Google’s advertising revenue rose 18.1% in the third quarter as shoppers clicked on more of its ads.
Paid clicks on ads across Google’s sites and advertising network rose 33% compared with the same period a year ago, the company reported today.
Looking specifically at paid clicks on Google-owned sites, such as its search engine and YouTube, the rise is even more pronounced, growing 42% year over year, thanks in part to Google allocating a larger share of its search results pages to ads.
The average cost per click on a Google ad decreased 11% compared with the same period a year earlier. On Google sites alone, the cost per click fell 13% year over year, while the cost per click on Google Network Members’ websites dipped 14%.
Among the ads helping drive Google’s growth are Google Shopping, or Product Listing Ads, according to a new report released this week by performance marketing agency Merkle Group Inc. The report found that Merkle clients spent 36% more on Google Shopping ads during the third quarter than they did in the same period a year earlier. Moreover, it found Google Shopping ads accounted for 48% of retailers’ Google paid search clicks in the quarter, a two percentage point increase from the second quarter. The image-focused ads are set to account for more than half of retailers’ paid search clicks by the end of the year, Merkle says.
Google also pointed to mobile search advertising as a big factor helping its growth. “Our proposition to marketers on mobile is simple and is resonating,” said Sundar Pichai, Google’s CEO. “Our mobile properties like search, YouTube, Maps, and Google Play are where people turn when they are actively interested in something. They are using our services because they want to actively watch something they are passionate about or because they want to know, go, do, or buy something. They are super-attentive and engaged. It’s just like people used to be glued to their TV screen during prime time. Our services are prime time for the mobile world. This matters for marketers because those prime time moments when people are actively interested and attentive are the perfect time for a brand to place their ads.”
As consumers shift to mobile, Google has been on a push to bolster its measurement tools. “We want to give marketers the best tools out there to close the loop between television and digital, online and offline,” Pichai said. He pointed to IKEA, No. 167 in the Internet Retailer 2016 Global 1000, which used Google’s store visits measurement tools to see how effective its digital marketing campaigns were at bringing shoppers into their stores. “By incorporating store visit data, they realized that more than 10% of the people who clicked on their search ads went on to visit a physical store, and that their ROI from online ads was actually five times higher than they had previously estimated,” he said.
For the third quarter ended Sept. 30, Alphabet Inc., Google’s parent company, reported:
- Advertising revenue of $19.821 billion, up 18.1% from $16.781 billion a year earlier.
- Google-owned sites, such as its search engine and YouTube, generated $16.089 billion in revenue, up 22.9% from $13.087 billion.
- Net income of $5.061 billion, up 27.2% from $3.979 billion.
- Google’s traffic acquisition costs, which is what Google pays to websites that host Google ads, rose to $4.182 billion, up 17.3% from $3.566 billion.
For the first three quarters of the year, the company reported:
- Advertising revenue of $56.984 billion, up 17.9% from $48.314 billion a year earlier.
- Google-owned sites generated $51.749 billion in revenue, up 21.1% from $42.749 billion.
- Net income of $14.148 billion, up 23.3% from $11.470 billion.
- Google’s traffic acquisition costs rose to $11.947 billion, up 16.1% from $10.293 billion.