By Vlad Vidaeff
The importance of Google advertising is unquestioned. Whether you’re a start-up or a well-established corporation, paid ads are a necessity for continued success. With that being said, consumer habits are changing as desktop usage is falling while mobile usage is rising. This blog will touch on Google’s decision to increase the size of its ads and the reason for this development.
Towards the end of May, Google announced its plans to show more frequent and larger ads. After the announcement, shares of Alphabet climbed 2.03%. New ads will appear in the prominent location on top of search results, enabling two-line titles and longer descriptions. This will give advertisers more space to get their message across to hopefully increase click-through rates. In addition, Google will also expand ads on Google Maps which will allow local businesses to advertise promotions on the popular app. Ads will even start showing up on driving routes when users use the GPS feature of Google Maps. It’s no surprise that Google is beefing up its advertising options as ads made up 90% of Google’s $75 billion in revenue during 2015.
Patrick Moorhead, founder of Moor Insights & Strategy, stated that Google “foresee[s] a revenue or profit challenge ahead.” As more users are moving to smartphones, Google’s advertising chief, Sridhar Ramaswamy, said that increased ads atop search results are acceptable on phones as it’s easier for users to scroll past them. Both desktop users and mobile users will see the new ads even though Google has recently deleted ads that appeared on the right of search results. Increased mobile usage is a potential challenge for Google as marketers pay less for CPC (cost-per-click) on mobile. Increasing the size and frequency of ads is a way to combat this trend and please investors.
As the technology landscape continues to evolve, and mobile usage continues to grow compared to desktop usage, it will be interesting to see how Google will alter its product mix to capitalize on the market. Nevertheless, Google’s announcement gets two thumbs up from advertisers. Google search ads are highly effective and beefing up visibility and opportunities for content creation only add to the value.
