Nomura Securities on Online Advertising: Feedback from Recent Online Advertising Launch
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Rating Summary:
44 Buy, 6 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 15 | Down: 12 | New: 12
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Nomura Securities on Online Advertising: Feedback from recent Online Advertising Launch
Concern #1: Google’s (Nasdaq: GOOG) weak 4Q:11 cost-per-click growth is a sign of weakness in Google’s core search business. We disagree and also do not believe it is appropriate to model Google’s search advertising as a simple product of cost-per-click growth and paid-click growth. Concern #2: Margin pressure from the MMI integration will stymie outperformance. MMI is a lower margin business than core Google, but we caution investors from focusing on operating margins alone, as we estimate that Google profit dollars will fall by only 1% through the acquisition. Concern #3: Facebook and Social are threats to Google’s search monetization. We see no evidence that Facebook is substitutive for search or a threat to Google’s monetization.
Concern #1: Google’s (Nasdaq: GOOG) weak 4Q:11 cost-per-click growth is a sign of weakness in Google’s core search business. We disagree and also do not believe it is appropriate to model Google’s search advertising as a simple product of cost-per-click growth and paid-click growth. Concern #2: Margin pressure from the MMI integration will stymie outperformance. MMI is a lower margin business than core Google, but we caution investors from focusing on operating margins alone, as we estimate that Google profit dollars will fall by only 1% through the acquisition. Concern #3: Facebook and Social are threats to Google’s search monetization. We see no evidence that Facebook is substitutive for search or a threat to Google’s monetization.
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