Google Mobile Ads Replacing Desktop Ad Revenue: May Hurt Sales

  • Google may be the biggest name in online advertising, but even the search giant faces difficulties in the evolving digital sphere, especially with mobile ad rates.
  • “Our revenue growth rate has generally declined over time, and it could do so in the future as a result of a number of factors,” the company stated in a 10-Q filing with the SEC.
  • Business Insider notes that this warning isn’t new for Google, but now the company is acknowledging that “mobile ad revenue is replacing its desktop ad revenue in a way that may hurt its sales,” the article states.
  • “Mobile search queries and mobile commerce are growing dramatically around the world, and consumers are using multiple devices to access information,” Google said in its disclosure. “Over time these trends have resulted in changes in our product mix, including a significant increase in mobile search queries and a deceleration in the growth of desktop queries.”
  • According to a recent earnings call, Google has an $8 billion annual run-rate from mobile ads, which translates to a 2 percent contraction in desktop business as click prices on mobile are cheaper.
  • “It’s a supply and demand problem: Greater search demand on mobile devices increases the available inventory supply for advertisers, and greater supply always lowers prices — which could hurt Google’s ability to grow revenues on the topline,” the article concludes.

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