Paid clicks on ads on Google Inc. sites and across its advertising network increased 13% in the first quarter of 2015 compared with Q1 last year, with strong performance and acceleration on YouTube, the company’s video-sharing service, according to Google executives. On Google sites, including the Google.com search engine, paid clicks rose 25% for the quarter ended March 31 compared with the first quarter of last year, according to the company’s first-quarter financial report released Thursday. The search giant does not disclose the number of paid clicks, only the percentage increase.
The average cost per click on a Google ad decreased 7% for the quarter compared with Q1 2014. On Google sites alone, the cost per click fell 13%, and much of that is driven by lower prices for clicks on YouTube ads, a category that’s growing faster than Google’s search engine ads. On sites in the Google network, sites operated by retailers and other organizations that display ads fed by Google, the cost per click increased 2%. Google also only releases percentages on cost-per-click data.
More ads are being seen via YouTube’s TrueView ads, which give visitors the option of skipping the promotional clips before they end, Google says. The higher drove revenue growth, but brought down the average cost per click, Google executives told analysts. “TrueView ads currently monetize at lower rates than ad clicks on Google.com,” Patrick Pichette, Google’s chief financial officer and senior vice president, said Thursday after Google released its earnings report. “Excluding the impact of YouTube TrueView ads, growth in site clicks would be lower, but still positive, and our CPCs would be healthy and growing year over year.”
“One-third of all people on the Internet are, every day, watching hundreds of millions of hours on YouTube,” said Omid Kordestani, senior vice president and chief business officer, according to a Seeking Alpha transcript of the earnings call. “This is generating billions of views. And then when we look at our advertisers, they want to be there. So we’re seeing a strong growth in TrueView with new advertisers. The number grew 45% in 2014. And all of the top 100 global brands have run TrueView ads over the past year.”
Pichette said Google continues to see momentum in mobile advertising and opportunities with brand advertisers.
In March, Google introduced app promotion video ads and extended app install ads to the mobile Google display network, Kordestani said during the earnings call. That move “increased (app) install volumes for early testers by an average of 28% without impacting cost for install. We also recently began testing sponsored search results within Google Play with a small set of users and developers, helping ad developers reach valuable users directly within the store.” Google Play sells apps for mobile devices that use Google’s Android software.
Google also has been indexing apps. “We now have 30 billion links within apps indexed. And if you’re looking for information that lives within an app that you don’t have, we’ll now begin showing links to install the app right under (search results),” Kordestani said.
On Tuesday, Google changed its search algorithm on smartphones so “mobile friendliness” factors into how a website is ranked in organic search results displayed to smartphone users. The search giant gave months of lead time on the change, referred to by some as “Mobilegeddon,” by announcing it in February to give website operators time to make adjustments.
Google’s first-quarter revenue was $17.26 billion, an 11.9% increase from the $15.42 billion it reported in the first quarter of last year.
For the first quarter ended March 31, Google also reported:
- Net income of $3.59 billion, an increase of 4.1% from $3.45 billion a year earlier.
- Google’s traffic acquisition costs, which is what Google pays to websites that host Google ads, rose to $3.35 billion, a 3.7% increase compared with $3.23 billion in the same quarter of 2014.
- Google-owned sites, such as its search engine and YouTube, generated $11.93 billion in revenue in the first quarter, up 13.9% from $10.47 billion in Q1 of 2014.
- Google network revenue, which comes from clicks on ads it places on the websites of other companies, including retailers’ sites, increased to $3.58 billion, up 1.4% from $3.53 billion in the year-ago period.
- Internationally, revenue was $9.87 billion, representing 57.1% of total quarterly revenue of $17.26 billion. U.S. revenue was $7.39 billion.