Ok so I was flicking through the Sky News website early last week and came across an interesting piece entitled “Google Spending Spree Hits Quarterly Profits” on Friday 17 October 2014 (ill put a link at the bottom of the post to the full news article.) this had me intrigued so I read some more. The crux of the story was basically due to an increase in Google’s operating costs have risen by 30% which has had a knock on effect meaning they were down by 5% from last year that means they have gone from $2.97 billion down to a measly $2.81 billion. Devastating I know to only have $2.81bn in the bank for 3 months work.
This slip was apparently due to the fact Google increased their workforce by 3000 employees along with a wider investment strategy. Apparently “Analysts argue that Google could be making more money if not for CEO Larry Page’s belief that some short-term gains should be sacrificed so that the company can invest in projects and other research that could take years to pay off”. However Mr Larry Page retorted, saying “Google might not have ever developed its market-leading Android mobile software and Chrome Web browser if the company had not taken such risks”.
A very good point well made I thought all successful businesses take some risks don’t they?
However I digress slightly the main point that interested me within the article was at the bottom of the page. The article states that it’s not all doom and gloom for poor old Google though as “Google’s average ad prices in the third quarter dipped by just 2% from last year” it goes on to say that this is “the smallest decrease during what is now a three-year slump in the prices paid to Google for ads appearing alongside search results and other Web content”.
This tends to contradict the reality of what we see on a daily basis and the feedback we get from our new potential clients. They say that “The measure, known as “cost-per-click”, has sagged because of the growing popularity of Smartphone’s over laptops and desktop PCs which have better screens to see marketing” however we have seen a general increase of approximately 10-15% increase in CPC with a drop of about 5% in the number of clicks year on year? There is a slight argument to say that the major focus on Product Listing/Shopping has skewed the figures to a degree as they are generally cheaper CPC. The question is why has there been a consistent “slump” over the last 3 years an analysis of the actual number of advertisers year on year should be done as from our experience many of the smaller businesses and some of the medium sized businesses who are fighting for their life online cannot afford to do business on Google and therefore are choosing to stop advertising on Google, the real question is, can they not afford to do it or do they not know how to make it affordable? I fear that the uncomfortable answer is the latter.
There is a reason that Google encourages and endorses businesses such as Click Convert, it’s because they know that with the help of businesses like us many of these small businesses will be able to continue and even thrive on Google Advertising.
If you find that you are struggling with these increasing Google marketing costs then give us a call and see what Click Convert can do for you.
http://news.sky.com/story/1354849/google-spending-spree-hits-quarterly-pro