Facebook may have solved mobile, but Google is still struggling with it

5 Comments

Google’s mobile ad strategy is sounding a lot like Facebook’s these days. On its third quarter earnings call Thursday, the company fielded a lot of questions about its plan for making up lost ground in the mobile area. When asked whether Google login has been been adopted by enough mobile apps, Chief Financial Officer Patrick Pichette said, “Our focus [is] on helping developers generate app downloads.”

The whole ethos of “helping developers” is the same one preached by Facebook since it acquired mobile server company Parse and introduced its Audience Network. Courting developers, making it easier for them to build their apps, gives these big tech companies an “in” to the new mobile app ecosystem. When they’re the ones offering up the server space, login infrastructure, and ad networks for mobile developers to make money, the big tech companies get big advantages, like valuable user data or advertising revenue.

Google was also asked about how it’s dealing with the problem of tracking users from desktop to mobile, where cookies containing information on them disappears. That information is key for targeted advertising. New Chief Business Officer Omid Kordestani (although back in his old job) admitted Google was watching Facebook’s activity in this area closely.

Google missed the expected mark of its earnings this quarter by a small fraction. It also announced that Kordestani, a former Google sales VP, was back as its permanent Chief Business Officer.

Here are the numbers:

Non-GAAP earnings per share: Expected to be $6.53, was in fact $6.35

Increase of paid clicks: Expected to be 22 percent, was in fact 17 percent

Cost per click decrease: Expected to be down 4 percent, was in fact down 2 percent

Revenue: Expected to be $16.6 billion, was in fact $16.52 billion

The big picture is that Google is still doing well — its executives repeated the word “thrilled” like a mantra on the earnings call — but investors do have concerns about slowing growth. The money Google makes when a user clicks an advertisement, the cost per click (CPC), has been on the decline for awhile now because advertisers pay less for mobile clicks. Today’s earnings don’t reverse that trend, even though the CPC dropped less than expected.

It hasn’t impacted Google’s bottom line much because while the money Google makes per click has decreased, the number of clicks it accumulates has gone up. As a result, Google is still raking in the cash and growing. At the same time though, the consumer move to mobile raises the question whether Google will be able to adapt over the long term and keep growing its revenue while maintaining its profit margins.

On the earnings call, Kordestani and Pichette received a handful of questions about rising expense costs — which Google chalked up to the recruitment cycle of hiring university grads — and CPC fluctuation. “If we have movements from one quarter to the next, that’s just the result of experimentation,” Pichette said.

5 Comments

Jeremy Dash

Not looking to oversimplify matters here for Google, but AdMob, Millennial Media, and certainly iAd are all in a similar predicament. They’ve either forgotten how to operate on the cutting edge of mobile advertising or they’re choosing to play it safe (at their own peril) by not leaving familiar comfort zones. When you look around the mobile ad industry today, who are the innovative young leaders? Fresh on everyone’s mind is Facebook. They’ve got a new ad platform, they’re drumming up more creative ad formats, and seem interested in making mobile advertising a better, more relevant experience. Another hot young ad network is Airpush. Their new Abstract Banners ( http://info.airpush.com/a1-oct14.html ) are light years ahead of what virtually all of their contemporaries are doing. A few years ago, we were laying the praise on thick for AdMob, MM, etc… and now, they’re losing market share and developer/advertiser interest to superior and more effective ad platforms like FB, Airpush and others. Unless Google gets back to basics (finding where the cutting edge is and getting comfortable with their toes on the ledge) they are going to keep losing ground in mobile advertising until they no longer even faintly resemble the creative powerhouse they once were.

stopWastingOurTime

You have got to be kidding me. In what way is the owner and driver of the Android OS, used on vast majority of mobile devices worldwide, “struggling” with mobile?

This is link-baiting at its worst!

ARMdevices.net

More phones and tablets in use (not only Android, but mainly it’s Android), means users use Google services (and the web in general which Google monetizes best) more on desktop/laptop too and when they use desktop or mobile Google knows more about users, improving ads, monetizing a lot more. Ergo Android is very involved in generating tens of billions of dollar for Google already.

Carmel DeAmicis

You’re right, I should have clarified in my headline that I meant Google is still struggling with mobile advertisements, not “mobile” in general.

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