Monday, December 05, 2011

SEM Predictor Roll-Call: Google Will Crush Q4 2011 Consensus Revenue Estimates


This week I'll be in Park City for the Search Insider Summit, an SEM sausage fest where vendors pay shit-tons of money to hear each other speak, and big search advertisers feign interest in order to rationalize their free ski trip. I've never attended before, but decided to because I'm considering getting back into the space and have to meet people there. Since then, Efficient Frontier was acquired by Adobe, so thinly-veiled gloating over the largest SEM M&A exit of all time is an added bonus.

We'll have poker night in Geoff's suite (companies spending >$1M/mo on PPC only, or wealthy drunks), but because it's possible I'll lose at Pass The Trash, 5-card-draw-with-7s-wild or High/Low Anaconda, I've decided to invest in a sure thing = Google crushing consensus Q4 2011 revenue estimates.

How have I arrived at this conclusion? By looking at data five of the top SEM firms have put out in the past week and which show Google coming in way, way over the 30.3% consensus for year-over-year (YoY) revenue growth.

Rimm-Kaufman Group (RKG): +43% YoY
George Michie and team pore over and manipulate SEM data the way Columbo solves murders, and this time is no exception. RKG's Mark Ballard reports a 43% YoY increase in non-brand paid search spend for the first half of Q4, with higher click-thru-rates (CTRs) accounting for most of the increase. While 1-2 quarters of accurate quarterly forecasting to not an SEM oracle make, RKG's data is perfectly in line with our next datapoint.

Marin Software: +44% YoY
CEO Chris Lien has built Marin into a top five SEM platform, and his large & varied customer base means their aggregate data is likely to be a statistically valid indicator of Google's business. Their most recent Q4 data dive shows 44% YoY growth, with CTR increases leading the way.

Kenshoo: +48% YoY
My wife likes saying 'Kenshoo', and last time she liked a startup name I told her about, it was 'Google', where I turned down Omid's offer to be Google's first salesman. Sorry honey. Kenshoo's CMO - Aaron Goldman - once *wasn't* present for a car I gave away on behalf of Omniture at SES (d'oh!), so he's equally unlucky. I'll forgive him, though, as his take on Q4 (showing 48% YoY growth) allows the savvy investor to triangulate Q4 reality with Marin & RKG data.

IgnitionOne: +31.2% YoY
I've given up trying to keep track of the-firm-formerly-known-as-360i-or-SearchIgnite, but they're top SEM practitioners whose Q4 data shows *merely* 31.2% YoY growth. Theirs is the lowest Q4 estimate I've found, and yet it's still over consensus.

Performics +104% YoY
Of all the firms mentioned, no one's been at SEM longer than Performics, so it'd be unwise to overlook their point of view. In this case, I'm not sure what to make of their data, as it's so wildly positive that I'm inclined to think that their methodology involves illegal narcotics. That said, they're showing 104% YoY growth for Nov 21-25. Matt Miller & Dan Parks, if you read this, you have some explaining to do.

Wall Street readers to the SearchQuant blog: assuming you take my advice and make tens of millions of dollars in profits, do me a solid and send me one of these after you close out your position (5.2L preferably).

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