Google says users are clicking on more ads

Google increased the volume by which users engage with its ads, mitigating a decline in the amount it charges marketers per click and helping to boost revenues beyond analysts’ estimates in its third quarter.

Google

Revenue grew by 12 per cent year on year to $14.9bn in the three months to 30 September – higher than analysts’ forecasts of $14.8bn for the quarter. Profit grew 36 per cent to $2.97bn.

The average cost per click (CPC) for Google’s ads fell 8 per cent quarter on quarter, deepening the 6 per cent decline in the second quarter.

However, the total amount of paid clicks in that time increased 8 per cent in the quarter and 26 per cent year on year – with the volume, thought to be driven by users accessing its services on more mobile devices, helping to offset the CPC decline.

Alistair Dent, head of PPC at PPC specialists agency Periscopix says the decline in CPC is not just down to more brands shifting their Google ad campaigns to mobile, which do not command the high rates of desktop, as per previous quarters.

He adds: “Revenue is being driven up by a change in ad formats as part of Enhanced Campaigns, which mean more clicks per search, rather more money-per-click. So CPC stays low, but overall revenue goes up. This can be as much about the expansion of Google’s presence in developing markets, as about the lag in mobile CPCs. Every time Google opens up a new revenue opportunity, its overall revenues will rise, even though the average CPC is pulled lower.”

One such recent new ad format is Shared Endoresements, adding “peer recommendation” to ad formats – although the announcement was met with concern by some users. 

Revenue grew by 12 per cent year on year to $14.9bn in the three months to 30 September – higher than analysts’ forecasts of $14.8bn for the quarter. Profit grew 36 per cent to $2.97bn.

The average cost per click (CPC) for Google’s ads fell 8 per cent quarter on quarter, deepening the 6 per cent decline in the second quarter.

However, the total amount of paid clicks in that time increased 8 per cent in the quarter and 26 per cent year on year – with the volume, thought to be driven by users accessing its services on more mobile devices, helping to offset the CPC decline.

Alistair Dent, head of PPC at PPC specialists agency Periscopix says the decline in CPC is not just down to more brands shifting their Google ad campaigns to mobile, which do not command the high rates of desktop, as per previous quarters.

He adds: “Revenue is being driven up by a change in ad formats as part of Enhanced Campaigns, which mean more clicks per search, rather more money-per-click. So CPC stays low, but overall revenue goes up. This can be as much about the expansion of Google presence in developing markets, as about the lag in mobile CPCs. Every time Google opens up a new revenue opportunity, its overall revenues will rise, even though the average CPC is pulled lower.”

One such recent new ad format is Shared Endoresements, adding “peer recommendation” and images to ad formats – although the announcement was met with concern by some users. 

Although Google’s headline figures have cheered investors, driving shares up by about 8 per cent in after hours trading to almost $960, the Motorola division remains a concern.

Operating losses at Motorola grew by 29 per cent year on year to $248m in spite of a wide cost cutting efforts over the past year. Google paid $12.4bn to acquire Motorola in May last year.

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