Google retools AdWords to boost mobile revenues

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Google (NASDAQ:GOOG) is overhauling its AdWords platform to reach consumers across all device screens, a move advertising industry executives said will increase the company's mobile ad revenues and assuage concerns that the shift from the desktop to smartphones and tablets is damaging its bottom line.

In a blog post announcing the AdWords changes, dubbed "enhanced campaigns," Google said it will require all advertisers to pay for mobile ads even if they only wish to reach consumers via the desktop. The revamp is designed to help merchants manage integrated campaigns stretching across multiple connected devices, shaped by contextual factors like location, time of day and device type.

"A recent study of multi-device consumers found that 90 percent move sequentially between several screens to accomplish a task," wrote Google Senior Vice President of Engineering Sridhar Ramaswamy. "This creates great opportunities for businesses but can also make marketing more complex and time-consuming. For example, a pizza restaurant probably wants to show one ad to someone searching for 'pizza' at 1pm on their PC at work (perhaps a link to an online order form or menu), and a different ad to someone searching for 'pizza' at 8pm on a smartphone a half-mile from the restaurant (perhaps a click-to-call phone number and restaurant locator)… With enhanced campaigns, instead of having to cobble together and compare several separate campaigns, reports and ad extensions to do this, the pizza restaurant can easily manage all of this in one single place."

Enhanced campaigns will roll out to AdWords advertisers as an option over the next few weeks, with Google planning to upgrade all campaigns by mid-year. Key features include bid adjustments for managing spending across devices, locations and time of day, context-optimized promotions and measurement tools to help marketers compare and contrast interactions on different devices and platforms.

AdWords is Google's primary advertising product and its chief source of revenue. Average cost-per-click, which measures the price advertisers pay the company, fell 6 percent year-over-year during the fourth quarter of 2012, following on the heels of double-digit declines during the previous three quarters; analysts have blamed the decline on the shift to mobile, where ad rates still lag behind the desktop. Ad industry executives told The Wall Street Journal the move to enhanced campaigns will boost the prices that advertisers pay Google for mobile device ads, fueling revenues in turn.

A Google spokesperson defended the change, telling the Journal that "the lines between devices are quickly blurring" and adding that the company's data shows "ad performance on these devices is similar."

But Danielle Leitch, an executive vice president at Internet marketing services firm MoreVisibility, argues that Google's move will increase the complexity of managing an AdWords campaign, telling the Journal that marketers won't be able to allocate a greater percentage of their budgets to tablets versus PCs because the two device types will now be combined. In addition, Leitch noted that many advertisers have not yet optimized their Websites for viewing on mobile devices. "If your Website right now isn't well-viewed on tablets, you're going to need to correct that," she said.

For more:
- read this Inside AdWords blog entry
- read this Wall Street Journal article

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