Google Posts Strong Ad Earnings in Q2

Google reported yesterday that Q2 revenue, almost entirely from search ads, rose 58% over the same period last year to reach $3.87 billion.

Google-operated Web sites generated $2.5 billion, up 74% year over year, while the third-party AdSense network earned $1.35 billion, a 36% increase from Q2 2006.

Profits for the quarter rose 28% to $925.1 million, from $721.1 million in the year-ago quarter.

Paid clicks grew by 47% compared to Q2 2006, counting both ads on Google owned-and-operated sites and on third-party sites in the AdSense network.

“Traffic was stronger than we expected on Google.com, both domestically and internationally, with annual traffic growth actually increasing over time, which is a very positive surprise,” said Google CEO Eric Schmidt in an analyst conference. “We are clearly doing the right things to attract and retain users.”

For innovations that contributed to ad revenue performance during the quarter, Google co-founder and technology president Sergey Brin pointed to a redesign that added visualization and dashboard tools to Google Analytics, and greater transparency in ad placement performance on Google’s publisher network. Google’s pay-per-action ad format is now available on all publisher sites, Brin said.

Asked about the legal challenges now facing Google, Schmidt pointed to lawsuits from authors groups over Google Print Library Project to scan all texts in major libraries and put their content online, and to a suit by Viacom against YouTube and Google for copyright infringement.

But he did not mention the regulatory hurdles that have cropped up over Google’s announced $3.1 billion acquisition of ad platform DoubleClick. Yesterday it was reported that House and Senate committees with oversight on antitrust issues will hold hearings in the fall on the impact of that purchase on competition in online advertising. The Federal Trade Commission has also requested more information on the purchase.