Google Crushes Expectation, But Struggles With Mobile


Google Inc (NASDAQ:GOOG) saw nearly $3 billion in profits this quarter, with the company reporting a profit of $2.97 billion for the quarter ending September 30th. That profit represents a gain of 36 percent year over year, while revenue increased 12 percent to $14.89 billion. Allowing for commissions paid to ad partners, net revenue came in at $11.92 billion.

Google Crushes Expectation, But Struggles With Mobile

Google continues to struggle

While those numbers beat analysts’ expectations, they also show that Google continues to struggle in its shift to mobile advertising.

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Earnings amounted to $8.75 a share, or $10.74 a share excluding one-time charges. Analysts had Google Inc (NASDAQ:GOOG) pegged at $10.34 a share and expected net revenue to come in at $11.7 billion.

The numbers are only relatively strong as the Internet giant continues to struggle with a steady decline in “cost per click.” The price that advertisers are willing to pay for a consumer click on one of their ads continues to fall, and may cost Google in the long-term.

Google has recently been expanding into new markets

Google Inc (NASDAQ:GOOG) has recently been expanding into new markets and has expanded its online store for digital music and video programming. In addition to its media expansion, Google introduced its Chromecast device for online video streaming for the television, as well as a new line of smartphones from its Motorola division.

The comScore research firm reported on Thursday that, for the first time, AOL and its subsidiary showed more web video ads than Google Inc (NASDAQ:GOOG) sites to U.S. viewers last month. Additionally, Facebook is cutting into Google’s hold on both mobile and display advertising.

Don’t worry about Google too much—they still collect nearly a third of the $117.6 billion spent on digital ads worldwide this year.

Google and others are struggling to convince advertisers

Presently, Google Inc (NASDAQ:GOOG) and others are struggling to convince advertisers that they should pay the same per click on mobile advertising. The effectiveness of mobile ads is difficult to measure, and the bulk of online purchases remain in the domain of the PC rather than tablets or smartphones.

Wall Street analysts have voiced concern over a steady decline in the cost per click indicator, which fell 8 percent in the third quarter, compared with the same period a year earlier. That marks the eighth consecutive quarter in which that indicator fell.

Google Inc (NASDAQ:GOOG)’s report on Thursday included the first results since it fully adopted a new system for selling search ads, known as “Enhanced Campaigns,” which effectively tell advertisers to put more of their budgets into ads that appear on mobile devices.

While mobile ads remain cheaper, many believe that a rise is an inevitability.

“More people are going to be on mobile devices, and businesses are going to learn how to optimize their campaigns for mobile performance,” said Joe Kerschbaum, account director at the online ad agency 3Q Digital. “They will shift their advertising budgets to be more competitive.”