Google Inc (NASDAQ:GOOG) recently launched a new ad service called Enhanced Campaigns. The new ad model, which has some controversial trappings, is seen as a key growth engine going forward according to a new report from Piper Jaffray. The report puts a price target of $938 on Google Inc (NASDAQ:GOOG) shares.
The report, which was authored by Piper Jaffray analyst Gene Munster, places heavy emphasis on the new ad program and highlights the importance of the service to investors. The report asserts that much of the Google Inc earnings report conference call will be spent on questions about the new program.
Google Adwords Advanced Campaigns allows advertisers to advertise to users based on contextual information like location time of day and the type of device they’re working on. One controversial aspect of the new service is that it lumps together traffic from desktop and tablet computers. The service will also give advertisers access to new metrics to judge the efficiency of their ads.
Google Inc (NASDAQ:GOOG) is set to release its earnings report for the first three months of 2013 on Thursday. The company has been performing strongly so far in 2013, but the introduction of Enhanced campaigns has proven controversial. With companies like Yahoo and Facebook still nipping at Google’s heels, investors have begun to wonder about the strength of the firm’s moat.
Piper Jaffray thinks that the new service will drive better numbers at Google Inc (NASDAQ:GOOG). The Enhanced Campaigns platform is likely to result in a higher cost per click on mobile in the second half of 2013 according to the report. Cost per click is one of the most important metrics for analyzing Google Inc (NASDAQ:GOOG) business.
The key take away from this report is that the Enhanced Campaign platform increases the quality of Google’s advertising offerings. In the past, an increase in the amount of information used to decide what ads get placed where, has resulted in greater conversion rates. Enhanced Campaigns add a slew of new information, particularly on mobile.
That means that though the beginnings of the switch may be difficult for some advertisers, and for Google Inc (NASDAQ:GOOG) itself, the greater concentration on mobile and the added context means that the new model is likely to perform well.
Google is expected to answer questions on its decision to consolidate the tablet and desktop market on its Thursday conference call.