Google floats its own economy, with a 42% sales gain

With $5.9 billion in first quarter 2008 revenues -- a whopping 42 percent gain over the same period in 2007 -- Google is enjoying a wave of success at a time when a lot of other stocks are tanking.

"It's clear to us that we're well positioned for 2008 and beyond, regardless of the business environment we're in," acknowledged Google CEO Eric Schmidt, in a conference call with financial analysts yesterday. "It's also interesting to note that paid clicks growth is much higher than has been speculated by third parties."

The indomitable search engine conglomerate has also managed to defy analysts' predictions that its first-quarter paid-click results would be horrendous. The $5.9 billion that Google raked in from January 1 to March 31 of this year represents a 7% improvement over the last quarter of 2007.

Aggregate paid clicks -- including clicks on ads served on both Google and partner sites -- did not keep pace with revenue growth, amounting to increases of 20% over Q1 2007 and 4% over Q4 2007. But generally speaking, financial analysts were projecting a year-over-year paid-clicks gain of only 16% or less, a miscalculation that many observers blame on inaccurate numbers from Comcast.

Schmidt told analysts during the call that Google made 100 different "quality improvements" to its search function during the quarter, together with dozens of additional quality improvements on the advertising side. Other Google execs elaborated on some of these, such as Google's introduction of in-video ads; industry benchmarking in Google Analytics; and demographic targeting on social networks.

Schmidt, however, claimed that Google isn't yet seeing an impact from the recent improvements at this time.

"[But] our conclusion is that we're well positioned should economics change to continue to do well because our [advertising] model is so targeted. Targeted advertising does well in pretty much most scenarios, we think," he told the analysts.

Also during the call, Omid Kordestani, Google's senior VP of global sales and operations, said his company is now analyzing the products, sales force, and service activities of its recently acquired DoubleClick division with an eye to how the two will be integrated.

"Fundamentally we are looking at maintaining the customer momentum that DoubleClick has had and benefited from," he said. "Looking at it in a simple way, how do we get more of the advertising into their network and more of their publishers benefiting from the advertising systems and infrastructure that we are assembling together now?"