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Google Taking the Initiative to Grow Its Mobile Search Business


May. 31 2016, Updated 9:08 a.m. ET

More than half of Google searches occur on mobile

Mobile searches have become the most important growth driver for Google (GOOG). More than half of Google searches take place on mobile—and this ratio continues to increase. According to the Wall Street Journal, Google recently announced that it will start showing more search ads, which will also be larger, both on mobile and PCs.

Such an initiative should help advertisers because these changes will make it more likely for a user to click on these ads. This, in turn, benefits Google as it will help it to monetize its search ads more effectively.

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Accurate ad measurement tools

Another initiative that Google has taken is to make its ad measurement tools more accurate so that advertisers can understand how effective their ads are. Advertisers need to know the sales conversion rate of online ads. Conversion can happen either online or offline, such as in a retail store. Conversion rates determine what value advertisers should give to each ad and the ad rates they should pay.

Google’s ad rates, or cost per click, have continued to decline over the quarters. As the chart above shows, Google’s aggregate cost-per-click continues to decline, ranging from 7%–13%. The above initiatives should help Google stop their declining ad rates.

For diversified exposure to Google, you can consider investing in the PowerShares QQQ Trust, Series 1, ETF (QQQ). QQQ invests 4.8% of its holdings in Google.

Facebook and Twitter strive to improve their ad measurement tools

Similar to Google, Facebook (FB) and Twitter (TWTR) have also taken a few initiatives to improve their ad measurement tools. Facebook bought Atlas Ad Server from Microsoft (MSFT) in 2013, which it enhanced for its October 2014 relaunch.

Facebook claims that Atlas can help advertisers improve their online campaign measurements and achieve a better return on investment by providing relevant ads to users. Atlas can also measure the true impact of online ads on in-store sales.

Similarly, Twitter acquired TellApart in early 2015 to enhance its ad targeting and measurement capabilities.


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