This Thursday, on October 16th Google (NASDAQ:GOOGL) is set out to announce its third quarter earnings for the year 2014. It reported an increase in revenue by 22% for year on year. But looking at it through a broader perspective, the company didn’t do so well, thus coming short on investor expectations. The main component that was the reason of growth for so many years at Google (NASDAQ:GOOGL) the cost per click, declined once again as it has been for the past two years.
This caused a negative change in growth but the impact was somewhat reduced in magnitude as the enhanced marketing programs launched by Google did very well. It is expected that the earnings report will show the increase in revenue with the divisions of PC and mobile search ads. Revenues from display ads are also expected to increase since Youtube is becoming more popular. It has been estimated that the search ads on PCs make up to 35% of the value of the firm.
Currently Google (NASDAQ:GOOGL) has a market share of 65%, however the cost per click has been declining. This proved why the growth of the top line from the search ads did not capitalize on the search volume growth. The revenue from desktop searches would definitely decrease over time, with the web traffic from mobile devices increasing to 50%. It is expected that the company will experience a declining trend in RPS in Q3.
However it is also expected that the revenue from ads will increase by absolute numbers as search volume is definitely increasing. 29% of Google’s (NASDAQ:GOOGL) revenue is made up of the search ad mobile division making it the company’s second largest division. The company has a 90% market share, with dominance in the market of mobile search engines which is probably because of the flagship Android OS that saw the penetration and adoption in the smartphone domain.
It is more likely for an Android user to make use of Google (NASDAQ:GOOGL) search rather than other OS users. An example of this can be Apple’s (NASDAQ:AAPL) iOS which uses its own search engine. Google (NASDAQ:GOOGL) is doing its best to make sure Android stays the most dominant over others, hence the company has partnered with other smartphone makers in the emerging markets where it aims at launcher cheaper phones. This is so that most of the market is catered by Google hence getting more market share.
It is expected that Android will have around 80% of the market share in the smartphone market with mobile ad revenues increasing rapidly in Q3. Paid clicks are also set to increase with campaign programs being conducted which results in more sales of ads in the third quarter. Hence with earnings not looking so well for Google (NASDAQ:GOOGL) right now, they are waiting for them to increase and become better. With the company focusing on targets to work on trends that will enhance the company’s revenue, market share would go up as well.