Google plans to combine desktop ads and the less profitable mobile ads into one offering, according to CEO Larry Page.
Google CEO Larry Page shared select bits of his vision for Google in the Q3 earnings call late last week. In his opening statements, Page introduced an idea that came up again and again throughout the call: Internet users don't really want a different experience on mobile devices than on their desktop computers.
It was a peculiar thing to say, given Google's GoMo initiatives and its insistence that webmasters make its sites mobile-friendly. Why, it was only in July this year that Google's own research told us 75 percent of customers prefer a mobile-friendly website. When it comes to search, though, users want "the experience" to flow seamlessly from one device to the next, whether on-the-go or sitting at home on a desktop, said Page.
For that reason, and that reason alone (read: this is not about increasing profit in any way, shape, or form), Google plans to combine mobile and desktop ads.
"As more users upgrade to Google+, more users are enjoying amazing experiences across devices. In the same way, we want to make advertising super simple for customers," Page told investors. "There are separate campaigns for desktop and mobile right now. This is more arduous [for] users and mobile opportunities possibly get missed. Advertisers should be free to think about their audience while we do the hard work of dynamically optimizing their campaigns across devices."
There's just one problem with changing the system and combining desktop and mobile ads in this way, to make things better for users and advertisers: it isn't actually better for users or advertisers.
Google's costs-per-click fell for the fourth quarter straight, for a 15 percent loss year-over-year, as searchers continue to move to mobile, but advertisers refuse to pay desktop rates. CFO Patrick Pichette was quick to point out on the call that it would have been only an 8 percent year-over-year loss, were it not for foreign currency fluctuations. Investors were not convinced.
"The short of it is mobile ad formats are different and quite frankly, people are using it in a different way and advertisers are not convinced they should be bidding up for keywords the same way on mobile the way they do on desktop," MorningStar tech analyst Rick Summer told CNBC.
Google's solution? Just combine the two.
An investor from Citi asked Page if desktop revenue was now as good as it would ever get. "Mobile search is really strong," he said. "What's happening with desktop, does it flatline at some point and have we reached that point?"
Page to Investor: "You're Asking the Wrong Question"
"You're asking the wrong question," Page said. "The ubiquity of screens really helps people move from one screen to another effortlessly. Focusing on platform-specific queries won't make much sense, because ads will dynamically update for the platform. That's a great opportunity for us."
Monetization on mobile queries is a significant percentage of desktop, said Page, so Google is really living the best of both worlds right now.
It's not the right question, because you're not supposed to know how long it takes for mobile and desktop to equalize. They'll just become one. It's better that way.
Just over a month ago, Google told us, "Consumers seeking retail information are looking for things they can act on immediately. They still prefer to do deep research, read reviews, and make big purchases on desktops; making contact and taking action are their priorities when mobile consumers are on the go."
That was from Google's What Users Want Most from Mobile Sites Today study. My, how things have changed.
Google has hammered the concept of searcher intent into our heads for years, but now we are to forget all of that. Mobile searchers are just like desktop searchers. Google will dynamically update ads with no extra effort on the part of advertisers and stop focusing on platform-specific queries. Somehow that will work better for users and advertisers alike.
Search vs. Apps: "I'm Not So Worried"
Another investor asked how Google would deal with the fact that in a mobile world, Google may not be the starting point for searchers in an app-driven world.
"I think a lot has been been made of that and it's not really true, you know, search vs. apps," Page said. "We're in a good position with Android and Google Play. In time, if we do our jobs right, the experience will be very similar on apps or on the web. I'm not so worried about that."
He went on to speak of innovation in mobile and reiterated that people want the same information on the web. "I don't think people are really thinking about it correctly now."
People certainly weren't thinking of search the way Page and co-founder Sergey Brin were when they started up, either. Then, they had no investors, analysts, or advertisers to contend with; their plans could truly put the user first. Can Google remain objective when they're proposing an amalgamation of services that defies all conventional knowledge (even their own) and seems designed for one purpose only: to generate revenue.
Google's recent transition to a pure paid model for Google Shopping product listings was controversial in itself. Page did take the opportunity to sing the praises of PLAs during the call, as well, repeating several times the paid model was as much a benefit to advertisers as users.
Will advertisers acquiesce on this as well, on one ad format that combines two distinct ad types, one of which has yet to prove its worth? Page spoke of a dynamic ad platform that would deliver the right ad to the right person, on the right device. His repeated assurances that people want the same thing whether on desktop or mobile doesn't instill confidence in Google's ability to fix the mobile problem with this new system.
The benefit for advertisers, Page said, is that they won't have to optimize two separate campaigns.
"Our ads require they spend some effort to deal with mobile, in general," he said of advertisers. "It's been a small percentage of ad spend, for most advertisers. That's no longer the case and you'll see them spending more effort targeting ads for mobile."
"We're positioned uniquely well and have a significant monetization of mobile," Page promised.
Google will have its work cut out for it convincing advertisers that mobile ads are any more effective if they can't tell their performance apart from desktop ads. Investors aren't apt to go for less transparency, either. As much as the "users want the same on mobile and desktop" mantra was repeated yesterday by Page and other Google execs, it just doesn't make it so.
Investors will only trust a CEO's gut so long as he's meeting their projections. In search, he might have more leeway, as there must be room to innovate. Still, this feels like a step backward; advertisers want more accountability, control, and transparency, not less.
Page has said time and again he's looking long term, but he shouldn't pooh-pooh the concerns of investors wondering just how this new one-ad system will work. Their vision is not his, and Google as a corporation exists for one reason alone, to them: to generate revenue.
Failing that, the corporate monster's patience grows short. Telling investors and advertisers they're just looking at it wrong or not asking the right questions won't appease either. Google's plan is going to have to become a lot more convincing than "Trust us, we're only doing what's best for you."
This article was originally published on Search Engine Watch.
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