Boston, MA 04/21/2014 (wallstreetpr) – Q1 revenues of Google Inc (NASDAQ:GOOG) fell short of the targets expected, thereby, reducing the price of its ads. The decline in the price of ads can be attributed to an increase in the shift towards mobile devices. More and more Internet companies seem to be facing this problem of late.
The story around ads
Google Inc (NASDAQ:GOOG) ads rely on clicks made by consumers. The number of such “paid clicks” on Google ads saw an increase of 26% in the quarter, which are reportedly believed to be below analyst estimates. It was expected that this segment would show a bigger growth. The average “cost per click” declined by around 9%, showing a downward slide. These days, most ads are mobile based. Mobile advertising is also quite cheap, compared to normal online ads, and it makes up a bigger chunk of Google’s ad business.
Other aspects of the revenue
The operating income of the company stood at 32% of the revenue, compared to 34% it posted in the same period, a year ago.
Google Inc (NASDAQ:GOOG) has constantly looked to revamp its product offerings and advertisements such that they account for smartphones, keeping in mind the global trend. The company is spending big amounts in order to move into newer markets like that of wearable computers, home automation and ultra high speed Internet access. Early this year, it acquired Nest for $3.2 billion, a company that makes smoke detectors and thermostats.
The company’s finance chief Patrick Pichette said that their expenses continued to exhibit the same discipline that it always has, except for a few bumps in this quarter.
The sale of digital media content, like apps and games in the Google Play Store, and also hardware devices, boosted the company’s “other” section revenue by 48% to $1.6 billion.
Google’s overall revenue climbed 19% to $15.42 billion from $12.99 a year ago.
Google’s advertising rates are presently under a lot of pressure. There are more people accessing the Internet through mobile devices these days and hence, there is increasing demand for mobile ads. Mobile ad rates, however, can be around half of that of those on PCs.
Mobile ad rates in emerging markets, the Google is trying to enter, are also significantly cheaper.
