As more and more people today access the Internet using their mobile phones or tablets, it seems that Google’s profits are set to decrease. What’s more, the trend is happening at a much faster rate than is actually expected.
A Drastic Plunge
Over the course of three months up to September 30, Google’s profits have declined by 20%, amounting to £1.3 billion. A major reason for the drastic plunge is the decrease in the cost-per-click amount; this is the price Google charges from advertisers for every Internet user who clicks on ads. Compared to the same period in 2011, this figure plunged by 15% in the year’s third quarter.
Mobile vs. PC Internet Access
According to a senior advertising executive, the decrease in Google’s profits can be attributed to the lesser amount that advertisers are willing to pay. For every click on a mobile device, they are usually prepared to pay 50 cents.
This is obviously less than the $1 dollar they are willing to pay for clicks through personal computers. The reason for this is that people who use mobile phones are considered as less likely to make a purchase; hence, the cheaper price. The same phenomenon has been observed to be happening on Facebook, where people that log in through their mobile phones are viewed by advertisers as less valuable.
An Unexpected Occurrence
Apparently, the sudden increase in people accessing the Internet via mobile devices is said to have taken place quicker than Google anticipated. As a result, it has some catching up to do. Another noteworthy change is the slowing down of Google’s Internet search enterprise, which dipped to 17% this quarter. Notably, since the year 2009, this was the first time that it had gotten below 20%.
Nonetheless, one leading advertiser shares that the Google brand remains very strong. The company’s earnings in Britain amount to a total of £760 during the quarter; this is equivalent to 11% of their total profits. Furthermore, last year, the company had paid just £7.3 million in corporate tax on about £2.5 billion worth of revenues in the UK.