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Google Up After Earnings, But Mobile CPCs Still Down

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It was a day of firsts and lasts for Alphabet’s Q3 earnings call Thursday afternoon – the first since CEO Sundar Pichai took over in August and the last before the company unbundles its internal properties next year.

Alphabet announced quarterly revenue of $18.7 billion, a 13% YoY increase. Google’s advertising revenue was $16.8 billion, a 13% YoY increase.

But unlike Facebook, Google still hasn’t managed to make its impact on mobile, where CPCs remain stuck in the mud, with rates down 16% YoY. Google reiterated an argument it made in earnings reports earlier this year that the apparent lag in mobile rates is the result of strong growth in YouTube, specifically TrueView video ads, which monetize at lower rates because any time a user doesn’t actively skip the ad, it counts as a click.

Though Google didn’t unbundle mobile-specific revenue from overall spending, the company noted that mobile now accounts for more than half of global search queries and “was a catalyst for growth in the third quarter.”

Pichai declined to comment on one investor question that asked when those 50+% of search queries on mobile are expected to turn into 50+% of ad clicks.

Google’s new ad products and marketing tools, launched in recent months, include a suite of shopping ads, search ads in the Play Store, customer matching from first-party CRM data and, unveiled Wednesday, YouTube Red. However, as these new products are still developing and represent incremental revenue, Google didn’t discuss their progress.

In Q2, Google emphasized new digital video metrics like the duration of user sessions and videos, which many experts considered a way to differentiate from surging competitors like Facebook. The same was true this quarter, as Pichai noted on multiple occasions the growth in viewer watch time – a metric that could be an important influencer as publishers battle for digital video budgets.

YouTube is also the strongest marketing vehicle out of Google’s six apps with a billion or more users (YouTube, Search, Android, Maps, Chrome and Google Play).

Integrating the app world with desktop search – where Google has huge market dominance – was a clear focus.

Google “has now deep-linked over 100 billion in-app pages” for use in its web search, said Pichai.“40% of searches now return in-app indexed results in the top-5 results.”

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