Google might thank Apple’s big phones for ad revenue boost

When Google releases its fourth-quarter earnings report late Thursday, it is unlikely to match the stunning gains shown by Apple earlier this week.

But the development that made Apple’s profits so huge — bigger smartphones — could also be helping Google.

“In a way, Google has Apple to thank for cost-per-clicks going up this last quarter,” said Tamara Gaffney, an analyst for the Adobe Digital Index, in an interview earlier this week.

Adobe researchers found that Google advertisers saw an 8 percent year-over-year increase in the cost per click, with much of that rise happening after September, around the same time Apple introduced phones with bigger screens.

“This rise in smartphone cost per click is indicative of marketers deciding that smartphones are worth more for them,” she said. “What we’re seeing happen is the Apple iPhone 6 and 6 Plus are much better devices to have people consume media off of, to fill forms, just because of the screen size.”

In the past, many who clicked on mobile phone ads seemed to be doing so by accident, but that is changing, Gaffney said.

Google’s traditional text ads in the retail sector went down 6 percent year-over-year, according to Gaffney’s digital advertising trends report published this week. But the company experienced big gains through its new image-based shopping ads. Growth of spending on Google shopping ads went up 47 percent over the past year.

But with text ads still the core of Google’s market, the decline raises questions about how it can adapt as the advertising market evolves.

“In the past Google got every dollar of every marketer’s budget. Now we’re seeing that Google didn’t get every dollar,” as advertisers explored other services such as Yahoo/Bing, Gaffney said. “When we look at the product innovation coming from Google on the advertising side, in 2013, there was a lot, in 2014, not so much.”

Above: Google employees ride bicycles through the company’s Mountain View campus in June 2014. (Patrick Tehan/Bay Area News Group)

 
 

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