Google Q1 sees another fall in ad pricing; doesn't blame mobile

Google Q1 sees another fall in ad pricing; doesn’t blame mobile

24 APR 2015

Google reported that its aggregate cost-per-click (CPC) during Q1 was down 7 per cent compared with Q1 2014 – its biggest drop in a year – but CFO Patrick Pichette had a dig at analysts who typically ascribe the downward trend to difficulties in making money from mobile advertising.

“So many commentators are incorrectly assuming that the growth trends in our sites, clicks and CPCs, are primarily due to difficulties monetising search on mobile, but that’s in fact not the case,” he said at Google’s earnings call.

One factor skewing results, he said, was that when users choose to skip an ad on YouTube, or opt out of so-called ‘engagement’ ads with TrueView, they are all counted as clicks.

The CFO maintained that Google is seeing “great momentum” in mobile search and advertising.

Omid Kordestani, Google’s chief business officer, said more than 400 million users have downloaded the Chrome app for mobile browsing on their smartphones.

“We continue to invest in proving the mobile web for both users and developers,” said Kordestani. “In the recent Chrome release, we made it easier for users to add their favourite sites to their phone’s home screens and get helpful opt-in notifications from sites they visit often.”

Google also said it had more than one billion users of its Android mobile OS.

Currency impact
Google’s overall Q1 revenue was £17.3 billion, up 12 per cent year on year. The top line performance would have been better – up 17 per cent year on year, or $795 million higher – had it not been for a strengthening US dollar.

Total advertising revenue was up 11 per cent, over the same period, to $15.5 billion. This, however, is a gross figure. It does not include a deduction for traffic acquisition costs, or TAC, which totaled $3.23 billion (23% of advertising revenues) during Q1.

Total costs and expenses were up 13 per cent, to $12.8 billion. Operating income was up 8 per cent, to $4.45 billion, while net income rose 3.8 per cent, to $3.59 billion

Project Fi and Android Pay
Pichette stressed Google’s position once more that Project Fi, the firm’s imminent MVNO service, was intended less as a rival to mobile operators, but more of a way to develop new products and services that its “carrier partners” might adopt in the future.

“We’re always looking to make the web faster, cheaper, more available, and we wanted to try this new vision, this new idea of fast and easy wireless service, and then work with the ecosystem of our carriers [and manufacturers],” he said.

Kordestani was keen to play down how Android Pay (Google Wallet) might fare against rivals, including Apple Pay, suggesting instead that competition was good for the market.

“I think it’s great that the industry is really opening up here and that the merchants, the banks, consumers, are all starting to experience this,” he said. “[Our] goal has always been to remove much of the friction that our users encounter today on everyday shopping experiences.”


Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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