Google shares climb as stems ad price decline
The average price per click climbed 2pc in the final three months of last year compared with the third quarter. Although that rate is still down 6pc from the fourth quarter of 2011, it is an improvement on the 15pc annual drop Google saw in the third quarter.
The amount Google can command from advertisers per click is being eroded as consumers increasingly access the web via mobile devices, rather than desktop computers. Given they are smaller and can sometimes be more disruptive for the user, the amount companies can charge for advertising on mobile devices is up to 50pc lower than rates on PC adverts.
“The transistion to mobile is still a work in progress, but they are showing they can manage the process quite well,” Benjamin Schachter, an analyst at Macquarie, told Bloomberg.
Google shares rose 4.4pc to $ 736.50 in extended trading on Wall Street.
Google, which is also behind the Android operating software used smartphone makers such as Samsung, said that the overall volume of paid clicks climbed 24pc in the fourth quarter compared with 33pc in the third quarter. Larry Page, Google’s chief executive and co-founder, said that the mobile advertising business will continue to grow. Google’s overall profits for the quarter were $ 2.89bn, up 6.7pc from the same quarter in 2011.
However, some analysts remained concern about the impact that consumers’ migration to mobile devices from desktops is having. “Go back four or five quarters and click prices were improving,” said Colin Gillis, an analyst at BGC Partners. “Mobile is still pressuring click prices.”
Google is also facing a potential threat to its search business from Facebook, which last week launched a product that allows users to search the largest social networking site through four main categories. Asked by Wall Street analysts about Facebook’s effort, Mr Page would only say that he “feels very confident about our core business.”