As everyone knows by now Google released results that exceeded expectations for both revenues and earnings. Analysts have attributed Google’s strength to folks shifting advertising from display to keyword because it is more effective. But there has definitely been some slowdown in Google’s US growth. Google claims that this was due to its improvements in search quality.

Both of these arguments are related in a way that may put a larger crimp into Google’s growth in the long term. I am convinced that we will get more and more data around the effectiveness of display in influencing the likelihood of purchasing. At the same time more small advertisers will learn how to really measure their cost of conversion - many will find that their CPC campaigns are not actually as effective as they tought. In combination this will make display more competitive. Despite their acquisition of Doubleclick it is unlikely that Google can develop as strong a hold on display as on keyword and at the same time Google will have to continue to improve the quality of clicks.

So Q1 is definitely an inning won by Google, but the online advertising game is far from over.