So, Google declared today that they bucked the trend of the world’s economy by increasing revenues by almost 20% in Q4. Profits were down, poor stock market performance and ‘one-time-investment-write-downs’ saw to that, but nonetheless they posted top line growth.

This growth in today’s economic gloom may be surprising. Yet, if you look under the skin a bit more then perhaps there are a few clear reasons for this upturn:

1. Internet usage has grown globally by 16% year on year (Internet World Stats) – more users means increased usage of Google and greater opportunity for revenue.
2. Google lifts their longstanding embargo for bidding on gambling and alcohol based terms – bidding wars for this lucrative traffic could reportedly net Google an extra £300 million a year!
3. Emergence of universal search makes natural listings harder to achieve – Paid search provides reliable shortcut to traffic for advertisers.
4. Google Suggest - Google, by pre-empting searches with ‘most popular’ cues, has said to be slowly killing off the longtail. This potentially means more people coming through on fewer search queries. In turn this bottle necks traffic by almost forcing people into higher demand keywords. A knock on effect of this being an increase in revenues on ‘costlier’ keywords.  
5. Growing reputation of SEM as a ROI focused sales tool - 80% of advertisers cite their search spend will increase in the next two years (European Interactive Advertising Association 2008)
6. Declining markets drives up advertiser demand for traffic- more competitive and aggressive bidding means higher CPCs.
7. Advertising Opportunities – Google’s innovative means of planning and delivering adverts to end users continues to grow (almost daily) The invent of Google 3PAS, Ad Planner and the pure global reach makes it an attractive medium when budgets are squeezed.
8. The festive season! – People spend more during Q4 with online shoppers spending £4.67bn   online last month, up 14%% on 2007.

So I’ve thought of 8 reasons why Google have posted this revenue growth. Some, theoretical, some solid fact, and am sure there’s plenty more to add to this.

Eric Schmitt, CEO of Google notes - "We had strong search query growth year-on-year, revenues were up in most verticals, and we had tight control of our costs, something which eluded us perhaps in the past, but we got the formula down now,"

It will be interesting to see how Google’s “formula” turns out in Q1. If it’s anything like its PageRank then I’m sure it’ll be water-tight, impenetrable and a success!