‘Substantial improvements’ in mobile search fail to arrest Google’s CPC decline
Google’s parent company Alphabet has called its first quarterly earnings call since it shocked the world with a complete overhaul of its operations with total revenues of $17.7bn for the quarter ending 30 September, reporting “substantial growth” in its mobile search advertising business.
The disclosures were made in its latest investor relations release, although it also contains news of it registering yet another decline its average CPC, which slipped 11 per cent year on year, and 1 per cent sequentially.
This indicates that advertisers are still unwilling to pay as much for mobile ads, compared to desktop. However, this was offset by a 23 per cent increase in the amount of paid clicks on the Google network. See chart below for a further evidence of this trend.
The overall figures reflect the financial results of Google prior to its reorganisation, translated into a profit of $4.7bn for the quarter, according to Google CFO Ruth Porat, who added that advertising revenue “improved greatly” by improved mobile search ad formats.
Porat went on to claim that improvements in its mobile search ad formats led to a marked increase in its US revenues (up 19 per cent year on year) and UK revenues (up 10 per cent year on year) during the period.
She added: “Year on year growth reflects substantial growth in mobile search due to ongoing improvements in ad formats and delivery to better address how consumers use their mobile devices.
“YouTube revenue continues to grow at a significant rate with growth driven by video advertising across Trueview and Google Preferred.”
Google’s Network revenue was $3.7bn, up 4 per cent year on year, which she claimed reflected enhanced advertiser demand for programmatic media-buying technologies and offset a decline in its traditional ad network business.
“Other revenue”, such as those generated by its Google Play store, was up 11 per cent totalling $1.9bn for the period.
A note on the company’s investor relations website explained the new Alphabet operating structure will be introduced in phases, and that it would likely result in it disclosing its Google business as a single segment beginning in the next quarter, with the other Alphabet business units reported separately.
Also Commenting on the initial results, Sundar Pichai, Google, CEO, said: “Products like search, Android, Maps, Chrome and YouTube a billion users each, and Google Play crossed that milestone that quarter, but what’s most exciting is that we are just beginning to scratch the surface.”
Porat and Pichai were both speaking at the beginning of Alphabet's earnings call. The Drum will report separately on the later discourse.