April 13, 2012, 12:16 PM

Google is bullish on mobile ads

Google says the space looks a lot like traditional search did a decade ago.

Katie Evans

Managing Editor, International Research

Lead Photo

It’s déjà vu all over again.

In its first quarter 2012 earnings call yesterday, search engine giant Google Inc. said the mobile search landscape is looking a lot like traditional search did a decade ago. Marketers are curious about it. Consumers are embracing it. And Google is bullish on its revenue prospects. 

“Mobile is exploding in query growth,” Patrick Pichette, senior vice president and chief financial officer, told analysts during the conference call, according to a transcript provided by SeekingAlpha. “The formats themselves are adapting already a lot and from a relatively crude base. Right now they don’t monetize as well because we’re kind of in what search used to be in 2002, 2003, 2004. So as these formats continue to get better and better, we’d expect much better performance on them.”

Despite the fact that mobile advertising still is in its early stages, marketers are trying it, Google says. As Google witnesses more smartphones entering consumers’ hands and the use of the mobile web steadily rising, it is investing in mobile, Google said. “Mobile is quickly becoming a backbone of many clients’ overall advertising strategies and has huge headroom to grow,” Nikesh Arora, senior vice president and chief business officer, told analysts. “In the long term, we think mobile will monetize better.”

As consumers’ use of the mobile web grows and as Google continues to innovate in mobile advertising, Google expects cost-per-click for mobile to rise. That cost is now significantly lower than traditional search advertising.

“I think that over time the cost-per-clicks action may get better,” Larry Page, CEO, told analysts. “We’re very bullish about that. We’re making a lot of investments in that area. And we’re very, very excited about the potential there. I’m amazed the computer that I’m carrying in my pocket is as good as the one I had a few years ago on my desktop. And I think we’re only at the very, very early stages of what’s possible with those devices.”

Page added that businesses that use mobile-specific offerings, such as click-to-call, should pay more. “I think, for example, it’s a lot easier to call someone from your mobile than it is from your computer right now,” Page said. “And so if that’s how you’re relying for transactions, actually mobile CPC should be higher for that. I’m very bullish that CPCs will improve on mobile over desktop due to all those capabilities.”

In Q1 Google began to scale its GoMo (or Go Mobile) campaign. The initiative helps businesses set up mobile web sites so they can leverage the rapidly growing mobile web audience and drive traffic from mobile search to mobile optimized sites—a much better experience than sending consumers to a traditional web site. It also recently added a click-to-download mobile feature that lets marketers promote their mobile apps directly in Google’s mobile search results and link consumers to the advertiser’s Google Play or Apple App Store page, where they can download apps.

 “We continue to innovate with our (mobile) product offerings with a number of new tools for advertisers,” Arora said. “These things help improve ROI to provide users with more relevant download information about apps such as star rankings and pricing. We keep actively working to help develop the mobile ecosystem from enabling mobile commerce to empowering local businesses.”

While Google may be bullish on the possibilities that lie within consumers’ tiny smartphones, it says mobile is one piece—albeit a very important piece—of the digital marking ecosystem. 

“Our clients and partners want complete solutions that work across all screens: desktop; mobile, tablet; and in the future, television,” Arora said. And, he said, they want ads to work together across all formats—from search to display to video.

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