According to eMarketer’s latest report, Google remained the leader in U.S. online advertising last year, with 41% of the market. Google is also a clear leader in mobile advertising and accounted for 53% of the mobile ad market last year. The researcher expects Google’s share to reduce marginally over the next few years to 50.6% in 2015 as Facebook increases its share from 9.4% in 2012 to 13.1% in 2015. Overall, Google’s share in digital advertising in the U.S. market is expected to grow from an expected 41.1% this year to 44% in 2015. Total digital advertising market in the U.S. is expected to be worth $42.26 billion this year and is projected to grow to $52.49 billion by 2015. Google’s impressive performance in the advertising market has helped it become the third-largest U.S. company with its stock price soaring above the $1,000 mark.
Google’s (NASDAQ:GOOG) Q3 revenues grew 12% over the year to $14.89 billion, surging past analyst expectations of $10.74 billion. EPS of $10.74 was also ahead of the market’s projections of $10.36 for the quarter.
Revenues from Google’s sites grew 22% to $9.39 billion. Revenues from partner sites grew to $3.15 billion. While analysts were disappointed with the falling cost-per-clicks for the quarter, Google was able to counter the price fall by delivering better growth in paid clicks. During the quarter, paid clicks grew 26% over the year and 8% over the previous quarter. Cost-per-click fell 8% over the year and fell 4% over the quarter.
Google’s Ad Upgrades
Google cannot shy away from the growth in mobile advertising. Mobile ads typically cost half to two thirds less than traditional online ads. As the volume of mobile ads increases, overall ad revenues are likely to reduce. However, Google plans to counter that by continuously improving their ad offerings.
Last year, Facebook had launched its ad exchange platform, the FBX. FBX enables social commerce by letting advertisers to purchase targeted ads on Facebook’s site based on the data collected by cookies on the user’s computers. Within 16 months of its launch, FBX has become a big player in the online ad world. Till recently, Google was not part of the real-time ad bidding exchange. But earlier last week, Google and Facebook announced an agreement whereby advertisers will now be able to buy inventory on FBX using Google’s DoubleClick Bid Manager. By excluding Facebook from DoubleClick, Google was losing advertisers who were interested in posting ads on Facebook. But the new agreement will ensure that Google is able to handle ad sales across the web.
Google is also trying to attract TV ad dollars to their site. Earlier last quarter, they released Chromecast, a device that users can plug into their TVs to watch both online and on device content, including video, music and images, directly on the TV. The device retails for $35 each and is OS-agnostic, thus working with equal ease on iOS- and Android-based devices. Initially Chromecast will allow streaming from Netflix and from Google’s sites, including YouTube and Play. Google plans to add other apps, including Pandora and possibly Hulu and Amazon as well. Through the move, Google hopes to attract users to watch online content directly on TV and also lure some TV advertising dollars to these online sites.
Google’s reached an all-time high of $1,015.46 soon after its results announcement. The stock is trading at $1,011.41 with a market capitalization $337.4 billion. Google is now the third largest U.S. company after Apple and ExxonMobil.