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Google's mobile revenue issues persist as Enhanced Campaigns deadline looms

Monetizing mobile continues to be an issue for Google, with second-quarter cost-per-click rates dropping two percent compared to the previous quarter even as the company reported six million marketers have switched to its new Enhanced Campaigns, which is meant to drive CPC rates.

With the deadline for Enhanced Campaigns on Monday, July 22, some marketers have been furiously integrating mobile and desktop content or moving to responsive design. However, many others have not fallen in line yet, meaning mobile users could have a harder time finding what they are looking for in the near term.

?Google is trying to get companies to focus more around mobile than they have in the past,? said Brian Klais, founder/CEO of Pure Oxygen Labs, Madison, WI.

?The next six months will have a very interesting mobile user?s experience, particularly a mobile search experience,? he said. ?Some of the brands that you expect to be there may not be because they are not implementing the recommendations that Google put forth.

?But, I think, probably by holiday, you will see a better mobile user experience, particularly a better mobile search experience that is more integrated across more companies.?

CPC rates drop
Google reported yesterday that CPC rates dropped by 6 percent in the second quarter in a year-over-year comparison, driven in part by the fact that mobile search continues to grow yet mobile CPC rates are typically much lower than on desktop. 

While some reports suggest Enhanced Campaigns are having the desired impact on CPC rates, any impact was not enough to help Google's second quarter results, with revenue and profits both missing analyst expectationis.

Enhanced Campaigns is Google?s attempt to address low cost-per-click rates in mobile by lumping paid search campaigns for smartphones and tablets in with desktop. This means that marketers either need to have servers capable of delivering content to mobile users or embrace responsive design.

Brands struggle
Many marketers have invested in standalone mobile sites that use the m. prefix or various mobile sub-domains with suffixes.

With one campaign automatically being served across desktop and mobile at the same time, it will presumably include the desktop URL for users to click through on.

If users are clicking from a mobile device, marketers will not need to change their m. or mobile sub-domains pages, but they will need to ensure that the server can intelligently redirect the searcher to the appropriate deep mobile page.

?This is where many brands are struggling,? Mr. Klais said.

?If their mobile site isn?t integrated into their desktop site such that when users click on a www address in organic results or they click on an ad that resolves to a www address, and the server does not have the intelligence to know this is a mobile device, that is where brands will suffer in this migration to Enhanced campaigns,? he said. ?Their conversion rates will go down and the quality scores will go down.?

Google's second quarter revenue totaled $14 billion, up 19 percent. Advertising revenues totaled $13.11 billion, up 20 percent and representing 93 percent of consolidated revenues.

The number of paid clicks increased 23 percent year over year and 4 percent compared to the first quarter while traffic acquision costs totaled $3.01 billion or 25 percent of advertising revenues.

Motorola Mobile revenues totaled $988 million, or 7 percent of consolidated revenues.

Responsive design
Google is urging marketers to use responsive design as a way to address this issue, as this enables marketers to create one Web site that can be served across both desktop and mobile.

Responsive design is easier from an implementation standpoint and can ensure that users have a good experience across devices.

However, many still feel that responsive design is not the best answer for mobile.

In particular, large retailers with a lot of pages could stick with dedicated mobile URLs.

?The takeaway shouldn?t be that you have to go responsive in order to have good quality scores in Google Enhanced Campaigns,? Mr. Klais said.

?You can still accomplish that with your mobile site or a lot of brands are using dynamic serving, which lets server does detection and serves mobile content if on a mobile device, but it appears to be the same URL as the desktop,? he said.

The tablet experience
The tablet user experience, in particular, could be downgraded going forward as a result of Enhanced Campaigns as more sophisticated marketers were already using device-specific segmentation in their campaign settings to enable greater control of ad messaging for mobile and tablet devices.

Since Enhanced Campaigns will treat tablets the same as desktop, these marketers will no longer have the same control in terms of bidding strategies, creative messaging and landing page experiences at the tablet level.

?Google believes that tablet behavior is no different than desktop behavior and that is the single biggest adjustment sophisticated marketers will need to make, there are no more levers to pull for tablet-only optimization at the bidding or ad creative level,? said Keith Wilson, vice president of agency products at The Search Agency, Los Angeles.

?At The Search Agency, we think this is a step backwards,? he said. ?We would welcome and have urged Google to re-introduce the biddable and tablet specific creative optimization levers previously available.

?Hopefully, tablet control is re-introduced down the road.?

A report released today by The Search Agency reveals that cost-per-clicks on Google increased across every type of device in the second quarter. Tablet CPCs were up 26 percent and, for the first time, surpassed desktop CPCs.

Mobile opportunity
While there may be some degradation of the mobile user experience in the short term, the consensus is that farther out Enhanced Campaigns will improve the mobile experience in search.

For example, marketers who have not been that active in mobile can use the switch over as an opportunity to understand their audience?s intent and behavior in mobile, identify what actions consumers are taking that lead to conversion and optimize their mobile traffic accordingly.

?Marketers of tomorrow will try to understand how to integrate the cues of purchase intent from mobile and integrate it into their core marketing activities,? Mr. Wilson said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York