For a while, Google’s popular advertising program was experiencing slowed growth on all its properties – from Web search to YouTube.
But in the last quarter of 2012, the company surprisingly posted a 22% revenue jump and seems to have reversed the trend for the time being. What’s the cause? Mobile ad usage is increasing and media buyers are investing more in their mobile ad programs.
More are accessing web via mobile than ever before. While mobile ads used to be one of the most affordable forms of online media buying, more consumers are using their phones to access the web than ever before. That means online ads have the potential to reach more viewers, which in turn makes them more valuable for both advertising sellers like Google and media buyers as well.
Even though Google’s web property ad prices fell by 6%, Google made up for that decline with an increase in the number of overall ad clicks by 22%. Mobile ad rates have been inching up as well, which compensates for the decline in web-search ad rates. During the same quarter, Google had an overall increase of net profit of 6.7% (excluding the Motorola Mobility hardware division).
Google is charging higher online-ad rates for tablets. Search-ad prices on tablets were higher than desktop browser ads in the fourth quarter, because tablet ad buyers were seeing greater success in generating sales. In a teleconference with the media, CEO Larry Page announced earnings, but declined to comment on whether or not mobile ad rates would ever reach levels of desktop search ads.
Google’s positive performance in the tablet ad domain doesn’t mean the troubles are over for the online media and search company. Their acquisition of Motorola Mobility is still costing millions – in the fourth-quarter the mobile device maker posts an operating loss of $353 million. While this is better than the $527 million loss in the prior quarter, it is still harming the company’s overall profitability.
If mobile ad rates can continue to grow, Google may be seeing this type of growth in revenue for multiple quarters in a row – keeping executives and investors alike happy.