Google Reports Better-Than-Seen Revenue Growth (opens in new tab)

This is entirely possible. I will see if I can come up with ways to test that hypothesis. One puzzling bit of not well known information is that Google recently yanked their mobile ad feed from many (if not all) of their partners. One way to interpret that would be that they were trying to shore up their mobile CPC values. Really too bad they don't break out mobile and non-mobile.

> Google owns mobile search

Google does not own mobile search. Infact it is struggling[1] big time in mobile search. People do not use google to search on mobile. Infact, they use specialised apps like yelp, priceline etc to search for what they need.

[1] http://www.nytimes.com/2013/07/19/technology/google-misses-e...

> Strategically, this is a good trend for Google. They're being disrupted, but they own the primary disruptor.

Only if they can maintain similar margins in the long term. If it fundamentally eats a chunk of their profit margin, I'm not seeing that as a net positive for its share price.

Side note: this is the first time I've heard Simpson's paradox explained intuitively.

Its only good if mobile CPC is rising to replace it and Google is hopping from the sinking ship to the rising one. Otherwise "Simpsons Paradox" is just a description of the particular nature of the death spiral

Android has a lot of defensive value, but if you're saying having Android makes up for a new normal with lower CPCs then Google shareholders are in for a rough ride.

As I mentioned above, they have CPC erosion in both their AdMob numbers and their Sites numbers. This statement though I've heard a couple of times:

   > (Except that right now growth in the sheer number of
   > mobile ads is outpacing the growth in monetization 
   > of those ads.)

I don't think I understand it. I get that more and more ads are being shown (growth in sheer number) but this part I don't get (outpacing ... monetization). So Google is throwing more and more ads out there, and at some point they are going to discover how to make them more valuable to advertisers so that the advertisers will pay more for them? I get that this isn't like a commodity good which is racing toward zero margin, but I don't see mobile ads getting more valuable. I characterize what we do at Blekko as 'utility search', which is what a lot of mobile users seem to need. When they search on their mobile for a restaurant name you can give them "perfect" search results by returning, the home pages of the restaurant, a onebox with hours/phone/address, a link to a review site, and an advertisement for a coupon at that restaurant or a competitor in the same food pallete. Google gets that, its pretty much the formula they use, but it isn't special because pretty much a solid businesses database, set of navigation links, and an ad feed for restaurants is all you need to serve that up. And other people are willing to give the phone provider a bigger cut of the ad revenue.

That is why I'm having a hard time imagining a way that Google is going to pull higher CPCs here. It feels very commodity to me and that is a margin game.

As a margin game that 32% net margin which is funding free food, self driving cars, and moonshots comes under pressure.

Ask.com & AOL are large chunks of change for the "google search network" syndication partners. This is probably most of the $3B+ in traffic buying.

Probably due to a lot of factors, but the biggest one is likely ad blindness - People just don't notice Ads anymore. It's especially prevalent in kids but it's probably also taking ground with adults now too.

Mobile has lower rates. Expansion of ads to countries with lower rates. Both increase the overall reach & revenue of Google ads, but lower CPCs.

My guess is that the clicks are worth less these days for two reasons:

1) The ads are now displayed so prominently that everybody has to notice them. Earlier, they where less prominent and more clearly marked as ads. So there is probably a shift in demographics. Less dedicated buyers and more people who just stumble upon the ad.

2) On tablets and phones people might a) misclick more and b) surf more without the intend to buy.

internet ads become king when advertisers were promised fine grained targeting.

then cpc become kink when everyone realized advertising based in demographic was not generating returns for the brands, because in the internet nobody knows you are a dog.

so everyone spend all their money on cpc, because they were told that was the metric to follow. until they realized it also does not result in conversion.

then they start spending all their money on conversion, and realized they had to give away all their profit per conversion.

then they briefly guessed that going back to before cpc was good, and everyone dumped their money on ad networks and paid cents for million of impressions god knows where. turns out those impressions were all in russian warez sites and porn.

now everyone is spending all their money on viewable impression. until they realize no browser allows for a real world implementation of this, and even if they did, in the end it is exactly the same as buying the more expensive placements on impression based publishes. but this is still beginning, so we are here. everyone is dumping their money on this this week

oh and every step, after the premium bands got tired of the new thing, the publishers being stuck with it, start a race to the bottom on price.

There is only a subtle distinction between selling an information service like targeting and selling the underlying information.

Consider, a mobile phone network that sold drone strikes on its users using the privileged information they have on their location. The precise flow of money and information is not that important to the consequence for the end user.

Google targeting is "using information about me to benefit another company for financial gain of Google". It is not silly to call this selling...

It happens to me too now and then and I'm pretty sure that we're not the only ones. The Ad icon I see is far from gigantic and more blueish than gold, it's very easy not to notice you're clicking on an advertisement. Maybe15 years of using Google and relying on the first search results on top has caused some sneaky "Ad" blindness.

Sometimes I feel sorry for the advertiser when I accidentally click such sneaky text Ad, especially when the first real, natural search result is the link to the advertising company's website, just below the Ad. It feels like a devious way to rip off advertisers who would have been first anyway.