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Google is Sacrificing Profits for Market Share

Google has long been the leader when it comes to digital advertising, and that is not going to change any time soon. According to some of the latest reports from Google’s parent company, Alphabet, it is clear that the company is looking to further grow their lead in terms of how many ads they are displaying, and how much revenue they are bringing in.

This growth is coming from a lot of hard work and the traditional quality and ease of use that consumers have been getting used to, but there is more. In order to get more and more apps, sites, and other partners to display their ads, Google is accepting a lower share of the revenue.

This was shown to be true by looking at their most recent numbers. Their overall revenue from AdMob grew nicely to $559 million, but their portion fell by $33 million. This is one reason why they failed to meet their profit estimates for the quarter, and their stock dropped by 5%.

Google clearly thinks the short term losses in this area will be made up by long term gains from having more advertisers than ever, and displaying them in more locations. This seems like a sound strategy, though when you are already the clear leader in an industry, it may not be the case.

It will be interesting to keep an eye on how this plays out for the search and advertising giant in the months and years to come.

Pesach Lattin
Pesach Lattin
Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pesach Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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