Google & Money

1st September 2014

Who Are We & What Are We Worth?

• Search Star was set up in 2005• PPC, Analytics & Conversion are core

services• 18 strong team based in Bath • We depend on Google…but how much are

we worth to Google?

IPO’d 19th August 2004 @ $85

Market Capitalisation on 22nd August 2014 = $399bn

Google Global Revenue ($m)

Share Of Revenues Q2 2014:

USA = 42%UK = 9%

RoW = 49%

Global Revenues By Source

Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14$0

$5,000

$10,000

$15,000

$20,000

439 666 829 1,049 1,046 1,230 1,647 1,554 1,596

7,542 7,7278,640 8,640 8,868

9,375

10,538 10,469 10,935

2,9833,133

3,436 3,262 3,1933,148

3,522 3,3973,424

10,96411,526

12,905 12,951 13,10713,753

15,707 15,42015,955

Other Google Sites Network

Q2’14 Y/Y Change = 22%Q2’14 Q/Q Change = 3%

($ in millions)

Play, Gdrive,

fibre etc.

Click Volumes Are Growing

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'140%

10%

20%

30%

40%

50%

20%

23%

26%

31%

26%25%

20%

13%

5%

10%9% 9%

20%

29%

40%

44%

37%

33%

Aggregated Network Google Sites

Y/Y Paid Clicks Growth %

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14-16%

-12%

-8%

-4%

0%

-4%

-6%

-8%

-11%

-9%

-6%

-9%

-5%

-6%

-11%

-12%

-13%

-2%

-8%

-13%

-15%

-11%

-7%

Aggregated Network Google Sites

Y/Y Cost-Per-Click Growth %

But CPCs Are Falling

“We’re seeing tremendous innovation in advertising, which will help us monetize mobile queries more effectively than desktop today. Indeed, our mobile monetization per query is already a significant fraction compared to desktop. In short, as we transition from one screen to multiple screens, Google has enormous opportunities to innovate and drive ever-higher monetization, just like search in 2000” Larry Page Oct 2012

Relevant Ads on Multiple Screens & Devices

Payments to network & distribution

partners

Data centres, content

acquisition costs, credit card

charges etc.

2010 2011 2012 2013Google Revenue $29,321 $37,905 $50,175 $59,825

Traffic Acquisition Cost $7,317 $8,811 $10,956 $12,258Other Cost of Revenue $3,100 $4,377 $9,678 $13,600Total Cost of Revenue $10,417 $13,188 $20,634 $25,858R&D $3,762 $5,162 $6,793 $7,952Sales & Marketing $2,799 $4,589 $6,143 $7,253General Admin $1,962 $3,224 $3,845 $4,796Costs & Expenses $8,523 $12,975 $16,781 $20,001Total Costs $18,940 $26,163 $37,415 $45,859

Income From Operations $10,381 $11,742 $12,760 $13,966Net Income After Tax $8,505 $9,737 $10,737 $12,920

Google Headcount 32,467 37,544 43,862

Google Revenue Per Head $1.17 $1.34 $1.36

$$$$$$$$$$$$$$$$$$$$$$$$s

($ in millions)

So What’s Search Star To Google?

• If Search Star manages £20m pa…• Google last 12 month revenue = $60.8bn– $60.8bn = £36.6bn– UK is 9% of global revenue = £3.3bn– Search Star manages 0.6% of UK revenues