Despite its Q3 revenue being up 20%, Google's latest earnings results fell below analyst estimates – resulting in a drop in shares of almost 3%.
The company, which launched its new Google Preferred product in Sydney this week, reported revenue of $16.52 billion for the quarter ending 30 September 2014, an increase of 20% compared with the third quarter of 2013. However, analysts had expected more.
As a result of the misses, in after-hours trading yesterday Google's shares dropped nearly 3%.
The US search giant, which in Q3 had capital expenditures of $2.42 billion, the majority of which was for data centre construction, production equipment, and real estate purchases.
Aggregate paid clicks, including clicks related to ads served on Google sites and the sites of its network members, increased 17% over the third quarter of 2013.
Sites paid clicks, which includes clicks related to ads it serves on Google owned and operated properties across different geographies and form factors including search, YouTube engagement ads like TrueView, and other owned and operated properties like Maps and Finance, increased 24% over the same period last year.
The average cost-per-click (CPC), which includes clicks related to ads served on Google sites and the sites of its network members, decreased 2%, compared to the third quarter of 2013 – an indication the company continues to struggle with ad prices following the shift to mobile. CPC for Google sites decreased approximately 4% over the third quarter of 2013.
CEO of Marin Software, Dave Yovanno, said he feels Google is heading in the right direction and that according to Marin's data, the mobile conversion rate has increased 71% year-over-year.
Yovanno said Google is still in the middle of a “paradigm shift” to mobile, and based on Marin's data it believes it's still seeing mobile driving down CPCs.
“In Q3, mobile CPCs were 27% lower than desktop CPCs. While the click-through rate of mobile ads is higher than desktop ads, the conversion rate of mobile ads is 32% lower than the desktop conversion rate,” Yovanno said.
“A lower conversion rate translates into less ROI on mobile for advertisers, which means they are less likely to bid aggressively on mobile and hence the lower CPCs. As the conversion rate of mobile continues to rise, we expect mobile CPCs will rise as well.”
For more news on Google see below:
Google pushes hard with YouTube venture
Google GroupM ad deal to help shore up 'scarce' premium video inventory
Apple and Google smash $100bn in brand value
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