Google will release earnings July 19. A big concern: how the Motorola Mobility acquisition will contribute to overall revenue and profits.
Citigroup Analyst Mark Mahaney told Bloomberg television he expects Google to have the "messiest quarter" out of several companies releasing earnings this week. He points to the integration of Motorola halfway through the period.
Mahaney is looking for Google to report $12.4 billion in gross revenue, according to a July 10 report. He estimates Motorola Mobile will bring in $2.5 billion in revenue and a loss of $28 million in non-GAAP operating income on a full proforma basis. The Motorola Home segment, about $916 million in revenue and $99 million non-GAAP operating income.
Mobile search continues to impact costs per click (CPC). A recent call between Mahaney and execs from Performics, IgnitionOne, Kenshoo, Marin Software, and DidIt reveal mobile is becoming a part of most campaigns.
Kenshoo noted 20% of clicks come from mobile. Performics said 14% of spend last year was on mobile, and this year, mobile accounts for 28% of bugets. Performics pointed to a 20% discount for tablet cost per clicks and a 55% discount for smartphones CPCs. Marin said CPCs are 36% less expensive on smartphones, but the click through rate (CTR) is 70% to 80% higher than via desktop search.
Tablet CPCs came in 24% lower than desktop CPCs for Q2, but the CTR is 30% greater vs. the desktop, Mahaney wrote in a research note. "Conversion rates on smartphones are much lower than on desktop or tablets, simply because many Web sites are still not optimized for mobile, and queries on mobile might be less monetizable."
Overall, marketers continue to increase search budgets. Driving the uptick, Kenshoo and Marin saw CPC "modestly" increase in the quarter, and IgnitionOne said they fell about 4% year-on-year in Q1 and 3% in Q2. DidIt said CPC came in flat, and Performics saw retail CPCs fall 20% year-on-year, with clicks up 40% and CTRs up 44% across all verticals.
Combined, these companies manage about $7 billion in online ad spend.