Google Profits Climb – Cost-per-Click Cost Continues to Fall

Posted by at 1:55 pm on October 16, 2014

Google LogoGoogle today reported consolidated revenues of $16.52 billion for the quarter that ended September 30, an increase of 20 percent compared to the third quarter of 2013. In the third quarter of 2014, total acquisition costs totaled $3.35 billion, or 23 percent of advertising revenues. Cost-per-click continues to decline, but continued growth, especially in non-US markets, has far more than offset this price decrease.

Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of network members, increased approximately 17 percent over the third quarter of 2013 and increased approximately 2 percent over the second quarter of 2014.

Sites paid clicks, which include clicks related to ads served on Google owned and operated properties across different geographies and form factors including search, YouTube engagement ads like TrueView, and other owned and operated properties like Maps and Finance, increased approximately 24 percent over the third quarter of 2013 and increased approximately 4 percent over the second quarter of 2014.

Network paid clicks, which include clicks related to ads served on non-Google properties participating in AdSense for Search, AdSense for Content, and AdMob businesses, increased approximately 2 percent over the third quarter of 2013 and decreased approximately 4 percent over the second quarter of 2014.

Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of network members, decreased approximately 2 percent over the third quarter of 2013 and remained constant from the second quarter of 2014. Cost-per-click for Google sites decreased approximately 4 percent over the third quarter of 2013 and decreased approximately 1 percent over the second quarter of 2014. Network cost-per-click decreased approximately 4 percent over the third quarter of 2013 and increased approximately 2 percent over the second quarter of 2014.

Traffic acquisition costs, the portion of revenues shared with Google’s partners, increased to $3.35 billion in the third quarter of 2014, compared to $2.97 billion in the third quarter of 2013. Acquisition costs as a percentage of advertising revenues was 23 percent in the third quarter of 2014, compared to 24 percent in the third quarter of 2013. The majority of acquisition cost is related to amounts ultimately paid to network members.

As of September 30, 2014, cash, cash equivalents, and marketable securities held by Google were $62.16 billion. On December 31 of 2013, the company held $58.72 billion.

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