CHARTS: Mobile Advertising Is Hurting Google's Revenue Quality

Google’s Q2 2012 revenues—almost all of which come from advertising—rose 35% per cent to $12.21 billion. That sounds impressive, and it is. But once again, for the fourth quarter in a row, Google’s average cost per click (the price paid by advertisers who run ads on the search giant) declined, this time by 16% from the prior period.

Aggregate paid clicks went in the opposite direction—they’re up 42%.

That means Google sold more advertising at lower prices.

The probable reason is the growth of Google’s mobile advertising business. Mobile ads are much cheaper than web ads are. And Google in June integrated AdMob into AdWords so it’s now easier to buy both through AdWords.

Those two factors appear to have accelerated a pre-existing trend: That although Google is selling more and more ads, those ads are getting cheaper and cheaper.

Google will have to hope that those prices don’t become so cheap that they threaten topline growth.

Here are the numbers. First, Google’s revenues are still growing nicely:

google

Photo: Google

But Google’s total paid click growth and its cost-per-click are rapidly diverging:

google

Photo: Google

Related:

  • MASSIVE: Google Just Created A Gigantic New Mobile Ad Marketplace
  • Google’s Mobile Ad Business Is Radically Altering The Quality Of Its Revenues

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