Despite Google's growth, CPC revenue drops

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Despite Google's growth, CPC revenue drops
Despite Google's growth, CPC revenue drops

Although Google reported net income of $2.89 billion for the first quarter (Q1) of 2012, an increase from $1.80 billion for the same period last year, its cost-per-click (CPC) revenue decreased 12% in Q1 and 6% in Q4 2011 quarter-over-quarter.

Overall, Google's revenues increased to $10.65 billion in Q1, compared to $8.58 billion in the same period last year, a year-on-year increase of 24%. Additionally, Google-owned sites generated revenues of $7.31 billion, or 69% of total revenues in Q1 2012, representing a 24% increase over last year for the same period.

But while aggregate paid clicks, including clicks for ads served on Google sites and network members, increased around 39% over the first quarter of 2011, and around 7% over 2011 Q4, CPC revenue declined.

However, Patrick Pichette, Google's SVP and CFO, downplayed this decrease during the company's quarterly call.

“Given the recent trends in CPCs and clicks, the most important thing for you to understand is our business is healthy,” said Pichette.

Pichette added that trends in CPC and clicks were due to a combination of several factors which cannot be isolated. He declined to get into specifics but cited generally shifts in use cases for mobile, tablet and desktop computing; trends in emerging and developed markets; and overall changes in ad quality.

However Pichette saw mobile CPC as a major potential growth area. “Mobile is exploding in query growth and the formats are adapting a lot,” he said. “[Mobile ads] don't monetize as well [as desktop ads] because it's where search used to be in 2003, 2004, and as these formats get better, we'll expect more from them,” Pichette said.

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