New ad formats boost Google revenues

Google has credited brand take-up of new advertising formats for boosting revenues by 22 per cent in its second quarter.

Google’s revenues rose 22 per cent in its latest quarter.

Revenue rose to $16bn, while profits were up 6 per cent to $3.4bn in the three months to 30 June.

Speaking on the company’s earnings call, senior vice president and chief business officer Nikesh Arora, who announced he is leaving the company to join Japanese firm Softbank, said Google is seeing “tremendous amounts of momentum” from the retailer segments when it comes to using its product listing ads format across screens. Google says it sent three times as much traffic to merchants on smartphones and tablet devices compared with the second quarter of 2013.

Arora once again reiterated, as he has done on the previous two earnings calls, that “digital is at the centre of the brand building campaign”, with video the “linchpin” of their strategies.

Google launched its preferred video offering at its BrandCast event in April which offers marketers exclusive access to the top content on YouTube. Google has received support for the format from Digitas and Omnicom Media Group and brands including General Motors, Coca-Cola, Universal Pictures and Adidas have all experienced “tremendous success” with the format, Arora said.

Google will continue to experiment to see if advertising is the only model by which it can monetise YouTube, Arora said, hinting that the company may look to subscriptions.

The volume of clicks continued to outpace revenue growth as the consumer shift to smartphones continue and mobile advertising rates still pale in comparison to desktop. The average cost per click decreased 6 per cent year on year and 2 per cent quarter on quarter. Paid clicks rose 25 per cent year on year and 2 per cent on the quarter.

Google does not split out mobile income as a percentage of revenue. Patrick Pichette, Google’s CFO, said this is because we are now living in a “multi-screen world” where consumers switch from mobile, to tablet, to desktop and TV.

Pichette did hint at more mobile advertising innovation, particularly within the app store to help brands and developers aid the discovery of their apps.

He said: “You should expect us to most aggressively try and make sure that app indexing all happens, is available and is easily accessible across devices…I think it’s clearly an area of focus and clearly you should expect to see activity in that space. And in terms of revenue its not unlike any revenue we create in the search where we help people find things and that allows us to create an advertising opportunity where we’re able to monetise that.”

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