The mobile advertising on an overall scale may be soaring for the WWW, owing to its relative newness and consumers interest that is rising every day, but it is still a sore wound that is hurting Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB), which rely heavily on revenue from advertising. Google Inc (NASDAQ:GOOG) recently shook Wall Street with its bad timing and tanking revenues. The consolidated revenues for Q3 2011 were $14.1 billion, up from $12.2 billion but the real problem was how cost per click (CPC) declined 15 percent. This marked the fourth consecutive quarter of declining CPC, which points to Google’s inability to master the mobile sphere.
ValueWalk's Raul Panganiban interviews JP Lee, Product Managers at VanEck, and discusses the video gaming industry. Q4 2020 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview With VanEck's JP Lee ValueWalk's ValueTalks ·
Businesses are not interested in paying as much for putting their ads on display on mobile sites, as they are for PC-based websites. Some analysts are going as far as saying that Google’s stardom in search and advertising might be reaching its final drop-scene, just like it did for Yahoo! Inc. (NASDAQ:YHOO) when it lost its place to better competitors.
Same goes for Facebook Inc (NASDAQ:FB), where earnings are expected to be flat for the quarter. According to analysts polled by Thomson Reuters, EPS is expected to be flat at 11 cents per share, while the revenue is expected to equal $1.2 billion, marking the seventh straight quarter of plummeting growth.
These unfavorable tidings indicate how PC slowdown will not just hurt tech giants that are frequently discussed in analyst circles, namely, Intel Corporation (NASDAQ:INTC), Microsoft Corporation (NASDAQ:MSFT), and Hewlett-Packard Company (NYSE:HPQ), growth in the smartphone sphere is harder for moguls like Google, who even has the most widely used mobile OS, Android, in their arsenal.
The mobile trend is going to hurt a lot of major websites, who in turn rely on generating revenue from ads. It is impossible to display the same number of ads on a small mobile webpage, and it is even more unlikely that the viewer will have the time or concentration to click on the ad. Trends will change for everyone, as companies try to cope and adjust with this major mobile invasion. We can note how popular news sources like the Wall Street Journal are making more and more of their content subscription-based, rather than free. We don’t know for sure, but declining revenue from ads could be a possibility. People like reading news on the go, using their handy cellphones now. WSJ is owned by News Corp (NASDAQ:NWSA) (NASDAQ:NWS), which only a few months ago decided to split its entertainment and publishing business into separate companies. Lately, News Corp has also been eyeing the LA Times with some vocal interest. The LA Times is currently run by the media company, Tribune Co. Interestingly, the overall advertising revenue of the news industry has been declining since 2007. It is now down 50 percent to $24 billion.
These changing times will bring some new players in the industry, the picture is not so clear right now, but when one loses money, someone else gets it. Either Google will conquer the mobile arena, which will make it an even bigger and more intimidating giant, or it will sink against a new contender, only time will tell.
Google Inc (NASDAQ:GOOG) is trading at around $674, a 10 percent drop from its pre-earnings high of $755.