Report: Mobile ad revenue to boost Google in 2014 as desktop ads decline

Google (NASDAQ:GOOG) will see a surge in mobile advertising revenue in 2014 even as revenue from desktop web ads continues to decline, according to a new report from research firm eMarketer.

eMarketer estimates that globally, Google's total net advertising revenue will jump 14 percent to $43.5 billion in 2014, up from $38.3 billion in 2013. In terms of Google's total net ad revenues, including display, eMarketer said mobile search is gaining a significant share. Mobile search revenue accounted for 19.4 percent of total revenues in 2013, and the firm thinks mobile search will jump to 26.7 percent of the company's total ad revenues this year, or $11.61 billion.

Looking at the broader advertising market, eMarketer found that U.S. mobile search ad spending grew 120.8 percent in 2013, contributing to an overall gain of 122 percent for all mobile ads. Meanwhile, overall desktop ad spending increased just 2.3 percent last year.

The firm thinks desktop search ad spending will drop $1.4 billion this year, a decrease of 9.4 percent from 2013, while mobile search ad spending will increase 82.3 percent year over year. Mobile search will total $9.02 billion in 2014, compared with $13.57 billion for desktop search, the firm said.

Overall mobile ad spending in the U.S., which includes advertising served to tablets, will increase nearly 83 percent from $9.69 billion in 2013 to $17.73 billion in 2014, according to eMarketer.

Over all, the firm thinks Google will have a notable influence on the overall shift from desktop to mobile search spending. In 2013, according to eMarketer, more than three-quarters of the company's net search ad revenues came from the desktop, but that is expected to fall to about two-thirds in 2014 due to a $770 million decrease in desktop search ad revenues year-over-year. Google's overall net search revenues are still climbing, however, as its mobile search business will increase by a total of $1.76 billion this year.

Still, Google is working to overcome longer-term challenges as more web browsing is done on mobile devices, since the users of smartphones and tablets spend most of their time in apps rather than on the web. Consequently, as the Wall Street Journal notes, Google is building an index of content inside apps and placing "deep links" in its mobile search results that point to content inside apps.

Google's Chief Business Officer, Nikesh Arora, said at an investor conference last week that Google will benefit from the shift to mobile since the additional data that smartphones and tablets capture about their users, such as location information, will let the search giant offer better-targeted, and thus more lucrative, ads.

For more:
- see this eMarketer release
- see this WSJ article (sub. req.)

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