Google Tops Estimates, but Prices of Ads Slide
Ben Margot/Associated Press
Outside of Google's
headquarters in Mountain View, Calif. Google is still the leader in
online advertising, according to eMarketer, yet the advertising business
is changing under its feet.
By CLAIRE CAIN MILLER
Published: October 17, 2013
SAN FRANCISCO — For more than a decade, Google’s search advertising
business has seemed almost magical in its ability to mint money. But the
magic is beginning to wear off as people spend more time on mobile
devices, where the company makes less money on ads.
Google's stock performance over the last three months.
Related
-
Google to Sell Users’ Endorsements (October 12, 2013)
-
Google Accused of Wiretapping in Gmail Scans (October 2, 2013)
Times Topic: Google Inc.
More Tech Coverage
News from the technology industry, including start-ups, the Internet, enterprise and gadgets.
On Twitter: @nytimesbits.
On Twitter: @nytimesbits.
Justin Sullivan/Getty Images
Larry Page, chief executive and co-founder of Google.
Shareholders sent the stock up 8 percent in after-hours trading on Thursday, after Google’s better-than-expected third-quarter financial report.
Still, the results revealed the company’s deep challenges: as its
desktop search and advertising businesses mature, along with overall
business in the United States, its growth rate is slowing and the amount
of money it makes from each ad it sells is falling.
The problem is that mobile ads cost half to two-thirds as much as
desktop ads, yet they lead to purchases just a quarter to a third of the
frequency that desktop ads do. That’s because advertisers have not yet
figured out the best format for mobile ads, tracking the effectiveness
of such ads is harder and buying things on small screens is more
cumbersome for consumers.
Google executives, on a call with analysts, acknowledged those
challenges by emphasizing that they were embracing phones and other
mobile devices, as well as nonadvertising businesses like hardware and
business services.
“For years, everyone talked about the multiscreen world. Now it’s
arrived, and on a scale few imagined,” said Larry Page, Google’s chief
executive. Most consumers have more than one device, he said, and
devices for people’s homes and bodies, like glasses and watches, will
proliferate. The mention of watches was particularly intriguing because
while Google has explored building a watch, it has not publicly
announced one.
People activate 1.5 million Android devices a day and Google introduced its first Motorola phone, the Moto X.
It has been encouraging advertisers to transition to mobile, like
requiring them to buy mobile ads when they buy desktop ones, known as enhanced campaigns, and introducing new tools like one to track consumers across devices and tell marketers whether a consumer makes a purchase on a computer after researching an item on a phone.
Mr. Page also addressed long-term research projects, like Calico, the new health start-up
financed by Google to investigate aging and its causes. “It’s hard to
spend meaningful amounts of money, relative to Google’s scale, on things
that are speculative,” Mr. Page said. “You should probably be asking me
to make more significant investments.”
A closer look at Google’s revenue growth showed that it was largely
driven by growth in some parts of Europe, Brazil and Japan, and by
selling apps on Google Play, which returns little profit to the company.
“Over all, Google’s doing exactly what it should be doing, investing in
emerging markets and in mobile technologies,” said Jordan Rohan, an
Internet analyst at Stifel Nicolaus. “While we’re not seeing any profits
related to that today, it’s inflating the revenue number and will
someday lead to a more profitable business.”
Yet in Google’s core business — the sale of ads — the price that
advertisers pay each time someone clicks on an ad decreased for the
eighth quarter in a row. It fell 8 percent from the same period last
year, largely because mobile ads cost less than desktop ones.
Google is still the leader in online advertising, earning 41 percent of
all digital ad revenue and 53 percent of mobile ad revenue, according to
eMarketer. Yet the advertising business is changing under its feet.
People are spending vastly more time on mobile devices. Clicks on Google
on computers last quarter were flat, while clicks on tablets increased
63 percent and clicks on phones more than doubled, according to the
Search Agency, a digital marketing firm. At the same time, computer ads
are becoming more personalized and increasingly automated.
As the ad landscape changes, Google has been introducing new tools for advertisers. Last week, it announced a change
that would allow it to show people’s social networking activity, like
photos and comments, in ads across the Web. It is trying to capture TV
ad dollars, including with two new products — Chromecast, a device for watching Web video on TVs, and Google Fiber, the ultra-high-speed Internet and TV connection now available in Kansas City, Kan.
Google’s ad innovations have prompted criticism from privacy advocates
and some consumers. In recent weeks, Google faced an uproar over its
plan to use personal information in ads and lawsuits over personalized ads in Gmail.
Google reported third-quarter revenue of $14.89 billion, up 12 percent
from a year ago. Net revenue, which excludes payments to ad partners,
was $11.92 billion, up from $11.33 billion. Net income rose to $2.97
billion, or $8.75 a share, from $2.18 billion, or $6.53 a share.
Excluding the cost of stock options, Google’s third-quarter profit was
$10.74 a share.
The results exceeded the expectations of analysts, who had predicted
revenue of $14.82 billion and earnings, excluding the cost of stock
options, of $10.35 a share.
| Google pokes the Microsoft bear, pledges to support Chrome on XP ... Computerworld
Computerworld - Google
today stuck a finger in Microsoft's eye, telling users of Windows XP
that its Chrome browser will support their aged operating system a ...
|
| |||
| Google earnings beat Wall Street expectations San Jose Mercury News
MOUNTAIN VIEW -- Google (GOOG) managed to beat Wall Street's expectations for its third-quarter earnings, but its report showed Thursday that it's still ...
|
| |||
| Google may post modest revenue growth MarketWatch
SAN FRANCISCO (MarketWatch) -- Google Inc. is expected to report a modest gain in third-quarter revenue on Wednesday afternoon, propelled by steady gains ...
| ||||
| Google Earnings Preview: Growth In Ad Revenue And Motorola ... Chicago Tribune
Google
is set to release its Q3 2013 earnings on Thursday, October 17. While
the company continues to innovate and introduce new products and
services, the ...
|
| |||
| Google Ads Keep Getting Cheaper and Larry Page Wants More ... Businessweek (blog)
Google's
latest quarter beat analysts expectations for revenue and profit,
following the company's dull path of grinding profitability. Here are
three things we ...
|
| |||
| Google Chromebooks go on sale in India from today at Rs 22999 ... IBNLive
New Delhi: Google Chromebooks have finally made its way to India - more ... Chromebooks are laptops powered by Google's Chrome OS operating system.
|
| |||
| Google pressured ahead of results; Chipotle gains MarketWatch
SAN FRANCISCO (MarketWatch) — Google Inc. snapped a six-day winning streak to trade lower Thursday, but Chipotle Mexican Grill Inc. extended gains as ...
|
| |||
| Google Sales Top Estimates on New Ad Formats Businessweek
Google
Inc. reported sales that topped estimates during the third quarter as
advertisers boosted spending on mobile and video promotions.
Photographer: David ...
| ||||
| Google And Android: Powering The Next Generation Of Internet ... Chicago Tribune
Like most things in the mobile world, Google is leading the charge with its Android operating system along with its massive install base. In aBusinessWeek ...
|
| |||
| Google Clicks: A Window Into Google's Mobile Money Bloomberg
Oct. 17 (Bloomberg) -- Bloomberg senior West Coast correspondent Jon Erlichman explores Google's information on cost per clicks for paid advertising as it ...
| ||||
沒有留言:
張貼留言