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Google Results Show Struggle With Mobile

July 18, 2013 by Leave a Comment

Despite a range of efforts by Google, the riddle remains unsolved, its financial report Thursday revealed.

Google reported second-quarter results that missed analysts’ expectations for revenue and profit. They showed that its desktop search business continues to slow and ad prices continue to fall as it struggles to make as much money on mobile devices.

The report was particularly incongruous given how Google’s share price climbed 27 percent this year.

It is a vexing problem for every company that has generated revenue through advertising, be it a century-old magazine with a mobile app or a new Web site aggregating the news. Mobile ads do not command the premium that Web advertising does (and Web ads do not make as much as print ads).

Colin W. Gillis, a technology analyst at BGC Partners, wrote a haiku before the earnings announcement: “The results should be/ pretty as a picture to/ justify the stock.”

They were not. Shares, which fell 1 percent ahead of the report on Thursday, fell another 4 percent in after-hours trading.

“One of the reasons why people like Google is you can look forward and see what they’re doing with Glass and laying fiber and driverless cars and Chrome, chasing after new revenue streams,” Mr. Gillis said. “But those are still pretty far away. Google’s core business is all about advertising and clicks, and the core business is absolutely maturing.”

Mobile ads, he added, are inexpensive yet “overpriced because the conversion rates are so low.”

“It’s still too hard to transact on a phone,” Mr. Gillis said.

Google had seemed to have finally found a solution to the riddle, by making the biggest-ever change to its AdWords advertising product. The new program, called enhanced campaigns, which was introduced in February and will be mandatory for all advertisers on Monday, gives advertisers less choice about advertising on mobile devices by automatically including desktop, tablet and cellphone ads for all campaigns. Advertisers can choose not to buy cellphone ads but are required to buy tablet ads.

Google says that this simplifies the process for advertisers and makes it easier to reach customers who use devices indiscriminately. More important than the type of device, the company says, is whether someone is at a desk or on the sofa, in the mood to shop or eat.

But it also means that the price of mobile ads, which has been about half that of desktop ads, will most likely increase. Google’s ads are sold at auction, and one reason mobile prices have been low is that there has been less demand. Enhanced campaigns should change that.

For example, the cost per ad click, known as C.P.C., for clients of the Search Agency, a search ad firm, rose 22 percent in the quarter, largely because of Google’s ad-buying changes. It was the first time that tablet ads cost more than those on desktops, and advertisers increased spending on smartphones 25 percent, the most of any device category.

“There used to be a discount you would get for going after traffic on tablets instead of desktops,” said Keith Wilson, vice president for agency products at the Search Agency. “Now that is disappearing. That is what is going to drive up C.P.C.’s in the mobile space. This has been a catalyst for prioritizing mobile.”

But it was too early for the results of the new ad program to show up in Google’s financial report, company executives said Thursday. The price that advertisers pay when Google users click on their ads decreased 6 percent from last year and 2 percent from the previous quarter, declining for the seventh quarter in a row and at a steeper annual rate than in the previous quarter.

Mobile ad pricing is “one of the many factors at work” affecting click prices, said Nikesh Arora, Google’s chief business officer. Google is in the early stages of enhanced campaigns and it will most likely take a year for the results to become apparent, he said. He added that another important metric at Google, the number of clicks on ads, is up 23 percent over last year, partly because of increased mobile use.

Larry Page, Google’s chief executive, said that six million advertisers had already switched to enhanced campaigns. American Apparel, according to Google, doubled its mobile conversion rate with the new ads, and MMs, the Mars candy brand, increased it by 41 percent.

In addition to enhanced campaigns, Google is doing other things to improve its mobile offerings and its profits from mobile ads. It has been encouraging Web sites to improve their mobile versions, and last month it said Web sites without easy-to-use mobile versions could fall in search rankings. And it introduced its product listing ads, for shopping, to mobile devices.

Google reported second-quarter revenue of $14.11 billion, up 19 percent from $11.8 billion a year ago. Net revenue, which excludes payments to ad partners, was $11.1 billion, up from $9.2 billion. Net income rose to $3.23 billion, or $9.54 a share, from $2.79 billion, or $8.42 a share. Excluding the cost of stock options, Google’s second-quarter profit was $9.56 a share.

Analysts had expected net revenue of $11.33 billion and earnings, excluding the cost of stock options, of $10.78 a share.

Adding to the disappointing results was a $342 million operating loss at Motorola Mobility, which is expected to introduce a new phone, the Moto X, this summer.

As shareholders and analysts wait for Google to find the next product to reignite revenue growth as the core search business slows, Mr. Page acknowledged the challenges of building new products that reach people on the same scale as search.

“It’s pretty easy to come up with ideas,” he said. “It’s pretty hard to make them real and get them to billions of people. And that’s to me what’s so exciting.”

Article source: http://www.nytimes.com/2013/07/19/technology/google-misses-expectations-for-revenue-and-profit.html?partner=rss&emc=rss

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Advertising: Google, Seen as Print’s Nemesis, Is Honored by USA Today for Creativity

January 15, 2013 by Leave a Comment

The contest, the 2012 USA Today Print Advertising Competition, was announced on Oct. 1, in conjunction with a redesign of USA Today timed to coincide with the newspaper’s 30th anniversary. The winner of the contest is the Google Creative Lab unit of Google, which is known for, among other online innovations, Google News, a free aggregator of the content of newspapers like USA Today.

Executives of USA Today, which is owned by Gannett, are to discuss the results of the contest on Wednesday at a breakfast at the newspaper’s New York office.

The Google Creative Lab entry was one of three finalists in the contest, which attracted about 100 entries that were judged by six advertising and media executives. The winning ad promoted the Google Plus Hangout service as an alternative to meetings in person.

One runner-up was the Advertising Council in New York, for an ad from a campaign for Save the Children, which carried the theme “Every beat matters.” The campaign was created by BBDO New York, part of the BBDO Worldwide division of the Omnicom Group.

The other runner-up was Team Detroit, a WPP agency, for an ad for a new toy, Nanoblock, sold by the Ohio Art Company.

There are those who will applaud the outcome of the contest, which asked the entrants to submit print ads — existing or new — that they deemed their most creative. A company like Google, according to such people, ought to hear an “attaboy” or two when creating ads in print rather than online.

“I love the idea of using print to talk about a technology,” one judge, Tiffany Rolfe, said of the winning ad.

“To me, print is still an interesting medium,” said Ms. Rolfe, who is a partner and chief content officer at Co Collective in New York, an agency that works for USA Today. “We have to work harder now to use it effectively.”

However, others who hear how the contest turned out may wonder whether the winner will react — to paraphrase the old joke about dubious victories — by asking whether the second prize was $2 million worth of full-page newspaper ad space.

Larry Kramer, president and publisher at USA Today in McLean, Va., said he could see how people may consider it “hysterical” that Google has won a competition for creative print advertising.

But when Mr. Kramer saw the ad during the preliminary stages of the contest, he recalled, “I said, ‘That’s a winner,’ ” because the creators of the ad “understood the palette” that print offers to marketers and took advantage of the medium’s strengths.

As for the japes about Google as a destroyer of print media rather than a supporter, Mr. Kramer said, “Everything we say about Google, the nice thing is that they have to search something.”

The root of the contest was “a conversation I had with Michael Wolff when we were hiring him,” Mr. Kramer said, referring to the author and editor who became the media columnist for USA Today and also served as a judge of the competition, about how many “great, creative” print ads appeared during the Summer Olympics.

“I was upset that agencies weren’t doing enough print creative and putting their best and brightest people on digital platforms,” Mr. Kramer said. “I’m worried the skill set is atrophying and wanted to do something to remind the world that print creative matters.”

Another judge, Chuck Porter — chairman at Crispin Porter Bogusky in Miami and chief strategist at MDC Partners, which owns Crispin Porter — said: “It’s not that kids have totally given up on print. That’s kind of baloney. But I think people don’t pay as much attention to the craft of print as they used to.”

The winning ad, which ran in October, was simple. It reprinted a paragraph from a newspaper article reporting that the Dalai Lama had “scrapped plans” to attend the 80th birthday celebration of a fellow Nobel laureate, Desmond M. Tutu of South Africa, because his visa request was not granted.

The ad updated the article by crossing out words like “scrapped plans” and replacing them with “joined” and “via Hangout.”

Robert Wong, chief creative officer at the Google Creative Lab in New York, said he was “happily surprised to hear we’re a finalist.” (He and the other two finalists were interviewed last week, before they learned the winner.)

“Every medium has its strengths,” Mr. Wong said, and for print, they include immediacy, in that “a newspaper is good for news.” He added: “A full-page ad in a newspaper says the ad is important.”

The decision to enter the contest came after positive responses to the ad, which ran in The New York Times. “We were proud of the ad and said let’s send it in,” Mr. Wong said. “A million dollars is nothing to laugh at.”

Mr. Wong said the company would donate the $1 million worth of ad space to “people who need it,” adding, “Right now, the Sandy relief effort could probably use some help.”

The prize, Mr. Kramer of USA Today said, equals “roughly half a dozen pages” in the paper. USA Today may sponsor a similar contest this year, he added.

Article source: http://www.nytimes.com/2013/01/16/business/media/google-seen-as-prints-nemesis-is-honored-by-usa-today-for-creativity.html?partner=rss&emc=rss

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Advertisers Refine Mobile Pitches for Phones and Tablets

October 29, 2012 by Leave a Comment

And just like that, Google made money. That icon was a so-called click-to-call ad, and the hotel paid Google for it when you called.

As more of us have access to the Internet and apps through our cellphones and tablets, advertisers are looking for new ways to reach us there.

Some mobile ads remain just miniature versions of ads on Web sites, an echo of the early days of the Internet, when advertisers essentially slapped print ads online. But increasingly, advertisers are tailoring ads to phones by taking advantage of elements like their ability to track location, make a call, show maps with directions and add calendar alerts.

The stakes are significant for an industry that is still finding its way in the mobile world. Advertisers will spend a relatively small amount of money on ads on phones and tablets this year — $2.6 billion, according to eMarketer, less than 2 percent of the amount they will spend over all. Yet that is more than triple what they spent in 2010.

“An ever-growing percentage of our ad buy is mobile because that’s where the consumer is,” said Chris McCann, president of 1-800-Flowers.com, which has run mobile ads urging people to call or walk into a nearby store. “It’s the future for us.”

Coming up with ads that exploit the smaller mobile screen requires inventiveness from many parties — advertisers; digital publishers like Google, Apple and Facebook that sell ad space; and mobile ad networks like Millennial Media.

“What we’re trying to do is think about the on-the-go user,” said Jason Spero, leader of global mobile sales and strategy at Google, which dominates advertising online and is far and away the leader in mobile advertising. “What does that user want when she’s sitting in a cafe or walking down the street?”

A big challenge for the tech companies is that advertisers pay less for mobile ads than for those online, largely because consumers are less likely to make a purchase on their phones. Though people click on mobile ads more than on desktop ads, advertisers wonder whether that is because of what they call the “fat finger effect” — accidental clicks on tiny touch screens.

And while users’ actions can be tracked across Web sites online, it is hard to know whether someone sees a cellphone ad for an offline business and then walks in — so it is difficult for advertisers to judge how effectively they are spending their money.

As Google sells more mobile ads, the average amount it earns from each ad has dived. Facebook’s value on Wall Street was halved on fears that it was not making enough money on its mobile users. Apple’s mobile ad network, iAd, has been slow to gain traction.

Despite the problems, though, there is evidence that mobile advertising is becoming a meaningful business, and in some cases a bigger business than online advertising.

Facebook executives said last week that in the third quarter, the company earned $150 million from mobile ads, 14 percent of its total revenue. Pandora reported that in the second quarter that ended in July 58 percent of its revenue, or $59 million, came from mobile ads. Twitter executives have said that on certain days, the social network earns a majority of its daily revenue from mobile ads.

Mobile ad networks, which show ads across mobile apps and Web sites, have created new and thriving businesses. The biggest are Millennial Media, Google’s AdMob and Apple’s iAd.

Google earns 56 percent of all mobile ad dollars and 96 percent of mobile search ad dollars, according to eMarketer. The company said it is on track to earn $8 billion in the coming year from mobile sales, which includes ads as well as apps, music and movies it sells in its Google Play store. But the vast majority of that money comes from ads, it said.

“Whoever does mobile best, they’re going to be the next Google, so people are asking, ‘Is Google going to be the next Google?’ ” said Chris Winfield, co-founder of BlueGlass Interactive, a digital advertising agency. “It still is Google’s to lose.”

Article source: http://www.nytimes.com/2012/10/29/technology/advertisers-refine-mobile-pitches-for-phones-and-tablets.html?partner=rss&emc=rss

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Advertising: Toy Companies Turn to Nostalgia to Celebrate Anniversaries

July 12, 2011 by Leave a Comment

Toymakers are hoping you do, and they are hoping that you are sharing the experience with your children. Toy companies have long used nostalgia to lure adults back to their childhood favorites while updating those same toys to attract a new generation of children.

Colorforms, created by a husband and wife in their New York apartment in 1951, turns 60 this year, and University Games is using the occasion to remind parents of a popular childhood toy and to entice them to buy one for their children. And Mattel is commemorating the 40th anniversary of Uno with a yearlong marketing campaign to promote the family card game.

“Toys are always tied with nostalgia,” said Adrienne Appell, a spokeswoman for the Toy Industry Association, an industry trade group. “A lot of those purchasing decisions are being made by a parent or a grandparent. They gravitate toward toys they enjoyed as children.”

University Games plans to celebrate the Colorforms anniversary with new products, a contest for children and the re-release of two favorites: its original geometric set and a Michael Jackson dress-up set. To get the word out, Colorforms will have a big marketing push this year, including print ads and, for the first time, television commercials, said Bob Moog, president of University Games, which bought the brand in 1998.

He declined to say how much University Games would spend on marketing.

“We’re trying to say to the American public, Colorforms is still here,” Mr. Moog said. “Everything you loved about it as a child will be appealing to your children.”

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Mr. Moog said Colorforms was one of the few branded toys that had endured for generations. “There is something about this brand that has really stuck, no pun intended,” he said.

Colorforms were created by Harry and Patricia Kislevitz, who were looking for material for an art project. Because her husband liked abstract art, they used pieces of vinyl cut into geometric shapes, Mrs. Kislevitz said.

“I put some in the bathroom; people would go into the bathroom and never come back out again,” she said. “Harry, he thought we might have something here.”

The first commercial order, for 1,000 sets, came from F. A. O. Schwarz, and other retailers soon followed. The couple expanded with other products, including paper dolls, paints and crayons, and in the 1950s began licensing popular characters like Popeye, Mickey Mouse and Barbie for the Colorforms sets.

Licensing turned out to be a smart move for Colorforms, as it became a mirror of children’s pop culture. Current licenses include Green Lantern, Transformers, Dora the Explorer and SpongeBob SquarePants.

Colorforms has more than 75 products for children, and this year will bring two new ones, an electronic paint brush called Brush With Genius and Magic Fashion Show, a dress-up set with runway models and a catwalk.

To encourage children to be creative with Colorforms, University Games is sponsoring an art contest. Prizes, to be awarded Nov. 13, include art camp scholarships and a $500 Treasury bond.

But to be successful, the 60th anniversary campaign for Colorforms will have to appeal to parents as well as children, Mr. Moog said.

“Parents have been looking for activities that are self-directed and fun,” he said. “Many parents would like to have an alternative where a child can play and not be in front of a computer or a TV screen.”

Mattel is also using nostalgia to market the 40th anniversary of Uno, which was created by a barber shop owner in Ohio in 1971. Playing off the number one, Mattel started the campaign on the first of the year, or 1-1-11, with a float in the Rose Bowl parade.

“We are putting Uno in unexpected places. We want to be there first,” said Lee Ann Wong, vice president for marketing at Mattel’s games division. That meant going beyond the dining room table and updating the card game for mobile phones, social networks and video game consoles.

“What we’ve been able to do is evolve as the players evolve,” she said. “With the advances of technology, we have evolved into a multiplatform game; we are everywhere.”

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Mattel’s retail campaign promoted products like Uno Moo for preschool children, Uno Attack for older children and Uno Roboto, which players can personalize with their names and house rules. The line also introduced decks, including a nostalgia version and another that’s waterproof, and apps for the iPad and iPhone.

Ms. Wong said the plan was to widen the target audience for Uno to include young children, college students and adults with children of their own. The campaign, called Uno for Uno, includes a “robust marketing plan,” she said, with TV and print ads and a heavy focus on social media.

“We saw immediate point-of-sale lift from that,” Ms. Wong said. “It had a nice double-digit increase.”

Mattel declined to say how much it was spending on its Uno campaign, but according to the Kantar Media unit of WPP, the company spent a total of $184 million to advertise products from all of its toy lines last year.

The next phase of the marketing campaign for Uno includes a live tournament on Facebook in August. Uno has gained one million fans on Facebook in the last six months, Ms. Wong said, and Mattel wants to take advantage of that.

The tournament, a first for Mattel, begins Aug. 15 and lasts 40 days. It is free and open to players worldwide, and prizes, including a cruise, $10,000 in cash and iPads will be awarded.

“Uno is not just a simple card game,” Ms. Wong said. “That is our heritage, but we are evolving.”

Article source: http://feeds.nytimes.com/click.phdo?i=562daee2cc5bd3f22ee7a4321df4de25

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