Industry titans Google and Yahoo! Inc. (NASDAQ:YHOO)!
A company that has grown unthinkably fast in the digital advertising space is none other than the internet giant Google Inc (NASDAQ:GOOG). From Google search to Youtube, Gmail, mobile and GDN, it has a huge product portfolio to meet various advertising needs. The company reported robust first quarter results, with a revenue of $13.97 billion, up 31% from last year. Remarkably, the traffic acquisition costs have remained constant at 25% of revenues for the last few quarters. The most recent innovation in Google Adwords (its advertising program) is the addition of images alongside ads. The feature is still in beta phase and has been made available to certain high end advertisers.
My point here is that Google utilizes its resources very well to cater to every possible demand from advertisers. Hence, advertisers who are keen to form long-term partnerships find Google to be an apt partner.
It has been almost a year since Marissa Mayer joined Yahoo! Inc. (NASDAQ:YHOO) as its Chief Executive, and what an eventful time it has been! She has been on a major acquisition spree, with the most recent being the Tumblr deal in an effort to promote entrepreneurial spirit at Yahoo! Inc. (NASDAQ:YHOO) as well as capturing market share inorganically. It paid a consideration of $1.1 billion for Tumblr, which is expected to grow Yahoo!’s audience by 50% and traffic by 20%.
Even though the first quarter revenue declined by 7% y-o-y, Mayer seems quite confident about her company’s future mainly because her major concern right now is simply to bring back Yahoo! to its position from a decade back, when it was an internet user’s favorite. Like Google, it has adopted the user first philosophy and as time goes by, this should pay off handsomely.
Financial numbers reflect strength
Coming back to AOL, Inc. (NYSE:AOL), let us look at some impressive numbers. OIBDA for the quarter was $105 million, up 12% y-o-y, while the total revenue increased by a mere 2%. One of the factors behind achieving good margin is excellent cost management as the company reduced considerable personnel related and marketing expense. Recently it was reported that the company’s Patch unit might lay off 3% of its staff in an effort to consolidate operations and enhance profitability.
Final words
The company’s brand group has been doing well, driven by the success of HuffingtonPost, TechCrunch and Engadget. All these news and information sites are eying expansions in different markets, including Europe and Asia. Being a small player in display ads, it has delivered good growth and acquired a spot for itself in the display league.
As you might have noticed, I have mentioned the term “growth” several times during the article. It is because growth is what keeps me optimistic about AOL, Inc. (NYSE:AOL). I agree that some of its businesses are facing a bit of a tough time, but with diligence and patience they can be easily turned around. AOL is definitely on a strong growth track, and I would rate it as a sure buy.
The article AOL Growth Saga Continues originally appeared on Fool.com.
Mihir Mehta owns shares of Google. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Mihir 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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