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Google earnings below expectations. Mobile is blamed

Google have announced second quarter earnings which are below analyst estimates. The details have been shared on this page. It seems they are still struggling to get to grips with mobile advertising.

Google's CPC (cost per click) rate dropped a noticeable 6 percent. This is an indication of how much an advertiser pays Google every time a user clicks an ad on a Google owned site. The report would indicate that mobile has been driving down the rates.

Sam Grobart over at Businessweek said “An ad served up from a mobile search can cost 40 percent less than one coming from a desktop PC, according to digital-marketing firm Covario. Thursday’s report from Google shows that trend continuing. For the first quarter of 2013, the CPC drop was 4 percent; analysts had been expecting a smaller, 3 percent drop for this quarter, not a larger one. The stock’s price dropped more than 5 percent in after-hours trading.”

The initial feelings were that mobile advertisements would be more valuable than a desktop advert, due to locational checking and presentation of these ads. So far this hasn't been the case.

Google's strategy is very aggressive. They give away their Android operating system for free, for instance because the company want as many people as possible using the internet. The more people online after all, the more people who will be using their key services, such as Google. The concern however is that the rate charged to advertisers to promote their services is continually dropping.

Kitguru says: Google have recently taken over Motorola Mobility. We would imagine they are looking to generate money by sales of smartphones, outside of any continuing advertising concerns.

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