The search engine heavyweight, Google Inc (NASDAQ:GOOG), is scheduled to report its third quarter results on Thursday, October 18, 2012. The September quarter is Google’s first full reported quarter with Motorola Mobility Holdings Inc (NYSE:MMI). That’s why Citigroup Inc. (NYSE:C) researchers Mark Mahaney and Rohit Kulkarni expect the Q3 results to be messy. However, Citigroup maintains its Buy rating with $850 price target, and they expect the company’s revenue to grow 21 percent this quarter.

Google Logo

After consolidating the revenues of Motorola Mobility, Google is expected to earn $14.3 billion in gross revenue and $11.6 billion in net revenue. The core Google Inc (NASDAQ:GOOG) segment will post $11.4 billion in gross revenue, an 18 percent increase over the same quarter last year. Citigroup expects the Motorola Mobility Holdings Inc (NYSE:MMI) division to earn $2 billion in revenues, and another $880 million gross revenue will come from Motorola Home segment.

The two search engine marketers Citigroup Inc. (NYSE:C) talked to, Covario and Performics, said that mobile search is rapidly gaining the momentum. They said about 20-25 percent of their clients’ search spending is going on mobile search. As of August, 30 percent of all the search impressions came from mobile. The search engine marketers also noticed that their retail clients are flocking towards Google’s new Product Listing Ads (PLA) for the holiday season.

According to Kenshoo, another SEM, PLA ads have 8 percent conversion rates, compared to 2-3 percent for regular text ads. Given the high conversion rate and ROI, businesses will boost their spending on Product Listings Ads. Another SEM, ChannelAdvisor says that businesses are still working tentatively with Facebook, but they are not getting good ROI because users come to Facebook to socialize, not to buy. My opinion? Facebook Inc (NASDAQ:FB) is not a direct response advertising platform, which Google is. To me, Facebook is more of a brand awareness platform, therefore online retailers that want direct sales will prefer Google Inc (NASDAQ:GOOG) over Facebook Inc (NASDAQ:FB).

Google Inc (NASDAQ:GOOG) is currently restructuring Motorola. It will shut down about 30 offices and fire 4,000 employees of Motorola. Motorola Mobility Holdings Inc (NYSE:MMI) has over 17,000 patents in its portfolio that Google can use to boost its smartphone business.