Google Ad Prices on the Decline … Again!
Each quarter for the past couple of years, Google tries to push advertisers to pay more for each ad they buy. However, it appears as though they have failed yet again at achieving this goal. Regardless of this failed goal, Google continues to gather great revenue from advertisements. This revenue rose by 17 % year-over-year, resulting in an overall revenue increase of 20 % over the past quarter to $16.5 billion. This however still falls short of company estimates.
Unfortunately for Google, ad prices, or the average prices that advertisers pay Google for people to click on their advertisements, fell by approximately 2 % in the last quarter. The reason why the revenue from ads still rose is because of the increase in click-through rates on smartphones, tablets, and other portable electronic devices. The advertisers’ values for such mobile ads is less than the values that they have for desktop ads. Perhaps this is because people are more exposed to mobile ads at this point in time, so advertisers understand that they can pay less for the ads and still have more click-throughs than on desktop ads. Google has tried charging as much for mobile ads as they are charging for desktop ads, but advertiser values are not as high as Google would like them to be. Therefore generalizing, when performing a Generalized Second Price auction the way Google does to set ad prices, they have to charge less as advertiser values are not as high. This holds true regardless of whether the advertisers are bidding truthfully or not.
http://adage.com/article/digital/google-s-ad-rate-declines-continue-12th-straight-quarter/295450/