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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (49092)	1/22/2013 10:06:11 PM
From: Johnny Canuck	Read Replies (2) \| Respond to of 70704

Google's Mobile Ad Problem Starts To Ease--But Slo-o-owly Just a few months ago, it looked to many people like Google‘s business, among others’, was getting whacked by the rapid migration of people’s online activities from computers to mobile devices such as smartphones and tablets. The problem: Whether it’s smaller screens, the lack of compelling ad formats, reticence by publishers such as Google to annoy people with too many ads, or the inability of marketers to track the impact of mobile ads on sales, mobile ads command much lower prices than desktop Web ads. So the more people pulled out their iPhones and Androids, the less Google (and Facebook and Pandora and so on) made. And the numbers didn’t look good. Last October, investors smacked the search giant’s shares down 9% after a disappointing third quarter partly blamed on a decline in ad prices, or cost per click–chiefly thanks to the rise of cheap mobile ads. Today, with fourth-quarter earnings that cheered investors this time, Google provided signs that situation may be changing. But slowly. Google’s cost per click on ads overall fell 6% in the fourth quarter from a year ago, or 4% if you remove currency fluctuations. Still down, but better than in recent quarters, and in fact CPC rose 2% from the third quarter. What’s at work here–the reasons behind both the change and its slow pace–is encapsulated in the experience of two digital ad agencies I talked to today. Jared Belsky, executive VP at the digital shop 360i, a unit of Japan‘s Dentsu, told me that he was surprised to hear Google’s CPC fell at all, even if at a slower pace. The reason: “We saw an acceleration of CPCs, especially in mobile,” Belsky says. “I see more and more of our clients wanting to plow right into mobile.” That’s probably a function of 360i’s clients, which Belsky characterizes as usually leading the way in trying new kinds of ads–retail, financial services and travel companies. But the flip side is that other marketers are likely to follow suit. Sounds good for Google, right? Maybe, maybe not. Take one large retail client of his: “They know it’s the right thing to quadruple the investment in mobile,” he says, because the marketing folks know in their gut it will pay off in sales, whether online or in the store. “But they can’t count it,” he says–that is, they don’t yet have ways to measure whether someone who saw or clicked on an ad actually bought something. They’re starting to devise ways to do that by tracking people with loyalty programs or, especially in the case of click-to-call ads. But because people are using multiple devices for various parts of the buying process, and then often buying in a physical store, it’s still very difficult and may take awhile to approach the trackability of most online ads. That’s the key reason Brian Kaminski, president of digital agency iProspect, sees the gap between mobile and desktop CPC continuing for some time. That’s not entirely a bad thing, especially for his clients. Those who can track clicks to sales are getting reach on the cheap. “There’s far more value in mobile clicks than most brands are willing to pay,” he says. That’s not the only obstacle, either. Many marketers haven’t built mobile sites or even provided landing pages that work well on mobile devices when people do a search. Google is working with companies such as DudaMobile to make it easier for marketers to do that, but it’s a slow process. The result: Despite marketers’ enthusiasm for mobile–yes, they finally get it now–”they’re telling us to back off the acceleration” a bit, because they can’t prove their case to their chief financial officers yet. Google CEO Larry Page said during the analyst call today that “mobile will increase offline transactions from online ads.” But unless it can persuade marketers of that with hard numbers, and provide more case studies proving their value, mobile advertising will continue to be an opportunity more than a profit center.