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.
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:
For the year ended Dec. 31, Google reports: