Google’s parent company, Alphabet, saw quarterly profits rise by a fifth as the importance of mobile advertising continues to grow.
Profits rose 20% from $3.9 billion to $4.9bn between April and June, compared with the same period last year. And revenues also jumped 21.3% to $21.5bn.
But it was the company’s mobile advertising results that were particularly impressive to investors, which pushed its shares up 6% in after-hours trading.
Typically, the vast majority of Google’s advertising revenue comes from desktop buyers. But there has been a notable shift in recent quarters. Google says more than half of searches are now carried out on a mobile device. The number of ads clicked rose by an investor-pleasing 29% – even surpassing analysts’ expectations of 27%.
BGC Financial analyst Colin Gillis said: “Marketers are flooding into mobile because they are seeing a more effective return. The clicks are cheaper and they are starting to work. You are seeing the declines in cost per clicks abating.
“We are going to get to a spot where both levers, paid clicks and cost per clicks, turn positive again. And that’s the road to a trillion-dollar company.”
The new of stronger mobile advertising comes a day after Facebook also exceeded expectations from analysts. Facebook now has 1.71 monthly active users and reported a surge in profits, but its mobile advertising figures were particularly interesting. Analysts had estimated the social media giant would hit around $5.8bn in the quarter, it smashed that target with $6.4bn in advertising revenue. Accounting for 76% of all advertising revenue last year, mobile advertising jumped up to 84% this time around.