The mobile strategy of Google shows weak points: CPCs and net income drop
The third quarter of this year wasn’t very successful for Google. Its CPCs and net income have decreased, showing that the mobile strategy of the company has a few weaknesses. However, Google hopes to develop a cohesive marketing strategy for the brands to help them reach clients through various screens. Still, insiders are thinking that Google must focus more on mobile apps. The CEO of Google, Larry Page, is saying that the abundance creates a great opportunity and, at the same time, it causes disruption.
He mentioned that Google can benefit from these disruptive opportunities because it’s well placed. Also, the search query volumes of the company have grown lately and the innovation on advertising is tremendous. All these are going to monetize mobile queries and make them more effective than the desktop. Page also declared that the mobile monetization per query has grown higher than the desktop monetization. Google sees huge opportunities in transitioning to multiple screens and they can drive even higher monetization.
However, the 3rd quarter has also brought a decreased cost per click. The CPCs are down by 3% when compared to the 2nd quarter and by 15% when compared to 2011. This situation was caused by the fact that lower – cost mobile ads have grown. Concurrently, Google’s performance was cut off by Motorola Mobility. In the 3rd quarter, this division lost almost $527 million. The net income of Google was $6.53 / share or $2.18 billion. In 2011, the net income was $2.73 billion. The third quarter brought total revenue of $14.1 billion.
The news isn’t quite a surprise, since it’s well known that Google doesn’t focus its mobile advertising approach on in – app advertising. In fact, 90% of the Google mobile ad strategies are missing. The CEO and founder of TapSense, Ash Kumar, declared that Google has to become app centric as soon as possible. The consumer app adoption has scored a new high rate, but Google is still focused on a PC – centric approach and Web browser pages. This strategy is quite outdated.
Given that Google has scored disappointing results, the stock of the company has immediately dropped. This happened right after the report was released. Google’s shares were traded at 1 point and they decreased by 9%.
Recently, the company’s representatives mentioned that they invested $8 billion in mobile. In 2011, their investment in mobile was only $2.5 billion. The run rate calculation was changed so as to also incorporate the mobile revenue coming from apps and content on Google Play. At the same time, Google revealed that more than 1.3 million Android handsets are activated daily. Google also reported that the multiscreen consumers will rise. At the same time, the company will offer a cohesive solution for marketers to run advertising campaigns including display, search and video on mobile.
Still, the decreasing prices for clicks are a problem for Google. Analysts didn’t expect such a big drop. The iProspect president, Brian Kaminski, declared that the mobile query monetization is a huge challenge for Google. The mobile queries are becoming more and more important and Google should be aware of that.