Last week Google announced financial results for the quarter ended March 31, 2015. Google’s first quarter revenue was a staggering $17.3 billion, up 12% year on year.
That’s the equivalent of $8 million every hour or $2,244 per second!
Predictably most of this ($15.1 billion) came from advertising revenue, reinforcing the fact that, above all else, Google is very much an advertising business. Something many lose sight of with peripheral things like Google driverless cars & other “Moonshot” ventures dominating the news about Google.
The great majority of advertising revenue ($11.9 billion) came from Google’s own websites (primarily Google AdWords advertisements in Google search results and YouTube). This revenue grew an impressive 14%. However a deeper look shows that whilst paid clicks on Google’s websites actually grew 25%, the average cost-per-click earned fell 13%.
Financial analysts have speculated the migration to mobile and lower bids for mobile clicks are responsible for Google’s declining aggregate CPCs. However Google have said that’s not the case at all & in fact mobile CPCs are rising. The overall decline is attributed to YouTube ads which, whilst growing in volume, have significantly lower CPCs than search ads because video ads typically reach people earlier in the purchase funnel and so can’t command such high prices.
Why should you care?
If you’re spending money advertising on Google, hearing they are making more money than ever certainly won’t come as a surprise. It’s something most advertisers are painfully aware of! CPCs rise as more advertisers enter the market and drive up prices (remember AdWords is an auction – the more advertisers bidding, the higher the prices).
A big problem is that whilst AdWords can be incredibly effective, it’s also easy to lose money if you don’t know what you’re doing. Google make it alluring and do a great job enticing new advertisers onboard with things like free credits and set up assistance. The reality however is that Google AdWords gets more and more complex each week and many advertisers end up paying what leading AdWords expert Perry Marshall refers to as Google’s stupidity tax.
Ensure you’re not one of them – it’s how Google was able to pay its billionaire Chairman Eric Schmidt nearly $109 million last year…
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