On Google’s earnings call yesterday, some analysts honed in on a particular trend: declining cost-per-click rates, or CPCs.
Google’s ad revenue is determined largely by two factors: the number of clicks on ads (“paid clicks”) and how much advertisers pay for each click (“CPC”). The first number has been rising fast — it was up 39% in Q1 of 2012, compared with the previous year.
But the second number has started to decline, and was down for the second consecutive quarter (as compared with a year ago).
Google said that the factors driving CPC are very complicated, and include foreign exchange rates, rising mobile usage of Google (where advertisers pay lower prices per click), faster growth in developing countries (where prices are lower), and changes in ad quality all have an effect.
Most analysts seem to agree that CPCs, taken in isolation, are not the best measure of Google’s business. But if you’re looking for a reason why the stock went down today, other than the new class of stock the company announced, this might be it.
In the real world, using salary as a measure, a Goldman Sachs staffer is worth much more than a Wal-Mart employee. An average Goldman Sachs employee is paid a bonus of $500,000, while the average Wal-Mart employee salary is $20,000.
On Facebook, the opposite is true. In the eyes of an advertiser, a Wal-Mart employee is worth nearly twice as much as a Goldman employee, according to Facebook’s suggested advertising bid prices.
Kim-Mai Cutler at VentureBeat looked at Facebook’s suggested advertiser bid price on per category basis. What she found is pretty interesting.
As you can see in this chart, the most expensive company to target is Facebook. The next most expensive is Wal-Mart. Goldman and Bain employees are duking it out for the cheapest.
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According to data collected by mobile advertising network AdMob, Android phones have surpassed the iPhone in mobile traffic—at least in terms of ads served to the devices, which is a pretty good measure for overall traffic. As mobile browsers account for more and more of our online time, it’ll be interesting to see how the OS distribution works out. [TechCrunch]
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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