats like TrueView, and continue to help marketers engage and connect with consumers in new ways. Google also picks up on the long romance that mathematicians have had with infinite and ultimate things. “The respective interpretation of the symbols 0 and 1 in the system of logic are Nothing and Universe,” wrote George Boole.

This was a variant of Leibniz’s view of digital notation as shuttling between creation and the abyss—indeed, in the space where Google likes to shuttle. Since adoption of mobile broadband is likely a major driver of viewers on the video platform, the analyst assumed somewhere around the 73 per cent growth rate in global internet access also applies to YouTube’s unique users.

And for our top 100 advertisers the average spend per advertiser is up over 60% year over year,” said Kordestani. “We recently introduced a new feature for TrueView that allows brands to automatically insert product information, images and pricing into their video ads. Google has ramped up hiring and made acquisitions in order to expand on its core internet search business and to develop fast-growing businesses like mobile and local search. As futurist Alvin Toffler said once: “The illiterate of the 21st century will not be those who cannot read and write but those who cannot learn, unlearn and relearn.” Many of the ideas Google is exploring are moonshots –audacious innovations that have a slim chance of succeeding but might revolutionize the world if they do.

And as advertising increasingly shifts towards programmatic buying, brands can now easily buy TrueView ads programmatically through DoubleClick Bid Manager.” According to The Wall Street Journal’s sources, YouTube posted revenues of about $4 billion in 2014 — up from $3 billion a year earlier. Some strains in Protestant and New Age thought may value immediacy as the only authentic religious mode, but neglect the infrastructures that make it possible.

These investments have led to margin compression in recent quarters, though the company has maintained its dominant market share in core search and ramped up its display, YouTube, and mobile businesses. Religious practices in all their varieties have some kind of sacred media at their core; immediacy is usually the achievement of some hidden cultural technique.

As for the low CPC numbers, Porat again pointed to YouTube, which is making up a much larger percentage of overall paid clicks while remaining less expensive than other Google ads. ZenithOptimedia estimates that the average person globally watched 180 minutes of TV per day in 2014 – 7.7 trillion viewing hours – putting YouTube’s 170 billion hours at 2.2 per cent of this figure. Too much stretch, and the strategy ambitions will become complete hallucinations; too little stretch, and complacency inevitably creeps in; leaving the company to miss opportunities that require more audacious thinking. The Abrahamic book religions are selectively friendly toward devices of divinity, but they also harbor touchy iconoclastic strains ready to attack what are taken as false (objectifying) media.

Its advertising business generated $62.4 billion in revenue for the trailing 12-month period ended June 30, up 33% from the same period two years before. To manage this tension, Larry Page, the CEO and cofounder of Google has given considerable thought to how one should evaluate and prioritize innovative ideas for investments. The fight here is about the right media, not about whether media are part of the equation or not. “Religious media” is not an oxymoron; indeed, they may ultimately be the only kind of media there are. Digital performance marketing agency iProspect saw a similar trend with its client set (mostly large U.S. advertisers) last quarter—with mobile CPCs passing 70 percent of desktop CPC compared to about half the value last year. He has outlined three basic questions anybody within Google or the broader business community, can reflect on, when making choices about the relative merits of candidate moonshots.

Scrolls and Bibles, holidays and calendars, clocks and bells, astrolabes and sundials, sacraments and rites, prayer wheels and divining rods, towers and temples, ram’s horns and organs, stained glass and incense, choirs and diaries, relics and places of pilgrimage, robes and veils are among the media that make religious practice and experience possible. Wieser is confident YouTube will capture a portion of TV budgets from advertisers seeking to extend their reach within specific audiences and those less concerned about content quality. Those questions are: Obi Felten works for Google X, the semi-private innovation lab that is exploring the craziest ideas for new business development within Google. As can be seen in the chart below the Euro started its steep decline in July last year and didn’t start to stabilize until the late January/February 2015 timeframe.

Media can focus and collect spiritual energies, foster communities or zones of likemindedness, store and transmit culture, and unfold the data of the divine. While the impact should be less in the second half of this year it will still show up in company’s results if foreign currencies stay pretty much where they are. Demand for YouTube ads will also grow as advertisers learn how to use them effectively, said Hull. “You only have a few seconds to get someone’s attention or they’re going to skip—this isn’t just like buying TV space on a new channel, it’s a different medium,” he said. “I think the CPCs are still low because not every brand is doing that yet.

Her LinkedIn profile says she helps inventors, scientists and engineers at [x] to turn science fiction-like technology into real world products and businesses. Some children now associate watching TV as “punishment.” Ruth Porat told investors that Google’s GAAP basis operating profit was $4.8 billion and the operating margin was 27%. The longer you put off that learning you will unconsciously put off that news because it is disheartening to hear that what you have been working on is not working. Innovators accept things will never work exactly as planned; rather than stopping their efforts when difficulties emerge, they pause to interpret these “surprises” (what is the market telling us?) and adjust the course of ongoing innovation efforts.

A Google search of “God and Google” yielded 1,110,000,000 hits as of April 2013, including bits of loser-generated content about the church and ten commandments of Google, and several purported sightings of God captured by Google’s roving Street View cameras. Porat tried to split the difference on last week’s call, describing “our obligation to pursue activities that maximize value over the long term, and doing it in a disciplined fashion.” Striking that balance won’t be easy. As Henry Ford famously noticed: “If I had asked what my customers wanted, they would have said a faster horse.” Rather, Google encourages its employees to “live in beta,” and experiment solutions in real-time rather than intellectualize them to death at the start. That’s how Googlers get to know customers; that’s how they find out what they want; and that’s how they innovate. 5. “We’re always looking for new places where we can make a difference. Above that hovers the Google logo, truncated at the second O such that a quick glance at the cover—ubiquitous in bookstore displays as this book goes to press—makes it look like “God.” Google’s claims to know all and not be evil, rather like a priest set apart to heavenly things, helps explain its widespread credibility.

Ultimately, our constant dissatisfaction with the way things are becomes the driving force behind everything we do.” The development of computers, robots and other digital technologies is creating massive opportunities for Google. Its corporate mission—“ to organize the world’s information and make it universally accessible and useful”—presents the company as giving away information when its business is actually the taking in of information. This is no easy quest, and while Google coddles his employees with a ton of luxurious perks like free food, free haircuts, and even…heated toiled seats, it also does everything it can to ensure people “stay hungry” and go the extra mile.

From the beginning Brin and Page noted the danger of biased search protocols and the temptation to slant results in the direction of paying advertisers (Google remains explicit in acknowledging sponsored pages). “There are even numerous companies which specialize in manipulating search engines for profit,” wrote Brin and Page in 1998 with becoming innocence. (Search engine optimization is as old as search engines, like Lenin using the secretary position to rule the Bolveshik party.) Google’s algorithm, billed as a purely artificial intelligence in contrast to Yahoo’s partly curated (human-filtered) searches, was supposed to be neutral and universal in its indifference. When it interviews new potential hires, it asks “If you could change the world using Google’s resources, what would you build?” Performance evaluation schemes are not just assessing what was accomplished during the year, but also what comes next: “Are we taking advantage of what we’ve got here? Google presents one face to the public—with its whimsically changing logos (“doodles”), April Fool’s Day send-ups, baby-talk-like name. and infant-nursery colors—and another to its advertisers. My former student, Evelyn Bottando, begins her doctoral dissertation on Google Books by recounting her visit to the company’s headquarters in Cambridge, Massachusetts. Since 2007, Google’s special camera-mounted cars have taken 360-degree photos of streets, shops, and buildings in several countries for the Street View application on Google Maps.

Street View has aroused complaints about invasion of privacy, since it has immortalized men urinating in public and provided glimpses through people’s windows, and in early 2013 Google paid a seven million dollar fine (relative chump change). Curiously, the pictures Street View provides of the Googleplex, its corporate headquarters or “campus” in Mountain View, California, are taken from odd angles: as of August 2012, one could see the volleyball court and one building. Evidently the all-seeing eye of Google does not look in the mirror very often. (The one time I visited the Googleplex, without an invitation and in the company of a friend, we were quickly invited to leave by a polite security guard. On the way out I admired the power cords, dangling from the carports, that employees may use to charge their electric vehicles for free.) Power draws the center of the map blank. Compared to the clutter of, say, MySpace, Google’s spaciousness screams class and elegance. (Visual crowding in design signals trashiness.) Google’s color scheme—which seems to show up on all the books about Google as well—suggests Play-Doh basics; its “pristine sea of white” suggests purity and perhaps the pearly gates or the cloud in the sky.

A white background also suggests a new document in which to type: this is not the black background with green letters in DOS days of yore. (White is the color of the Apple logo and many of its products.) White also suggests greater expenditure of energy: it costs more energy to color pixels than to turn them off. Like Jesus, Google says: “I am the door.” The home page’s two options for scouting the web—“ Google search” and “I’m feeling lucky”—are an essential touch. “I’m feeling lucky” is a subjective mode of address.

The first search query, entered into Google’s white home page, is “study abroad paris,” and is archetypally loaded: American boy goes to the city of romance. Louve,” which Google corrects to “Louvre,” gently mocking our subject’s lack of French. (Google knows better.) The third is “translate tu es très mignon” (You are very cute), which, presumably, someone had told him, and which is what we are supposed to think about Google.

Then “impress a french girl,” “chocolate shops paris,” “what are truffles,” and “who is truffaut.” (The serendipity of search engines!) The American in Paris is getting culture and falling in love. Then “long distance relationship advice”: we hear a phone ringing, answered by an expectant female voice with a Gallic “Allo!” Time has telescoped between the searches, and the rhythm of the ad accelerates. Then “working in paris,” “AA120” (a possible product placement) with jet and airport sounds, and “churches in paris.” These searches allow Google to show off its diverse services: translation, flight updates, maps. Google ran the ad online for three months before the Super Bowl as part of its stable of edifying videos, many of them backed with pulsing but polite octave-heavy piano music, called “Google search stories.” (This roster of edification about divinely facilitated couplings could make a nice study.) The Super Bowl was a surprising choice, since Google’s claim to advertising excellence had always been presented as an alternative to throwing money away on diffusely targeted ads: Google as a smart bomb, not a weapon of mass destruction. It connects people—from the awkward beginnings of groping for a common language through media, such as telephone and airplane, to the sacral media of bells and church, and then to the homey assembling of a crib.

Using its time-tested creative strategy of riding already existing cultural materials (boy-meets-girl, Paris as romance, Louvre, chocolate, French cinema), the key message was: Google makes babies. Its knowledge was presented as not only intellectual, but carnal. “Parisian love” presents searching as eros, the desire to connect in the most fundamental way possible. (It also indirectly acknowledges what statistically is one of the web’s main affordances: erotic content and sexual coupling.) Here a classic boy-dream company presents itself not only as the spinner of fate and source of all intelligence, but as reaching into the mystery of making a new life.

In some vague way, Google confesses its envy of what Goethe called the eternal feminine. (Technology is womb envy.) Masculine theoretical knowledge is not enough to satisfy Google’s ambitions.

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