What is the reason why Google's cost per click is decreasing?

ByKristina Alexanderson

Google announced the settlement of Q1 (January to March) in 2015 on April 23, 2015. Google, which achieved higher revenue and earnings compared to the same period last year, is the advertising fee per clickCPC (CPC)It is pointed out that it is decreasing, and Google refutes this.

Google Inc. Announces First Quarter 2015 Results - Investor Relations - Google
https://investor.google.com/earnings/2015/Q1_google_earnings.html

Google grew both its revenue and profit in the first quarter of 2015 | The Verge
http://www.theverge.com/2015/4/23/8485413/google-q1-2015-earnings

According to Google's earnings announcement, sales in Q1 in 2015 were $ 17,258 million (about 2,630 billion yen), up 12% compared with the same period last year,GAAPBased on net income of 4,532 million dollars (about 542 billion yen), up 5% from the same period of the previous year and achieving higher sales and higher profits despite slightly lower market expectations, a strong business situation revealed became.


However, with regard to CPC, it is found that the advertising revenue per click tends to decrease by 7% compared with the same period last year, 5% down from Q4 (October to December) in 2014, and click advertising income is decreasing.


The cause of the decline in CPC is believed to be the spread of mobile terminals such as smartphones and tablets. In general, the advertisement on the mobile version website is cheaper than the advertisement on the PC version website, and the advertisement revenue of Google is decreasing with the popularization of the mobile terminal.

Google's Patrick Pichette CFO argues that "mobile advertisements are doing fine" against the viewpoint of market participants that search advertisements on mobile terminals are slump. According to Pichette CFO, the decrease in CPC is caused by the increase in TrueView on YouTube. TrueView is a video ad inserted before YouTube's movie starts, which means that advertisement costs will be incurred when advertisements are clicked or viewed over a certain period of time. CPC is being pressured numerically by increasing TrueView on YouTube, but CPC is steady except for the increase in TrueView.


Although Pichette CFO did not show concrete figures on advertising revenue on YouTube, it also states that YouTube is generating revenue, "it is continuing a strong situation over the previous year."

Pichette CFO says mobile advertising contributes to higher revenue and earnings, but Google has not disclosed the percentage of revenue for mobile advertisement and details are unknown. However, as Google announced that it changed search algorithms from April 21, 2015 and prefers mobile sites to preferentially optimize sites optimized for mobile devices, the response to mobile within Google is profitable It seems that there is no doubt that it is the most important task to increase.