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Google’s Mobile Business Got a Nice Lift from Retail Advertisers

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Holiday season had a positive impact on Google’s mobile business

In the previous part of the series, we discussed how mobile search was the main growth driver for Google (GOOG) in the last quarter. Google’s mobile business growth in the last quarter also benefited from the holiday season during which users made searches on mobile devices to purchases gifts. According to Google, 30% of all online shopping sales now happen from a mobile device.

Google also mentioned that its product listing ads (or PLAs) revenues from mobile exceeded that of the desktop in last year’s Thanksgiving, Black Friday, and corresponding weekend. PLAs are the ads that appear alongside a search query and feature a product image and price details. The ads also provide direct links to the product page on an e-commerce website where users can shop online.

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PLAs have proved to be a success for Google

The increased popularity of PLAs for Google can be gauged from an eMarketer report. It noted that PLAs’ share of Google’s paid search clicks for non-branded retail searches increased from 19% in 2Q12 to 50% in 2Q14. For overall retail searches during the same period, the PLAs’ share increased from 12% to 26%, as you can see in the above graph.

Such a trend is a threat to Amazon (AMZN). Amazon’s 4Q15 earnings came well below analysts’ estimates, and the stock fell by 14% after the earnings were announced. However, despite this, Amazon did well during the holiday season. Its users didn’t face any issues of site crashes or slowdown during the busy holiday season.

According to a report from Retail Dive, many retailers’ websites, including Target (TGT) and Walmart (WMT), reported problems during Thanksgiving weekend this year. The report mentioned that Target’s website crashed on Cyber Monday, while Walmart’s website experienced slowdowns during the Black Friday weekend. Even PayPal’s (PYPL) users experienced a slowdown while conducting online payments.

For diversified exposure to Google, you can consider investing in the PowerShares QQQ Trust, Series 1 ETF (QQQ). QQQ invests 5.2% of its holdings in Google.

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