Newer areas
Google’s Shopping business has finally started to see some traction in monetization. The Shopping functionality of Google has managed to list more than 1 billion products already. The company’s product listing ads have been rolled out on a much wider scale with introductions in the European region, and also on mobile devices, both of which should lead to incremental revenue for Google even after factoring some cannibalization occurring in search. The transition from a free-model to a paid model should work well for Google’s top line.
Google’s Enterprise business has gotten a large number of global firms to use its enterprise cloud product. Up to 58% of the Fortune 500 are now using this cloud product from Google, growth is coming from across all regions and industries. Many governments and big customers across the globe continue to use Google’s Enterprise solutions.
In addition, Google Fiber is a big and long-term bet of the company, and one that can potentially transform the company’s future and reshape the entire Internet. These newer non-core ventures of the company have strong growth potential for improving the revenue of Google even more in the long run.
Very popular in non-core
The firm’s leadership position in mobile with Android has enabled it to ramp up sales from its Play Store while also aiding substantially in enabling the launch of a number of hardware products with its manufacturing partners.
The number of Android-based devices has surpassed 900 million activations and the number of Google Play app downloads stands at more than 48 billion. Owing to increased hardware sales and content sales from the Play Store, the company’s Other Revenues line item saw a 150% Y/Y increase and crossed $1 billion for the first time.
These products and launches have enabled the company to have the most widely used apps on mobile. Facebook Inc (NASDAQ:FB) is the most widely used app on mobile, in the U.S., and after that, the next five leading apps are all powered by Google including Maps, Play, Search, Gmail, and YouTube. However, Google is still the number one in terms of mobile platform in the U.S. with 52% market share at the end of April, according to comScore.
Enhanced campaigns a major positive?
The rapid consumer adoption and usage of multiple devices has led to firms using different ad campaigns on mobile, desktop, and tablets. To address this change, Google unveiled “Enhanced Campaigns,” which is a big improvement from AdWords, in 1Q13. The introduction of Enhanced Campaigns will enable advertisers to run one unified ad campaign across all devices and with more improved measurement analytics.
As ~95% of Google’s advertising clients run campaigns in multiple screens to take advantage of the consumer behavior, the Enhanced campaigns product will enable Google to provide more clarity to advertisers. All the ad campaigns Google currently runs will be upgraded to Enhanced Campaigns by the end of 2Q13.
And this will enable not only appeal to big-pocketed brand advertisers, but also relatively smaller advertisers to place advertisements on mobile, desktop, and tablets as well. Clearly, Google is innovating quickly behind the curtains.
Going forward
Google’s business has always been about online advertising to offline attribution, and making sure those results are measured accurately. The company continues to have a steady market share in search engine while constantly introducing newer products like Product Listing Ads (PLAs) and Enhanced Campaigns to earn incremental revenue. The company seems to be attractively valued at current levels with a forward P/E of ~16, which seems like a good entry point to take advantage of Google’s enormous future upside.
The article Is This Internet Giant a Buy on the Pullback? originally appeared on Fool.com.
Ishfaque Faruk has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Ishfaque is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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