Google's success in mobile search ads fuels big holiday quarter

Mobile search helped to fuel an impressive quarter for Google (NASDAQ: GOOG), easing investors' fears that the online giant might be struggling to capitalize as users increasingly turn to the small screen.

Google posted $21.3 billion in revenue during the quarter, up 18 percent year-over-year, and the operating-profit margin of its core unit rose to 38 percent, up from 35 percent a year earlier. The company credited increased activity in its mobile search product, which it has optimized to deliver more relevant results, as well as programmatic advertising and video.

Paid clicks were up 31 percent in the quarter compared with the year-ago period, Google said, although cost per click slid 13 percent. And mobile search saw a spike during the holiday shopping season, CEO Sundaar Pichai said.

"This holiday season, we found that shopping moments replaced shopping marathons," Pichai said during the company's earnings call, according to a transcript from Seeking Alpha. "Shoppers turned to their mobile devices to purchase gifts online in spare moments throughout the day all season long, and marketers turned to our mobile ad offerings to reach those customers."

Pichai said Google's research indicates 30 percent of all online shopping purchases happen on mobile phones, and 60 percent of programmatic impressions during the week leading up to Black Friday occurred on handsets. "In fact, in the U.S., looking just at product listing ads, revenue from mobile phones exceeded desktop on Thanksgiving, Black Friday, and through the weekend," he continued. "Not only were people using mobile ads to shop online, they also used their phones to find the best products and prices in stores around them."

Indeed, it appears mobile marketers are finally unlocking the local ad revenues that have long been seen as crucial to the larger mobile marketing industry. Facebook last week posted quarterly revenue in excess of $5 billion for the first time thanks primarily to its mobile ad business.

Analysts at Jefferies Equity Research noted that mobile search was the top driver of Google's accelerating revenue growth for the second straight quarter, observing that while some investors have questioned Google's strength in mobile, "Results should quiet those concerns for now." Analysts at MoffettNathanson echoed those thoughts, explaining that "the constant currency acceleration in Google revenues underscored the increasing value of mobile search to marketers."

Google doesn't typically break out mobile ad revenues separately, but eMarketer estimated the company generated $24.31 billion in net mobile Internet ad revenues in 2015, up 49.4 percent over the previous year. That figure will rise to $34.11 billion this year, eMarketer predicted, and $42.41 billion in 2017.

For more:
- see this Google press release

Related articles:
Report: Google paid $1B to remain default search on iPhone in 2014
Facebook planning dedicated video site that could challenge AT&T, Verizon's Go90
Google sees strong growth in mobile, YouTube ad sales in Q2

Sponsored by ADI

What if we were never truly alone? Our next-gen communications technology can help people in even the most remote places stay connected.

What if there were no ocean, desert, mountain or event that could ever keep us from telling our stories, sharing discoveries or asking for help? ADI’s next-gen communications technology could keep all of us connected.

Suggested Articles

AT&T has shifted its Cricket prepaid brand to a 100% authorized retailer model, according to Wave7 Research.

The FCC decided to extend the timeline for responding to Huawei's application for review until December 11.

All operators are trying to understand the intersection between their networks and hyperscale networks. But who gets the lion's share of the revenue?