Stifel analysts Jordan E. Rohan and Michael B. Purcell have used data from IgnitionOne clients to analyze the performance of Google Inc (NASDAQ:GOOG) in the online advertising spending. For IgnitionOne clients, the growth in ad spend was 9 percent, which was mainly driven by price, due to the migration to Enhanced Campaigns. Volume and total spend experienced a decline owing to a lower mix of desktop clicks, which has been a trend for Google and others in the industry, believes analysts. Overall, the data from IgnitionOne reveals that programmatic display, including Facebook’s FBX, is expanding its reach in total online advertising spending.
Highest priced inventory of Google losing appeal
As per the data from IgnitionOne, Google’s Enhanced Campaigns migration, which includes higher desktop click pricing compared to tablets, was not the primary driver for the increase in spending at IgnitionOne’s clients. The amount spent by IgnitionOne clients on Google Inc (NASDAQ:GOOG) was up 9 percent year over year compared to 6 percent in the last quarter, but according to analysts, the growth was “more closely tied to an easy y/y comparison” as Google spend declined 0.7 percent quarter over quarter.
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IgnitionOne clients bought 13 percent fewer desktop clicks from Google while the desktop CPCs were up 25 percent year over year. Total click volumes were more or less the same, reflecting that Google’s highest priced inventory is losing its appeal, “creating scarcity” and compelling advertisers to compromise for a lower ad spending return.
CPC for Google declining
Cost per Clicks (CPCs) for the tablet was the most impressive, rising 38 percent year over year. For the desktops, CPCs were up 25 percent, while mobile was down 5 percent. On a year over year basis, average CPCs increased 9 percent while they were almost flat on a quarter over quarter basis. When compared to the second quarter, CPCs were up 6 percent. As per analysts, mobile and tablet clicks are now accounting for a higher share in the total.
For the second quarter, CPCs at Google Inc (NASDAQ:GOOG) were down 7 percent ex-currency and 6 percent overall, as compared to a decline of 4 percent in the first quarter. According to analysts, CPCs alone may not reflect Google’s performance in the search business as “CPCs and click volume are inter-dependent variables.”
With every passing quarter, Google Inc (NASDAQ:GOOG) is reaping more benefits from the increasing popularity of tablet and mobile clicks, as “clicks from mobile form factors drive a higher percentage of totals,” according to analysts. For the current quarter, IgnitionOne clients have purchased almost one-third of their clicks from the tablet and mobile devices compared to only 20 percent in the third quarter of last year.