Google’s grip on mobile will not last forever

Google is still struggling to monetise its dominance of the mobile market with cost per click advertising rates dropping 2% in its latest quarter. Despite an increase in clicks, the average cost per click declined for the 12th consecutive quarter, heaping pressure on the media giant’s objective to convince advertisers to pay more for mobile ads amid greater competition from Facebook and Twitter.

The technology firm’s latest quarterly results alarmed some analysts today (17 October) over concerns that its core ad business is slowing across the board.

Google revealed the total number of clicks on ads increased 17% in the three months to September, a drop on the previous quarter. While the price of ads fell 2%, it was a slower decline in comparison to the previous period’s 6% drop. The downturn impacted the company’s total revenue in the quarter falling short of analysts’ forecasts at $16.52bn in the quarter, a 20% rise on the same period in 2013.

Google does not strip out figures for mobile ad revenue separately from desktop, so it’s difficult to know for sure how well mobile is doing. But given the recent investments into trying to accelerate mobile ad sales, the performance suggests it has fallen short of the opportunities the channel presents.

Google ad chiefs have pointed out that mobile is still relatively new and recently admitted that some brands are still straining to engage with consumers on mobile.

It’s a long-standing problem for Google, which can only be solved by nudging brands to bid against one another more enthusiastically rather than by simply pushing up prices – due to the complicated auction process for search ads. And with Facebook and Twitter making their own dashes for the mobile pie, Google could see its dominance of the mobile space start to wane.

The launch of Facebook’s Atlas platform, which offers more granular targeting than Google’s own Display Network, heaps pressure on the search engine’s cross-device advertisement capability. Meanwhile, Twitter is steadily building up a suite of tools that offer marketers real-time feedback on how their mobile campaigns are performing.

The ace in Google’s pocket could be online video. A big reason as to why marketers have been reluctant to shell out more on mobile ads is because many mobile ad formats are not appealing. While video is more expensive to produce than traditional banners it would give consumers more of a reason to click through.

The business has spoken about plans to introduce its TrueView ads – the in-stream service that allows users to skip through videos, – to non-game apps that are part of its mobile in app network.

Google’s competition has come out swinging in the latest round for mobile ad revenues and the business needs to act fast to protect its share of the market.


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