Larry Page: Its been an area where we have applied a lot of new technologies and then some of the demographic targeting and so on, which has been very successful. The challenge and the opportunity there is there is a huge amount of inventory. We have obviously MySpace, Orkut, Inner Network and a number of other social networks. There is a lot of usage of those. There is a tremendous amount of inventory and so part of it is getting that advertiser ecosystem built up and people targeting that inventory and doing it in a way that makes sense for those advertisers. I think we’ve made a lot of improvements and I’m optimistic that there are improvements to be made. That’s balanced against tremendous inventory levels in those areas, which it takes some time for advertisers to realize they are there and start targeting effectively.

Imran Khan (JP Morgan): How are you improving the search quality in the international market. Can you give us some sense in terms of the frequency of search in your lesser developed countries like Continental Europe compared to more developed like US and UK, the frequency of search volume per person?

Sergey Brin: I don’t think we consider Continental Europe less developed. I do think that in the advertising space, we have seen that they are coming up on the ramps that the US and UK might have been a year or two ago. That obviously gives us great opportunity for growth advertising-wise. But in terms of basic Internet usage and searches per user, what we’ve seen is it typically depends on broadband penetration and quality of broadband and the more people have access to great networks and computers to use them the more searches and overall internet usage they will do. That’s why you see this skew during the week, that Monday to Friday we do tend to get a lot more usage than on weekends. Obviously part of that’s because people are relaxing off the Internet on weekends, but part of it also is that typically often people at home don’t have as good connectivity and Internet access as they do at the office.

Christa Quarles (Thomas Weisel Partners): You mentioned in the UK that travel and finance has rebounded. Could you discuss travel, finance and retail more broadly across the US and some of your other geographies in terms of strength or any relative weakness?

Omid Kordestani: In general what we are seeing is that these verticals behave by region as you are indicating, and they are the factors that determine for example in each geography we have talked about this in the past, renewal rates for finance or travel reservations that get done in UK drive those verticals. In general we saw in Q1 a bit of a slowdown in retail, some postponement of budgets but we haven’t seen anything that significantly indicates to us that one vertical or another is at risk here. We are going deeper into these accounts, and in some cases when the budgets are delayed its made up by other online categories.

Jonathan Rosenberg: If you think about what economists would typically theorize in a macroeconomic climate that was slowing they look at sectors like some of the ones you’ve mentioned – automotive, luxury goods, travel and finance -- and you look for the ones that are more sensitive to macro-economic conditions, and look to see what’s going on with them. What we tend to see is that clicks in some of those sensitive areas do grow a little less rapidly than our overall growth so the share of their total queries is down but on an absolute basis, they are all showing healthy growth in ad revenue. In the UK, for example, people are clicking on travel and local ads at a higher rate than they do in the US. In finance, although certain components of finance are down, foreclosures are up and even more mortgages do well, if you think about foreclosures, every foreclosure at some point becomes a home sale and a mortgage to somebody. Generally what we are seeing is absolute growth even in those areas that are otherwise adversely impacted by macroeconomic conditions.

Heath Terry (Credit Suisse): You mentioned that you are seeing much better click-throughs on the overlay ads versus your normal banner ad. What are the barriers to running ads on a broader spectrum of YouTube’s inventory, particularly the user generated content that you’ve got?

Omid Kordestani: What we’re focused on right now is working with YouTube management channel team to go from the plumbing, and work all the way up with the customer’s advertiser fee; there is a lot of integration work going on. YouTube was already a large DoubleClick customer and we are trying to basically streamline how the integration of DoubleClick and YouTube can be improved and how we can take advantage of our ad networks so that more of these advertisers could be represented. How do we work with the owners of content, user-generated or otherwise, to find the right match-up with the right advertiser so if we have a much better targeting of ads and also promotion of the right types of content. It’s a very comprehensive plan that we have put in place. We have a 2008 plan that has a very specific milestones again all the way from the systems and infrastructure that we need to provide that integration all the way to the different types of ads. It’s very early to make any judgment about which ads are working well and which ones are that we’re trying to have these integrated campaigns, try it out with the salesforce and our customers and do a lot of learning and settle in to a product roadmap.

David Joseph (Morgan Stanley): As you integrate DoubleClick into AdSense should we expect that to be a growth driver in addition to contextual ads or is it possible that it starts to cannibalize contextual advertising? Also, how is Google Ad Manager going to coexist with the DoubleClick Technology or ad serving technology? Also, should we assume that obviously DoubleClick is running AdSense revenue from here on out?

Omid Kordestani: In terms of the DoubleClick products, we are optimistic that where we are headed to is where our Head of Sales in the US, Tim Armstrong, calls the CMO dashboard. What our hope is that by basically providing the integration across the board here we end up having in a simple way again a lot of DoubleClick access more towards advertisers and having the DoubleClick advertisers have access to the AdSense network. That’s our goal and we’re hoping that all of this will be incremental and that ultimately we get to a point where the CMOs can have a very effective way to measure the effectiveness of the advertisers and do the right allocation of their ad budgets across the board here.

Brian Pitz (BoA Securities): How much of your international growth was due to the sunsetting of the European best practices funding?

Omid Kordestani: ETS was something we announced a while back and our goal is to have a very successful relationship with agencies across the world. We felt that the previous program and the goal of the program is to reward the way we engage properly together in servicing advertisers and also going after these new initiatives. The real performance in Europe comes from the great work that the European team is doing and understanding the dynamics of the business, putting the right customers in the right channels in each region understanding the dynamics of each industry vertical that we are selling into and paying attention to the seasonality effects and where to put the resources and servicing and selling clients.

Brian Pitz (BoA Securities): You mentioned 90% of impressions are eligible for display. Can you talk about the effective CPM difference between display and formats versus text links on your network?

Omid Kordestani: Our goal there is simply to allow again the advertisers to pay the way they wish between the display products and the text products. Ultimately the goal here is to focus on conversions for them so how they can best measure and achieve their campaign objectives.

Jonathan Rosenberg: What we are doing is we are trying to come up with a way to manage the auction so that you can have the display ads competing with the text ads and multiple text ads basically in the auction have to compete in such a manner that they trump the value of the display ads, typically three text ads versus one display ad unit. We’re still basically working through that. That’s basically how it works.

Brian Pitz (BoA Securities): Can you provide an update on China and on the new initiatives that the company was working on over in China?

Eric Schmidt: We are seeing market share growth and good revenue growth as we have learned to operate in that environment. Although the advertising business is nascent in China, the fact of the matter is that the Chinese Internet is so large that even on a small basis the numbers add up to quite significant with good growth rate. We believe that China will continue to be a good market for us. As we hopefully gain share we have significant new products for the Chinese, Knowledge Chinese, Users Chinese Language, Chinese Search and that’s our core growth, so the message there is good.