Paid clicks were up 47 per cent year on year in total, while cost per click continued to fall, down 21 per cent, as mobile dilutes desktop search.
The cost of acquiring traffic for search also rose significantly, by 32 per cent year on year, raising concerns that at least one of Google’s partners may have put up prices. Traffic acquisition costs were 23 per cent of advertising revenue, up from 21 per cent for the same period the year before.
Ruth Porat, Alphabet’s chief financial officer, said it was a “terrific quarter” for both Google, which also includes YouTube, and the Other Bets. blockquote> Tom Foremski:
This ignores an ongoing trend that should cause concern for investors: Google continues to make less revenue per click but somehow finds ways of showing ever more numbers of advertisements.
Every quarter Google has to find more ways to get more ads in front of people because each ad makes less money. Its traffic acquisition costs rose substantially this quarter. How is this a sustainable business model?
As Google’s ads fall in value it needs to find new places to show more ads. Yet the huge shift in Google users to mobile screens severely limits how much more advertising can be shown.