When Google’s third quarter earnings report leaked out on Thursday, concerns flared over declines in how much money Google makes each time consumers click on an ad. Those declines are most likely due to lower cost-per-click rates for mobile ads.
That would imply Google is no different than many other ad-supported companies who are struggling to monetize mobile. But during the company’s quarterly earnings call Thursday afternoon, the company made a big effort to stress the viability of its mobile business.
“We are seeing tremendous innovation in advertising which, I believe, will help us monetize mobile queries more effectively than desktop today,” said CEO Larry Page. “Indeed our mobile monetization per query is already a significant fraction compared to desktop.”
Last year Google reaped $2.5 billion from mobile, said Page, but that revenue stemmed only from mobile ads. This year Google’s mobile business is on an $8 billion run rate, boosted in part by the addition of mobile content and app sales through the Google Play store, he said. Google didn’t specify what share of that $8 billion comes from mobile ads, but chief financial officer Patrick Pichette said “ads continues to be the bulk of it, the vast majority of it.”
Some of the company’s existing mobile ads “have better monetization than desktop already,” he said. Pichette didn’t say which of Google’s mobile ad products are its top-earnings, but svp and chief business officer Nikesh Arora highlighted its click-to-call ads, which he said generate approximately 20 million phone calls per month.
Instead of tackling mobile as a standalone advertising channel, Page repeatedly stressed its role alongside search, display and video as part of a broader multiplatform ad strategy, saying that Google is focused on simplifying the campaign experience. “Advertisers should be free to think about their audience while we do the hard work of dynamically adapting their campaigns across devices,” Page said.
As for the CPC declines, Pichette pointed out that the 15 percent decline is only the latest in a prolonged downward trend. He blamed the drop in part to “currency headwinds” and said that when measured in fixed terms CPCs were only down 8 percent year-over-year.