January 30, 2014, 4:40 PM

Google's paid clicks rise 31% in Q4

Paid clicks were up 31% in the fourth quarter, the search giant announced this afternoon. Although it reports cost per click on all ads was down by 11% in Q4, Adobe reports that one ad format—the Product Listing Ad—had 70% cost-per-click increase in the quarter.

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Google Inc. reported today that paid clicks were up 31% in the fourth quarter ended Dec. 31, 2013. Total revenue in the quarter, excluding revenue from the Motorola Mobility segment, was $15.72 billion, up 21.8% from $12.91 in Q4 2012. Revenue for all of 2013, excluding Motorola Mobility, was $55.52 billion, up 20.6% from $46.04 billion in 2012, Google says.

Across all ad formats, Google reports an 11% year-over-year decrease in the average cost per click in Q4. However, according to an analysis of 6.87 billion paid clicks from more than 1,200 advertisers by digital marketing vendor Adobe Systems Inc. in the fourth quarter, the cost per click of Google’s Product Listing Ads (PLAs) grew 70% year over year (and 80% for the entire year over 2012, when Google introduced those ads that appear prominently on search results pages). PLAs include more content than text ads, such as product images or prices. Their revenue growth rate is eight times faster than cost-per-click growth of Google’s text ads and four times faster than that of Facebook ads, Adobe says.

With the rising costs of PLAs, though, the returns for advertisers buying them have remained flat year over year, Adobe says. “As the paid search space becomes increasingly complex, the need for marketers to employ scalable, algorithmic solutions that can handle that complexity and compute the optimal allocation of advertising budgets will be greater than ever,” Adobe writes in a blog post about the findings.

The news comes on the heels of Google’s announcement yesterday that it is selling its handset subsidiary Motorola Mobility to PC maker Lenovo for approximately $2.91 billion. The search giant will hold onto most of the patents it acquired when it bought the Motorola unit, which was thought to be a prime motivation for the purchase, and continue to develop the Android operating system software for Motorola smartphones, it says.

Google had failed to turn Motorola into a profitable segment since acquiring it in 2011 for roughly $12.5 billion. Motorola posted an operating loss of $384 million in the fourth quarter, compared with a loss of $248 million in Q3 and losses the prior two quarters as well. In Q4 2013, Motorola revenues were $1.24 billion, or 7% of Google’s consolidated revenues, compared with $1.51 billion, or 11% of consolidated revenues, in the fourth quarter of 2012, Google says.

For the fourth quarter, Google also reports:

  • Net income of $3.38 billion, up 17% from $2.89 billion in Q4 2012.
  • Google-owned sites, such as the Google.com search engine and YouTube, contributed $10.55 billion, or approximately 67% of revenue, excluding Motorola. That’s up 22.1% from $8.64 billion in the same period a year ago.
  • A 2.3% year-over-year increase in Google network revenue, to approximately $3.52 billion from $3.44 billion the same period a year earlier. This is revenue Google receives from clicks on ads it places on the web sites of other companies, including retailers’ sites.
  • Google’s traffic acquisition costs—that is, the amount Google pays to web sites that host Google ads—increased to $3.31 billion, up 7.5% year over year from $3.08 billion in Q4 2012.
  • International revenue for Google segments, including from Google sites, networks and other activities like hardware sales, of $8.77 billion, up 26.9% from $6.91 billion in the same period a year earlier. International revenues represented 56% of Google’s total segments revenue in Q4, compared with 54% in Q4 2012. Of total segment revenues, the United Kingdom accounted for 10% ($1.50 billion), flat with Q4 2012.

For the year ended Dec. 31, Google reports:

  • Net income of $12.92 billion, up 20.4% from $10.73 billion in 2012.
  • Revenue from Google web sites of $37.45 billion, up 20.0% from $31.22 billion in 2012.
  • Google network revenue of $13.13 billion, up 5.3% from $12.47 billion in 2012.
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