Dispatches from the Digital Revolution
The Wall Street Journal reported some unhappy news for Google stockholders last week, showing quarterly profits down 20 percent from this time last year. And while this doesn’t directly affect the book publishing industry, it may have an impact for publishing at large—especially for publications with ad-based revenue models.
Why, you may ask? Because, according to the WSJ, Google blames mobile ads for its downward turn. And although Google may be the headliner of this week’s news, this is an issue that is influenced by—and may have influence on—all three of Appazoogle’s namesakes.
The overall decrease in Google’s profits is not because its core business—selling ads—is becoming unsuccessful. In fact, according to the article, sales have risen. Unfortunately, those sales have decreased in value. That’s partially because of the increase in mobile ads, which are less expensive than web ads.
To quote the WSJ:
That change is hurting Google in the short term because mobile ads cost less than online ads viewed on desktop computers. Some industry experts, however, predict the price differential will be minimal by the end of next year.
So good news for all the Googlephiles (I may have just made that word up) out there: The company may be facing some setbacks now, but it’s in a transition period. And the triggers of this transition period, I think, are a tag team of Apple and Amazon in the device arena.
Firstly, Apple: The release of the iPhone triggered a new era of mobile technology, and made the common man sit up and take notice. See this—admittedly pessimistic—Business Insider article from last June, which points to the release as a turning point in the mobile ad timeline. But, Business Insider notes:
…the smartphone is a terrible place to advertise, at least using conventional display ad formats. For one thing, the screen is tiny. For another, the ads can be highly intrusive and annoying. (Not an emotion a smart advertiser wants to trigger in a potential customer.)
So why the brisk uptick in mobile ad sales? Perhaps because smartphones are no longer the “only” mobile devices. Enter the very recent popularity rocket that tablets have been riding, starting with the iPad and exploding into lower-price-point markets with Amazon’s Kindle Fire. According to a December ReadWrite article by Dan Rowinski (note the timing of this article—almost immediately after the Kindle Fire release): “Google notes that tablets are now a third screen that marketers have to deal with and that the company saw a 440 percent spike in tablet traffic in November 2011 from its December 2010 levels on the AdMob network.”
What does that mean for us as publishers? Maybe not anything actionable, but it does confirm our suspicion that mobile devices are really catching on. Ad dollars follow eyeballs, and increasingly more eyeballs are being occupied on mobile devices. That means more people are getting comfortable doing business on mobile devices—which, I suspect, means that ebooks sales are, in the not too distant future, going to rocket past print. They’re already growing in market share by leaps and bounds.
But we already know that, right? On Appazoogle we certainly talk about it frequently. It’s important, however, to note the ways that this trend we’ve been anticipating is taking shape and shaping industries beyond our own. Most importantly, this is a lesson in a symbiotic landscape: While Amazon, Apple, and Google are competitors in many aspects, they are also—perhaps in some ways accidentally—working together to forge ahead into this brave new world of information overload and unlimited choices. We as publishers need to stay aware of the changes and challenges that they are facing, because many of their decisions will have knock-on effects for our consumers, our business models, and our understanding of our place in the information chain.