Google?s mobile monetization troubles continue as key questions go unanswered
Google made important gains in mobile during the third quarter, including increases in ad clicks and impressions, but a lackluster cost-per-click rate remains a thorny issue as ad spend continues to trail time spent on smartphones.
During the third quarter, the average CPC rates decreased approximately 2 percent year-over-year and remained constant from the second quarter of 2014. The company also highlighted gains in its brand advertising business, including selling out preferred offerings on YouTube and an upfront commitment from Mondelez for video and display advertising, as well as its expansion Google Express, its home-delivery service.
?It is very clear that mobile is still a big part of our growth,? said Patrick Pichette, chief financial officer of Google, during a conference call with analysts to discuss the results. ?But when we talk about mobile, there are a couple of things.
?One is that you have to continue to look at both the volume of the growth and pricing, these are long- term trends that we are seeing,? he said
?The CPCs and the clicks, they can fluctuate from quarter to quarter, it just happens that we?ve made some changes this quarter that impacted the mobile pricing while impacting the lower quality clicks, and that is what you see a bit reflected in our numbers.?
Searching for answers
Google reported consolidated revenues of $16.52 billion for the third quarter ended Sept. 30, 2014, an increase of 20 percent compared to the third quarter of 2013.
Net income totaled $2.81 billion, compared to $2.97 billion in the third quarter of 2013.
Aggregate paid clicks increased approximately 17 percent over the third quarter of 2013 and increased approximately 2 percent over the second quarter of 2014.
?Google?s mobile ad clicks increased during the third quarter, continuing a trend we?ve seen over the last couple of years,? said Matt Grebow, group director of paid search for The Search Agency. ?In particular, tablet clicks jumped significantly from Q3 2013, an indication that Google?s enhanced campaigns have accomplished one of their primary goals?to boost advertising on tablets.
?Google also saw a considerable lift from mobile product listing ads,? he said. ?Enhancements to mobile shopping ads, such as a ?swipeable? slider, have allowed for impressions without crowding what is already a tiny screen.
?Despite these improvements, mobile CPCs continue to trail desktop click costs - a fact that has miffed investors and raised concerns about Google?s potential for revenue growth. However, according to our data, searchers aren?t abandoning their laptops. Instead, they?re conducting more searches overall, no matter what the device.?
Product Listings Ads
A continued area of success for Google on mobile is Product Listing Ads, which saw a big jump last year during the holiday season and have continued to grow this year.
PLAs provide an efficient way for searches to find products on mobile, showing an image, price and a headline.
Impressions for PLAs doubled from a year ago to 17percent, with 42 percent of PLA clicks coming from smartphones, according to a new report from The Search Agency based on aggregate client data.
Mobile also delivered the biggest spike in click-through rates for Google, which was up 88 percent on smartphones, according to The Search Agency.
The financial results coincided with Google?s official launch of Lollipop, its latest Android software update and several new Nexus devices designed to showcase the new software.
Lollipop
Google also unveiled new Nexus devices this week, the Google Nexus 6 phablet, Nexus 9 tablet and Nexus Player, a streaming media player.
The company officially unveiled Lollipop, its latest Android software update that was previewed this summer at Google I/O. One of Lollipop?s major new features is Material Design, which continues a trend also seen from Apple Microsoft, to give developers ways to create more consistent experiences across devices.
?In spite of all this, growth in mobile ad spending continues to lag increases in time spent on smartphones,? Mr. Grebow said. ?Many advertisers remain wary of the return their business sees from mobile devices.
?Google?s challenge over the next year, and beyond, is to provide insights that will help its own customers understand how searchers interact with brands across devices, different media, and even offline,? he said.
?Google is perhaps better poised than any other company to help answer these questions, but the journey will be long and complex.?
Final Take
Chantal Tode is senior editor on Mobile Marketer, New York