Google’s revenue from Cost Per Click (CPC) ads, a key measure of the quality of its advertising, have fallen for the 11th quarter in a row, as pressure from international markets and the rising popularity of social media push the value of paid search ads downwards.
The findings, from Googles Q2 earnings calls, indicate that the web giant saw its CPC ads worth only 34% what they were back in Q3 2011.
The following are the top financial highlights:
• Google sites: $10.94 billion (69 percent of total), up 23 percent YoY
• Network: $3.42 billion (21 percent of total), up 7 percent YoY
• International: $9.33 billion (58 percent of total) up 3 percent YoY. UK revenues were $1.62 billion (10 percent of total) which were flat YoY
• Other revenue: $1.60 billion (10 percent of total) up 53 percent
• Paid clicks: increased 25 percent YoY (up 2 percent vs. Q1). Network paid clicks (on non-Google properties) up 9 percent
• CPCs: decreased 6 percent YoY but were flat vs. Q1
• TAC: $3.29 billion in Q2 vs. $3.01 billion a year ago
The three biggest contributors are the shift to mobile, the rise of social media and the growth of the company abroad.
Google now manages to earn most of its revenue from the world outside of the US.
In the second quarter earnings report the company showed that 58% of its revenue came from overseas in the three month period.
International revenue isn’t just the biggest part of the Google ad machine, it’s also the fastest growing. Year on year increases in the international numbers hit 28%, was revenue from North America grew at just 14% year on year. CPC in international markets isn’t as healthy as those in North America, and that’s impacting the Google bottom line.
Another factor taking away from Google CPC is the company’s transition to mobile and competition for the likes of Facebook in the mobile space.
Danny Meadows-Klue, head of Digital Strategy Consulting, commented on the findings: “The rise of social advertising and massive pressure from Facebook that has copied the simple self-serve approach Google made famous, wooing everyone from global brands to mom-and-pop stores with a range of as products powered by brilliant targeting. Facebook has removed much of the media wastage that use to vex media planners, providing an escape valve for display advertising looking for niche target audiences.”