Hidden ad costs: Google’s not mobile?

Ads on mobile platforms are cheaper than ads on desktop platforms.
But the core of Google’s business is still on the desktop.
In this article I offer 3 key take-aways about mobile and desktop advertising trends you want to know about.

I purchased my first mobile in 1997. It was a 2G device from Ericsson and set me back by about 3,500 DKK (about €500). My second mobile phone was much cheaper in 2000 DKK (see photo).

The first generation iPhone was released on June 29, 2007. It changed how users took advantage of 3G technology in a big way (see chart).

Downloading music files became feasible, thereby making the smartphone an increasingly more versatile gadget for entertainment. Voice calls were still made, but listening to music files became popular.

See newspaper clip below and full article here: From 1G to 3G – what a change… People were not downloading MP3 music files in the early 1990s.

You could around 2000, but it was expensive, cumbersome and took about 10 minutes (at least when I did it in Copenhagen). When the iPhone 3 arrived July 11, 2008 it was possible to get the file in 10 seconds. These days it should take just 3 seconds – in theory at least 🙂

With an Apple iPhone 3G, users managed to download MP3 files in 10 seconds.

From 1G to 3G on mobile networks.

So if we are using 4G now, what will the future hold? Nobody really knows what 5G will bring.

5G is 10 x faster than 4G: Do I need it?

From-4G-to-6G-on-mobile-networks

What we do know, however, is that all this has changed the advertising business.

Most of Google’s traffic comes from mobile

We may not know how 5G will evolve, but we do have a pretty good idea of how people search for information on the web:

An interesting tidbit for the above graphic is that tablet searches are growing faster than smartphone searches using Comscore’s data. In the US most Google search traffic comes from people using mobile devices, as pointed out by Google’s Jerry Dischler, VP of Product Management.

In his presentation, he stated that “more Google searches take place on mobile devices than on computers in 10 countries including the US and Canada,” (the slide he showed pictured a US and Japanese flag).

Google puts tablets and PCs in one group.

What could explain the discrepancy between Google and Comscore’s data? Somebody must be wrong. There are four possible explanations:

1. 75% of mobiles in the US are smartphones. 53% are powered by Google Android and 42% by Apple’s iOS.
Android’s default is Google search… (see US Digital Future in Focus March 2015 Q4 2014 data).

2. Mobile search is growing much faster than anticipated. This may be reflected in Google’s numbers for Q1 2015.

3. ComScore’s or Google’s data are incorrect (see point 1).

4. A combination of these explanations.

Google is neither willing to comment on the above discrepancies to me nor the Wall Street Journal, but Mr Dischler did put the 50% number into perspective. He pointed out that roughly 50% search about cars on their mobile… Roughly can mean anything from 45% to 55% 🙂

By the way, if people use smartphone devices in the middle of a task such as shopping or cooking, how much does this annoy others?

I, for one, prefer to look at a cook book to find out information about how to bake on a Sunday afternoon. Why mess with a mobile phone? If I need a recipe for pancakes, I search on my laptop.

More about Google Mobile Ads – Ad Words Performance Summit

Key take-away #1: Google appears to be scrambling to catch up with Airpush, Facebook and others that appear to deliver great results for advertisers.

Why does Google push mobile?

The quick take-away, assuming these data are accurate, is essentially that Google search revenues may have peaked on the desktop. Google thus either has to acquire market share from rivals on the desktop or boost mobile search revenues to maintain growth.

The ads that Google displays alongside its search results are effective and lucrative in the online marketing world, but Google’s average ad prices have been in decline for several years. Google can try to grow video and display advertising, but the company faces much more competition in those categories.

Dischler said patterns are changing as users hop among devices. “It’s more of a swirl, with people browsing on phones, getting on their desktop at work, then their tablet at home, then purchasing through a store visit or on a phone call,” he said.

To tackle this, Google built a new crop of mobile-friendly ads that rely on data, such as images, product specs and prices, from advertisers, rather than keywords.

When users search for something, Google increasingly

shows a panel or carousel

of listings from advertisers at or near the top of mobile search results. Users can swipe across to see more listings and when they click on them, advertisers pay Google for the traffic.

See more hereMobile ad rates are dropping like a rock

Of interest is how the Internet giant tries to cope with these changes. For instance, the fact that mobile ads simply don’t command the same rates as traditional search ads.

Key take-away #2: Google is taking away precious mobile screen space to show ads in search results.
Usability for users will be affected by requiring more scrolling to get to the organic search results.

Interesting:  Google and DrKPI: SEO optimization

Will you like it?

Ads that include a mobile ad function consume 48% more of a smartphone’s CPU. Not so wonderful… is it?

Also increasingly popular are short advertising videos. These are between 15 – 20 seconds, instead of 30 to 40 seconds on a desktop. But that increases the amount of network data I require. Apps that serve advertising, including Google search, use a whopping 79% more network or data. How much this slows things down for everyone else is not yet clear.

And if this is not enough, research shows that your battery goes flat faster as well. A recent study of 21 Android apps shows that the use of ads leads to increased energy consumption (on average by 17%), and requires repeated changes to ad related code.

Must read: Gui, Jiaping; McIlroy, Stuart; Nagappan, Meiyappan; Halfond, William, G. J. (May 2015). Truth in advertising: The hidden cost of mobile ads for software developers. In Proceedings of the 37th International Conference on Software Engineering (ICSE). Retrieved May 5, 2015 from http://www-bcf.usc.edu/~halfond/papers/gui15icse.pdf

View larger image – What are the hidden costs of mobile ads for users and developers?

Key take-away #3: Increasing use of mobile ads results in more complaints about the hidden costs to users' devices.
In turn, it can negatively affect an app's ratings. 
Developers must carefully weigh the trade-offs of incorporating ads into their mobile apps.

What do YOU think?

Do you think mobile ads will increase in price and reach desktop levels?
Have you experienced negative effects on your smartphone due to mobile ads?
What is the BEST mobile ad you have come across?
Do you think Google will succeed with its mobile ads against Facebook?

Watch the full 45-minute video, in which Jerry Dischler explains how these developments will affect mobile advertising, below.

YouTube Preview Image

Urs E. Gattiker

Professor Urs E. Gattiker - DrKPI is corporate Europe's leading social media metrics expert (see his books). He continues to work with start-ups. Urs is CEO of CyTRAP Labs GmbH and President of the Marketing Club Lago, a member of the German Marketing Association (DMV).

4 thoughts on “Hidden ad costs: Google’s not mobile?

  • 13. May 2015 at 7:54
    Permalink

    AOL, that struck an ill-fated $350bn merger with Time Warner, has agreed to sell itself to Verizon for $4.4bn

    UPDATE 2015-05-13
    US Verizon hopes that AOL takeover will help it to target messages at:
    – right people,
    – right time, AND
    – on right screen !

    This takeover is supposed do help Verizon build its offerings in video and other digital content, especially for wireless.

    This follows a trend, whereby content owners have been scouting for deals to boos their scale in the ad market. The latter is increasingly dominated by Google and Facebook.

    This means AOLs video ads take starring role for Verizon.

    2015-05-13 FT,Verizon lays $4.4bn bet on rise of digital, p. 1 – view below:

    Verizon lays $4.4bn bet on rise of digital

    Reply
    • 16. May 2015 at 10:55
      Permalink

      If we look at the above it shows that the digital advertising pie is growing quite fast in the US. Moreover, mobile plays an ever greater role. Just this week, European publishers did strike a digital content deal with Facebook. Publishers will keep 100% of ads they sell directly. Ads sold indirectly via Facebook will result in the latter taking a 30% cut.

      The above makes clear why news content (e.g., Huffington Post or TechCrunch) is becoming ever more valuable. A rising number of readers rely on Facebook as the main portal through which they get their daily news.

      20% of the Guardian’s web traffic (w/out visits to its own apps) AND
      15% of the New York Times site’s traffic are via FACEBOOK

      Maybe Verizon was smart to get its hands on news content. Selling mobile ads with it and delivering the content to its large mobile user base…. will result in increasing revenue through mobile ads.
      What you think? – will it double Verizon’s share of the mobile advertising pie to about 5% within the next 18 months?

      The most valuable AOL destinations: Worth the price Verizon is paying?

      See more http://www.ft.com/intl/cms/s/0/97225f0e-f89a-11e4-be00-00144feab7de.html?siteedition=intl#slide6

      Verizon already has detailed information about users including location data. It is in a great position to turn mobile browsing into ecommerce.
      Will it succeed in leveraging this advantage against Facebook and Google? Only time will tell.

      Reply
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