The search engine giant, Google (GOOG, Financial) (GOOGL, Financial) is investing profoundly in four of its most energetic growth drivers that are gearing up its business tremendously. These include direct sponsors or performance marketing, helping clients to build their brands, its ad tech platform for its publishers and agencies, and last its emerging businesses like digital content, enterprise and hardware.
Positive moves by Google
The Internet provider is busy in driving comprehensively better monetization across the board as it is well positioned to help people to navigate web, apps and places around them. This generation is now always online and they like to have a seamless, easy experience as they move from screen to screen, displaying tremendous opportunity for Google to drive growth for its performance advertising segment as it is helping the marketers, retailers and merchants to measure the entire customer expedition.
Moreover, Google’s recent investment in the enhanced campaigning and estimated total conversion are turning out in greater monetizing as the advertisers are benefiting from these initiatives in a big way. On the top of this, Google is inviting hundreds of advertisers to its adverse advertising forum, where it will talk about its work in the area of marketers that should supplement its growth going forward.
Additionally, Google has witnessed real positive momentum in its product listing ads as well, with the new campaign system. Also the international retailers such as Farfetch and Dominos upgraded shopping campaign with Google that provided them a better conversion rate, along with reduced cost per acquisition or CPA. For example, Farfetch’s conversion rate increased by 13%, while its CPA reduced to 20% of late. Also Domino has made it easy for its customers to make payments using Google Wallet, instant buy within their Android app.
Besides, the company is also investing in its same-day delivery service, “Google Shopping Express,” that should further add value to its business. Google is off to this plan with the investment of approximately $500 million to fuel this initiative in the United States. Additionally, this service offers same-day delivery service from local stores and merchants in the region. Also, the internet giant is collaborating with the major retailers that on the contrary could result in product search ads either on Google search engine or Google Shopping Express service.
In addition, most of these retailers and merchants will certainly like to see display of their products on priority basis in the search results in Google shopping express service and Google search engine. Hence, Google is expected to gain substantial market share as the strategic relationships with the local stores, merchants and major retailers in the country move traffic to the product search ads.
Brand marketing moves
As stated above, its second area of concern is to assist the marketers to enhance their brands. Google has experienced a boom in several services that have undeniably resulted in brand-building capabilities for many marketers. Also, marketers and agencies that have historically built their brands on TV are now moving their investments toward digital.
In addition, Google is also working closely with Nissan in Australia to create made-for-YouTube videos for launches of Patrol SUV, and this campaign is aggressively promoted by TrueView ads and YouTube mass. Nissan was pleased to observe that this has led to an increase of about 340% in daily visits on its website, and more than 2% of those were interactive for the campaign booked a test drive.
Technology investments
Google has recently invested in premium publisher partners like The Local Media Consortium that will certainly boost its ad technologies segment. Google has experienced positive momentum built up for its programmatic ad technologies as this Local Media Consortium comprises approximately 800 daily newspapers and 200 local broadcast stations. Besides, the company has recently acquired wellium fraud fighter Spider.io that should help Google gain the confidence of thousands of marketers that trust Google. Also, Google was pleased to see that most of its clients are already using its MRC-accredited Active View technology to buy high-quality viewable ad impressions.
Google is also excited with the new emerging market such as digital content, enterprise and hardware. Its Google Play continues to drive its digital content. Google has further expanded its reach to various other countries.
Google’s hardware segment has also joined the momentum as its suits of products such as its newly launched Chromecast has turned out to be a real hit for the company. Google has also extended its reach worldwide with Chromecast as it added about 11 countries in the last reported quarter. Also it has recently opened up Chromecast developers.
Besides, the company is also making significant investments in the Google cloud platform that has experienced positive response to its most recent product announcements. Also, Google expects to see continued momentum in the cloud platform and believes that it can bring significant value to the many companies, which are opting public cloud.
Conclusion
Google is currently trading in forward P/E of 18.47 as against the trailing P/E of 30.74; with PEG ratio of 1.37 indicate potential growth in the future. Its profit and operating margins remains very strong with yield of about 20.91% and 23.21% respectively. Also the return on equity looks solid with quarterly return of 14.76%. Also its operating cash of 19.42 billion is strong enough to cover its total debt of 8.40 billion, while its leveraged free cash flow stands at 6.51 billion. Moreover, the analysts have estimated CAGR of 16.02% for the next five years reflect remarkable growth for the stock going forward.
