Sunday, October 21, 2012

Google Results Show Mobile Danger to PC-Based Revenue Models

Eric Jackson, founder and managing member of hedge fund Ironfire Capital, has argues that it is not impossible for Google to substantially fail in five to eight years, as advertising shifts to mobile apps. There are two angles to the looming danger.

First, people now are "finding things" using apps other than search. That threatens the search advertising business that underpins Google's current success. The other angle is that attention and advertising revenues already are starting to shift to mobile formats, as opposed to "PC-based" online venues. 

Jackson's forecast  might be a bit more aggressive than some others think, as search continues to grow, as a percentage of total online ads. But there is widespread thinking that mobile is where the growth will occur. 

But mobile is going to be a game changer, virtually all application providers believe. 

According to the company’s earnings report, Google's profit losses in the quarter were caused by flagging ads revenue, in which the amount paid by advertisers to Google’s click-per-click has decreased by 15 percent, earnings report suggests.  

On the other hand, some might counter, Google is making a transition rather well. About half of all U.S. mobile ad spending goes toward search ads, more than the roughly 47 percent of total digital spending in Web search, according to eMarketer Inc. 

Google takes a 95 percent share of mobile-search revenue in the U.S., estimates eMarketer. 

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