Google Makes Moves to Fix Mobile Ad Problems
Google may have found the answer to its mobile problem.
Google's AdWords enables companies to place automatic bids to display an ad next to certain search results. But the system has been balky and confusing, especially for small and medium businesses. Now, Google has simplified advertisers' ability to manage mobile advertisements on the platform, a move it hopes will lure more of its ad partners.
With more people accessing Google's search engine via their mobile devices — and not on their desktop computers — the change may boost the company's mobile ad revenue, said Jared Belsky, the vice president of the digital marketing firm 360i.
"Small advertisers are big bread and butter for Google but, to date, haven't flocked to mobile due to the complexities of running search campaigns on multiple devices," Belsky said. "On Day 1 of this change, Google will see a huge influx of small business advertisers run on their mobile inventory for the first time. This change will simplify the process ... of running on mobile devices and allow them to more easily scale their campaigns beyond simply PC-based paid search."
Google makes more than $40 billion in annual ad revenue from AdWords — which is used by over a million advertisers — but the company has had a steady decline in cost-per-click (CPC) over the last several quarters. It saw a 6-percent decline in CPC in the fourth quarter alone.
But the upgrade to AdWords, which is called "enhanced campaigns," could reverse that trend.
Enhance campaigns will basically make it easier for advertisers to control what kind of ads they want displayed, where they want them displayed — whether it be on a smartphone or tablet — and when they want them displayed.
It will also let the user control how much they want to bid for that placement. It enables users to control all of this from one single campaign on the AdWords Platform, whereas before multiple campaigns had to be created for this type of control.
"The complexity of orchestrating mobile campaigns was a real impediment. They've done a good job of simplifying it," said Andrew Frank, vice president of research at Gartner.
"It's become increasingly important for marketers to reach people across devices in the right context, and we built enhanced campaigns to help them adapt to the clear shifts in consumer behavior and device proliferation," Google said in a statement to CNBC.
Enhanced campaigns will roll out to all advertisers over the next few weeks and to all campaigns by mid-year, the company said in a blog post.
While making it easier for advertisers to manage mobile ad campaigns will likely attract more customers, the change is also upsetting some in the ad industry, Frank said.
By lumping together the desktop and mobile ads in the AdWords platform, the search giant creates a way to amp its CPCs back up, along with its revenue. However, the change makes it harder for more sophisticated marketers that were already implementing mobile ads on AdWords to optimize ads and get accurate data because now there is less distinction.
"It certainly isn't as straightforward as saying what you want. Google is now making a lot of more decisions for you and a lot of marketers feel uncomfortable about that," Frank said. "I think Google perceives there is a gap in growth of consumer usage of these devices and marketers' response. ... I think marketers are lagging behind, and Google feels it's part of mission to help them meet their targets."
Belsky said that there will be more net mobile competition and less net granularity, which will be a recipe for CPCs to increase. But he said that the change presents both challenges and opportunities for sophisticated marketers, though in the long-term it will be good for all advertisers.
"There are certainly things we'll need to do differently around optimization, targeting and reporting, particularly for smartphones. For large advertisers already advertising on mobile devices, the lack of data around tablets and resulting changes to smartphone optimization will require a change in approach in the short term," Belsky said. "In the long term, we feel this change will be a net positive for advertisers as Google looks to simplify cross-device advertising optimization and measurement."