Google shares spiked by over 18 percent in after hours trading, about the same time the search giant’s earnings report hit. The dramatic rise is attributed to a trouncing of Wall Street estimates.

Google reported revenues of $5.19 billion for Q1 2008, or $3.7 billion after traffic-acquisition costs, pulling in a non-GAAP earnings per share of $4.84. Analysts had predicted $3.61 billion in revenues and an EPS of $4.52.

Closing at $449.54, Google is currently trading at about $531.

“Our ongoing innovation in search, ads, and apps helped drive healthy growth globally across our product lines, yielding another strong quarter for Google,” said Eric Schmidt, CEO of Google.  “As we integrate DoubleClick into our advertising platform, we see exciting new ways to improve the user experience and increase value for our advertisers and partners.  Also, while exercising operational discipline, we continue to explore opportunities that add value to users everywhere and to Google in the long term.”

Prior to Google’s earnings report, Efficient Frontier released information suggesting that Google numbers were up all around. Based on metrics pulled from 18 billion impressions and 310 million clicks, Efficient Frontier said Google had grabbed 77 percent of the search advertising spend in Q1, gaining 3.3 percentage points over the past year.

Return-on-investment for advertisers, though, had increased by 24 percent, click-through rates had improved by 19 percent, while cost-per-click had increased by 11 percent.
 

“Google’s efforts around improving the quality of search results appear to have increased the value of the search channel for the leading advertisers that we work with in all major verticals,” said James Beriker, President and CEO of Efficient Frontier.
 

That gamble—decreasing the search ad real estate while increasing cost-per-click—seems to have really paid off for a struggling to impress search giant.