According to its latest earnings report, Google’s average cost-per-click dropped sharply this quarter compared to last year’s Q1.
If you ignored this stat, you’d see that the company’s ad business looks relatively strong: Site revenues are up 21 percent year-over-year, and network revenues are up slightly. Still, as Google invests heavily in a whirlwind of moonshots, such as modular phones or drones, it’s troubling to see declining revenue potential for Google’s actual business — ads.
Google’s ad empire is not crumbling, but increasing competition from firms like Facebook is cause for concern — especially on mobile. To that point, Google today announced plans to monetize its own social network, an interesting move considering Facebook’s strong mobile ad revenue last quarter.
Google made a point to double down on its core business not long ago, and now it’s increasingly hard to keep track of the company’s futuristic experiments. Investors are now punishing Google for its apparent lack of focus in after-hours trading.
For more on Google Q1 earnings report for 2014, head here.