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Google profits rise but ad cost-per-click income slides

17 Apr 2014
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Google has revealed profits for the first quarter of 2014 of $3.45bn, up from $3.35bn in the same period last year, but its average cost-per-click income has fallen, causing concern among investors.

Google said that the cost-per-click income fell by nine percent year-over-year and was constant in the previous quarter. This concerned investors, with shares in the firm falling by as much as $20 in pre-market trading.

The worries stem from questions over whether Google can generate the same income from mobile advertising clicks as it does from desktop adverts, at a time when smartphones and tablets are growing in use all the time.

However, Google chief business officer Nikesh Arora said in a conference call to discuss the results that he was confident income for mobile advertising would increase as firms understand the benefits of mobile-based selling.

"I believe the medium to long-term mobile pricing has to be better than desktop pricing. And I think the reason – the way to think about it is that in mobile you have location and you have context of individuals, which you don't have in the desktop.

"Part of our challenge has been that. We've had this huge massive advertiser in the desktop, which over the last decade have become better at advertising, understanding optimisation, understanding conversion, understanding transaction. That journey is just beginning for advertisers on the mobile side."

Google CEO Larry Page was also upbeat on the results, as he focused on the strong revenue growth over the past 12 months. "We completed another great quarter. Google's revenue was $15.4bn, up 19 percent year on year. We got lots of product improvements done, especially on mobile. I'm also excited with progress on our emerging businesses," he said.

Google also noted that its proposed sale of Motorola to Lenovo for $3bn, a significant loss compared with the $12.5bn it paid for it, impacted its overall performance. The firm racked up $198m losses from discontinued operations, with $74m pre-tax losses attributed to Motorola.

Google also revealed it now has a cash balance of almost $60bn and just shy of 50,000 employees worldwide. With its impending sale of Motorola to Lenovo, though, this could decrease in the coming months.

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Dan Worth

Dan Worth is the news editor for V3 having first joined the site as a reporter in November 2009. He specialises in a raft of areas including fixed and mobile telecoms, data protection, social media and government IT. Before joining V3 Dan covered communications technology, data handling and resilience in the emergency services sector on the BAPCO Journal

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