Exactly what “mobile” means in the context of consumer electronics has been a matter of debate for some time. That debate has chiefly revolved around whether the term covers both mobile phones and tablets or mobile handsets alone. But in the broadest sense, it could apply to a range of connected devices from e-readers to wearable tech to in-car systems.
The shifting definition of mobile was highlighted in a December letter from Google to the Securities and Exchange Commission made public this week. It came in response to the SEC's request for the search king to disclose how much revenue it generates from mobile devices.
Google argued that because of the challenge of defining what a mobile platform is “from period to period -- and what it will be going forward,” it doesn't make sense to try to break out mobile revenue in earnings.
A Wall Street Journal article Thursday on the letter highlighted Google’s suggestion that it could in a few years begin serving ads on a wide variety of devices including “refrigerators, car dashboards, thermostats, glasses, and watches.” (Nest, the smart thermostat maker Google acquired in January for $3.2 billion said on Thursday it has no plans to launch advertising on its devices.)
And reports yesterday indicate that Google plans to develop a new tablet with 3D capabilities for release as early as next month.
Google also pointed out that its Enhanced Campaigns tool launched last year -- for targeting across devices within a single campaign -- was specifically designed for a multi-device future.
"Because users will increasingly view ads and make purchase decisions on and across multiple devices, our view of revenue is similarly device-agnostic,” it stated.
What Google lays out is more an aspirational view of streamlined ad-buying across screens that doesn't yet exist. It introduced Enhanced Campaigns in the first place in part to get marketers to serve ads on smartphones and tablets, which they were reluctant to do because they didn't have mobile-optimized screens or didn't have the ability to manage complex accounts.
The mobile shift to consumer devices has also had an impact on Google's cost-per-click (CPC), with search clicks on mobile devices generating less than those on the desktop. The company maintains that over time, mobile pricing will surpass desktop pricing as targeting to mobile users based on location and other contextual factors improves, leading to more conversions and higher ad rates.
But so far, mobile search ads are not driving sales as well as those on larger desktop screens. “That journey is just beginning for advertisers in the mobile site. They're just beginning to understand what it takes for the end user to come transact on their website,” noted Nikesh Arora, SVP and chief business offer at Google, during the company’s latest earnings call.
In a research note released today on Google's letter to the SEC, Brian Wieser, senior analyst at Pivotal Research Group, defends the company’s decision not to break out mobile ad revenue. Aside from endemic advertisers like developers running app-install or mobile game banner ads, he argues most marketers “are indifferent whether or not Google or Facebook ads run on desktop or mobile environments.”
But even Google acknowledges the difference in performance between mobile and desktop, and allows marketers to manage bids and track results by devices. In time, as Google suggests, the distinction among devices may fade as factors like audience-based buying and improved mobile sites lead to more consistent performance across screens.
But that ideal of a seamless digital media world is still far from being realized. So why shouldn’t Google provide marketers and investors with more information about how the mobile shift is affecting its business today? Its reluctance stands in contrast to Facebook, which has trumpeted its increasing share of mobile ad sales to assure Wall Street it can monetize mobile traffic and maintain revenue growth.
What's Google -- the company that popularized the phrase “mobile-first” -- waiting for?