Q2 Earnings Show CPC Down, So Where’s Google’s Growth Coming From?

Google’s latest earnings call was a little mixed – while Google saw a 22% increase in revenue over last year, bringing earnings to $15.96 billion within the second quarter of 2014, and the hunt giant narrowly beat analyst projections of $15.6 billion in revenue, their ad sales within the US and the united kingdom, their two major markets, have slowed.

Non-US revenue (excluding the united kingdom) of $7.7 billion accounted for 48% of total revenue. Their earnings per share were considered a miss to boot, at $6.08.

The proliferation of ads in emerging markets worldwide drove profits to $3.42 billion for the period, up from $3.23 billion in Q2 2013. More individuals are clicking on Google ads – much more. Total paid ad clicks were up 25% over last year and up 2% over the 1st quarter of 2014.

However, the typical cost per click is falling as CPC is down 6% from a similar period last year (click graph below to enlarge ).

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This is a continuation of a two-year trend. If you’ll remember, lots of the PPC industry believed Enhanced Campaigns would drive up average cost per click, but that hasn’t panned out .

The undeniable fact that CPC’s continue to fall is superb news for advertisers. But is it excellent news for Google? They’re showing impressive growth, but it’s still an earnings miss, so that you can bet that they’re going to continue aggressive monetization of the SERP:

  • Sponsored results, AKA paid search ads, now not have a coloured background, but rather a small label. When ads are less obviously ads, they’re able to take in more of the SERP without users noticing. Again, this can be actually beneficial for advertisers – best for you in the event that they think your ad is a natural result.
  • The recent deletion of authorship photos from the SERP, followed closely by the lack of video snippets might point to a bigger trend: Is Google going to take away all visual elements from the organic results, in order that only the paid ads have eye-grabbing images? If that’s the case, that sucks for SEOs.

Here’s the old ad look:

old ad

And here’s the brand new ad look:

new ad

That yellow background stood out greater than the yellow label, wouldn’t you are saying?

Since greater mobile adoption and increased penetration into international markets are continuing to drive average CPC down, Google has no choice but to appear for growth in increased overall impressions and clicks. You already know what meaning: More ads – everywhere.

You can read the remainder of the earnings results  (PDF) straight from Google.

Mobile Photo via Shutterstock

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