What to Expect for Google for Q2 and Beyond

Google will report its Q2 earnings this afternoon, and available data suggests that continued revenue gains are in store. After 21% growth for US net advertising revenues in Q1, eMarketer anticipates a 17% gain in Q2.

Those sustained revenue gains reflect Google’s reliance on paid search advertising as the company’s main engine for growth. And a healthy search ad spending market further reflects the slowly recovering ecommerce market, said eMarketer senior analyst David Hallerman.

“Google is an indicator of economic trends. Most paid search ads have some commercial intent. Therefore, people clicking on search ads—and thereby monetizing them—indicates a continued increase in search queries with commercial intent,” Hallerman explained.

Furthermore, he noted, Google’s revenue growth also comes from the company’s success at placing the right ad in front of the right individual, and an increased competition for prime keywords, which tends to raise the price for higher positions in search results.

With all that in mind, eMarketer estimates that Google’s net US ad revenues for all of 2010 will grow by nearly 21%—making Google a rare bird among web companies that depend on ad revenues.