The assumption among most investors is that to make money on stocks based on holiday sales, the only option is shares in retail and e-commerce companies. That is not entirely true. All those retailers need to pick one or more places to market to consumers. Google Inc. (NASDAQ: GOOG) has to be at the top of that list.
Google has two advantages over most media as a means to deliver a marketing message. The first is its size. Based on comScore data for October, Google sites had 194.1 million unique visitors in the United States. And this is only traffic to desktop computers. The search company’s reach sits second to Yahoo! Inc. (NASDAQ: YHOO) sites by this comScore yardstick. Yahoo! had 195.8 million unique visitors in October.
Google’s other advantage is that its search ads are performance based, at least in theory. A retailer who wants buyers of toys runs ads next to toy search queries. Google is paid for people who click on these. Presumably, the “clickers” are the most likely buyers in the sector the marketer has aimed at.
Eventually, Google’s earnings will be the proof of whether the holidays have helped its revenue much. Google had revenue of $14.9 billion in the third quarter. In the fourth quarter of 2012, which includes the impact of holiday activity, Google’s revenue was $14.4 billion, when the revenue from its buyout of Motorola was backed out. If Google can maintain the growth rate year over previous year that it posted in the third quarter, revenue for the final quarter of 2013 should be $16.3 billion. Anything above that has to be considered a “win” for Google, and would likely be a sign that it did indeed get wind at its back because of the benefits of holiday marketing dollars.
It is tempting to believe that other media companies are a potential proxy for the expenditures of marketing dollars — of course, after the retailers themselves. These could include the television networks, newspapers or Internet portals. But none of these have the sheer bulk of audience that Google can deliver.