Google’s Success in the Advertising Market
https://www.theatlantic.com/business/archive/2017/10/google-cannot-be-stopped/544202/
This article describes Google’s increase in advertisement revenue. According to the article, between 2015 and 2016, Google had a 20% increase in advertisement revenue. Additionally, the article points out that mobile has the most promising future for advertising. In 2016, out of the time spent being exposed to print media, radio, TV, the internet, and mobile, mobile takes up 28% of people’s media consumption time, but only 21% of advertising spending goes into mobile. The article argues that Google “appears unstoppable” as a company.
This relates to our discussion of advertising markets in class. The article states that, in general, price per click of advertisements is going down. However, the number of clicks ads are getting is also going up. If both of these were changing at a certain rate, then Google would not be making any more money. Since Google’s profits are increasing, however, the rate at which click rate is increasing must be higher than the price per click is decreasing. Additionally, the potential for growth in mobile advertising suggests that Google may charge separate prices for slots on mobile. This would result in more advertisement markets forming where companies have higher values for mobile slots. This is because mobile slots may get higher click rates. This new advertisement market would result in matchings that are different from the current matchings, and it would most likely result in a higher profit from Google.