Google and Facebook earnings buoyed by ad revenue

Yesterday Google reported a jump in quarterly net income to $2.79 billion from $2.51 billion in the second quarter of 2011. The increase was thanks in part to a surge in aggregated paid clicks, which increased about 42 per cent over the second quarter last year while average CPC dereased about 16 per cent. 

"Google standalone had a strong quarter with 21 per cent year-on-year revenue growth, and we launched a bunch of exciting new products at I/O [Google's developers conference]—in particular the Nexus 7 tablet, which has received rave reviews,” said Larry Page, CEO of Google in a statement. “This quarter is also special because Motorola is now part of the Google family, and we’re excited about the potential to build great devices for users.”

Facebook, which will announce its second quarterly earnings next Thursday, has enjoyed a growth in CPM (cost per thousand impressions) of 58 per cent over the past year, according to the Global Facebook Advertising Report compiled by TBG Digital and verified by the University of Cambridge.

This report examined the trends and changes in the performance of Facebook campaigns managed by TBG Digital. The study was based on 406 billion impressions in more than 190 countries for 276 clients from Q2 2011 to Q2 2012.

The study attributes the increase in CPM to greater use of 'sponsored stories' and the introduction of mobile ads which have also provided Facebook with higher earnings. 

Ad engagement, measured by click through rate (CTR) grew 11 per cent and again, seems to have been helped in part, by the Facebook's mobile ads, said TBG. The success of Facebook’s mobile ads also appears in a  study by TBG Digital of 278 million sponsored story impressions, which found that mobile ads received a CTR that was 14 times that of ‘desktop’ ads, on average.

Mobile ads also provide great earning potential for Facebook, which received US$9.86 for every thousand mobile ads served (CPM), 13 times more than it received for ‘desktop’ ads.  

Cost per Click (CPC), the cost paid by advertisers to Facebook, has hit the dollar mark for the first time in the US and Canada, which saw a rise of 13 per cent and 12 per cent, respectively. However, European countries the UK, France and Germany, saw a reduction in CPC. For example, the UK fell 2 per cent to US$0.91.