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What mobile means to the tech world's bottom line

Friday, April 25th 2014 by Luke Thompson
What mobile means to the tech world's bottom line
New financial data highlights how mobile has made an impact on the technology sector's bottom line.

There's lots of blue sky thinking in the technology sector these days, which results in no shortage of remarkable news. Projects such as Google Glass and Amazon's automated delivery drones seem to have come straight from the pages of a science fiction novel, so it's easy to forget how many of the industry's movers and shakers actually make money – through targeted advertising.

Right now, there's a real shift underway in how these companies make sure we see the content they want us to see. People aren't browsing the web on desktop and laptop computers so much any more – they've moved to mobile devices, such as smartphones and tablets, and the tech world's ad men are scrabbling for a slice of the pie.

Over the last week or so, new financial data has highlighted how far they've come to date – and that some companies are doing distinctly better than others in the race to target ads towards mobile consumers.

Firstly, Google's first-quarter results – published on 15 April 2014 – showed a modest 2.9 per cent increase in profits year on year to 3.45 billion USD (£2 billion) from revenues of 15.4 billion USD.

The search engine giant managed to increase paid clicks on ads by an impressive 26 per cent, but earnings were held back by narrower margins on mobile platforms. It turns out Google now rakes in nine per cent less cash per click than it did this time last year, which disappointed investors for obvious reasons.

Conversely, Facebook's financial data shows the social network is in ruder health than ever when it comes to ad revenues – even now more than half of impressions happen on mobile devices rather than in web browsers.

The company posted revenues of 2.5 billion USD for the January to March quarter, of which 2.3 billion USD came through advertising. It profited to the tune of over 1 billion USD – a healthy 43 per cent margin, up from 26 per cent last year. And yet this quarter, mobile accounted for 59 per cent of those revenues – almost twice the 30 per cent figure posted for the same three-month period in 2013.

In an age of mobile apps and social media, could Google's traditional income model be slipping behind the times?

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