The differential between what Google's advertisers pay for search ads and what they get has swelled to levels that may be unsustainable courtesy of the company's move to tweak results to favor more mobile-friendly Web sites, according to Adobe data.
Adobe's second quarter Digital Advertising & Social Intelligence Report, which is based on anonymous and aggregated Adobe Marketing Cloud data, shows ad rate increases from "mobilegeddon," the move to prioritize mobile-friendly sites, as well as evidence that the search giant's ad cash cow is slowing.
For marketers, there's a 25 percent gap between what they pay for clicks vs. what they get. "Parity or click through rates are growing faster than cost per clicks," said Gaffney. "We're not even close right now. To see the gap widening is troubling."
Previously: Google's 'Mobilegeddon' indexing arrives Tuesday: Are you prepared? | Google releases second preview of Android M | Google's search practices come under scrutiny from leading academic Wu | Google I/O 2015: Google bets machine learning can create an edge with Android, apps, cloud | Google I/O 2015: How Google is changing mobile for the next billion users
Advertisers, however, did pay more for mobile Google search ads as cost per click went up 16 percent from a year ago. Click through traffic was down 9 percent from a year ago.
The data is timely given that Google reports its earnings on Thursday. Wall Street is looking for second quarter earnings of $6.69 a share.
Among the moving parts:
- Google's move to prioritize sites that look best on the small screen---known as mobilegeddon---has lowered traffic 10 percent to sites with lower social engagement. Tamara Gaffney, Principal Analyst, Adobe Digital Index, said that Google's mobile strategy will be an ongoing topic for the marketing community.
- Gaffney said the mobile changes didn't have an immediate impact, but now "low mobile sites are starting to feel the pinch and it's just beginning." Gaffney said sites can optimize for mobile, but the revenue per visit will lag what it is on a desktop. "You can't just have a mobile strategy for a mobile responsive site," she said.
- Google's search ad business appears to be slowing overall. Meanwhile, Bing and Yahoo appear to be gaining some share. But that deal has changed and it's unclear whether Yahoo can execute.
- For display ads, Google also appears to be lagging in relevance compared to Facebook. Adobe's data shows that Facebook's display add changes, which cut volume but increased prominence, doubled its click through rates. Google's display targeting changes cut the ads seen by 22 percent and increased click through rates by 24 percent compared to a year ago.
- Adobe's survey found that 51 percent of consumers saw Facebook ads as more relevant and of interest compared to YouTube, which garnered 17 percent of consumers.
- Facebook's ad changes for algorithms have been much bigger than Google's tweaks over time. For now, Facebook's move has paid off. It's unclear whether that lasts over time, but Facebook's focus on back-end targeting tools has paid off, said Gaffney.