While Google put in a strong first quarter, questions still remain about how mobile is driving revenue for the company as CPC rates dropped again and advertisers continue to migrate to enhanced campaigns that offer fewer mobile targeting capabilities.

Google reported revenues from advertising and other totaled $12.95 billion, up 22 percent from the same period a year ago and up slightly from the $12.91 billion reported in the fourth quarter. These results come at a time when Google is moving all of its AdWords advertising over to the recently introduced Enhanced Campaigns, which enables marketers to set up and manage campaigns across all devices from a single location.

?It is really about the new reality where we have multiple screens,? said Nikesh Arora, senior vice president and chief business officer at Google, Mountain View, CA, during a conference call with analysts to discuss the results. ?It is not about mobile or tablets or desktop - it is about this unified life you have where you are always connected.

?Rather than ask which small piece of this is going to contribute plus or minus the real question is are we growing the pie for you with Google and in the long term and are we contributing to creating the best answers for advertisers and for users,? he said.

?When people ask what?s happening with metrics or the impact CPC on a very specific basis ? I think that is the wrong way to ask the question. The real way is the excitement we have about helping you throughout your day on all your devices and the pie grows for everybody.?

Beating expectations
Overall, Google said consolidated revenues totaled $13.97 for the quarter, up 31 percent year-over-year. The results beat analysts? expectations and, as a result, Google?s stock was up in after-hours trading.

Enhanced Campaigns is Google?s most sweeping overhaul to AdWords in several years and addresses the fact that over 95 percent of the campaigns on Google run across multiple screens. By offering the benefit of context and location in one campaign for advertisers, Google hopes to deliver better returns-on-investment for its clients.

The strategy is also geared toward driving more revenue from mobile by driving up CPC rates, which have traditionally been lower on mobile compared to desktop.

It is crucial that Google be able to increase CPC rates on mobile as smartphone and tablet owners increasingly use their devices to conduct searches.

However, with Enhanced Campaigns, Google is removing the device targeting functionality that is currently available, which could make it more difficult to optimize for mobile.

CPC rates
The change was announced in February and in the first two months since the launch, Google reports that more than 1.5 million campaigns have been upgraded to Enhanced Campaigns.

The company expects to migrate all campaigns that it manages to Enhanced Campaigns by the end of the current quarter.

So far, the changes do not appear to be having an impact on CPC rates, but it is still early in the new game.

Google?s CPC rates once again slipped during the first quarter of 2013 suggesting that advertiser demand for paid search on mobile still is not keeping up with consumer demand as the aggregate number of paid clicks on Google and network member sites increased 20 percent from the same period a year ago and 3 percent from the fourth quarter of 2012.

Google yesterday reported that for the first quarter ended March 31, the average CPC rate decreased 4 percent year-over-year and were also down 4 percent compared with the fourth quarter of 2012. While the year-over-year decrease is smaller than in the fourth quarter, when the average cost-per-click decreased approximately 6 percent, Google actually reported a quarter-over-quarter increase at the end of 2012 of 2 percent.

Google?s average cost per click started declining during the fourth quarter of 2011 and continued to do so throughout 2012, in part because mobile search has been growing.

More relevant ads
The company also reported that r evenues from Google-owned sites totaled $8.64 billion, up 18 percent. Network revenues totaled $3.26 billion, up 12 percent while other revenues totaled $1.05 billion, up 150 percent.

The company?s net income totaled $3.35 billion compared with $2.89 billion in the first quarter of 2012.

Motorola Mobile revenues were $1.02 billion, or 7 percent of consolidated revenues in the first quarter of 2013. The operating loss for Motorola Mobile was $271 million.

In the fourth quarter of 2012, Motorola Mobile revenues were $1.51 billion and the operating loss was $353 million.

?In February, we rolled out Enhanced Campaigns to make it easier for client to measure and manage campaigns that exist on multiple devices,? Mr. Arora said. ?Marketers will be able to deliver ads that are more relevant to users? context and they will be able to do a better job of measuring mobile conversions.

?So far the feedback from advertisers is positive because it makes less work for them,? he said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York