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Google?s mobile ad investments help keep Facebook at bay

Despite facing a competitive threat from Facebook, which has been chipping away at Google?s territory by offering high-value targeted ads, Google is maintaining the strength in its core advertising business, helped by products such as Brand Lift, which lets marketers measure a campaign?s impact on brand awareness and interest and ad recall, and Google Search page product listing ads tailored towards products and product categories. 

Even with revenue of $18.1 billion in the latest quarter, up 15 percent from a year ago, the giant Web portal is trying to figure out how to handle challenges related to the dropping CPC rate tied to the migration to mobile from desktop PCs, unfavorable currency-exchange rates and other factors.

?Mobile is a behavior, not a device,? Omid Kordestani, Google?s business chief, said in a conference call to discuss the results. 

?People use screens interchangeably. Google is focused on building an ecosystem,? he said. ?It took desktop a long time to get the right format, it will take mobile [a long time too].?

Ad-business strength
During the call, Google stressed the continued strength in its core advertising business.

?This was driven by a strong holiday and a mobile performance from our sites line,? said Patrick Pichette, Google's chief financial officer. ?We saw great momentum in our programmatic business highlighted by our mobile display in our ads platform product.?

Campaign saw 65 percent conversion rate.

On Google sites, cost per click ? the revenue that the company gets for clicks ? fell eight percent from a year ago, while CPC for network sites climbed six percent.

Paid clicks from Google?s sites jumped 25 percent. Clicks from partner sites fell 11 percent, reflecting what Google called user-policy changes. 

?Everyone now is aware of the importance and impact of mobile search. Google wins there,? said Sheryl Kingstone, Toronto-based research director of Yankee Group. ?However, the future is not just about mobile clicks but cost per action. The price of those clicks are higher. 

?As investments in analytics pay off, Google can ensure customers get quality over quantity,? she said. ?It's exactly why Facebook increased prices, but the return is still a good value.? 

Google?s net income rose to $4.76 billion, or $6.91 per share, in the fourth quarter, compared with $3.38 billion, or $4.95 per share, a year ago.

In October, Google announced local availability for its product listing ads, giving customers real-time information about nearby goods in stock. Macy?s and REI leveraged these ads during the recent holiday selling season, Mr. Pichette said.

Google?s newly created measurement tools let advertisers obtain a reliable estimate of the number of times a search ad click drives a store visit.

?The mobile specific metric helped advertisers measure the full impact of their mobile marketing,? Mr. Pichette said.

Google DoubleClick.

Also during the holidays, Office Depot/OfficeMax used Google Search ads to promote a promotion called Elf Yourself, which encouraged shoppers to make videos of people re-imagining a dancing elf, producing a 65 percent conversion rate.

Google?s programmatic ad buying product, DoubleClick, which provides Internet ad serving services, also received wide use during the quarter. Its clients include agencies, marketers and publishers who serve customers such as Microsoft and General Motors.
?We?re extremely well positioned as advertising shifts to programmatic,? Mr. Pichette said. ?All the top 10 global agencies use at least one product in our double click suite.?

The results showed how Google has made significant inroads in the mobile space to extend and expand its presence.

?Overall, Google has created a comprehensive mobile strategy that gets better the more services consumers opt in to,? said Josh Martin, director of analytics research services with Strategy Analytics, Newton, MA. 

?Inbox, Now and search are just a few examples how Google has multiple user engagements on mobile while also collecting data on users to provide a more tailored marketing experience,? he said. ?Facebook still feels a bit isolated in its approach.?

Critical mass
Google is number one for a reason ? users typically find what they are looking for when they use it.

?Google seems to have reached a critical mass with its core business of simple text searches, and now it?s all about continually innovating to retain that number one status there,? said Ken Wisenfski, CEO/founder of WebiMax.

Google Search in holiday-season mode.

?However, while social media app innovation has simplified environments to drive the way people use mobile technology, Google has invested in so many different levels and areas of innovation that connect the Web to the physical world that it is hard to deny they are well positioned for the mobile revolution we currently find ourselves in the middle of.? 

Final Take
Michael Barris is staff reporter on Mobile Marketer, New York