GOOG's cost per click down 4 quarters in a row due to mobile (iOS, Android)
Google makes 96% of its revenues from Internet searchword advertising on traditional desktop PC's, which has been falling off a cliff during the past 4 quarters because iOS and Android devices are killing and taking eyeballs away from the PC. Mobile devices just have far less screen space to display Google's ads. This trend toward mobile is a permanent change, and the genie can never be put back into the bottle. Ironically, as Android's market share goes up, Google's cost per click goes down, so even though Android has a 72% market share for mobile devices, Google's cost per click keeps diving since price-sensitive Android phone buyers are the least likely to click on ads and buy anything online. Last quarter, Google missed its EPS estimate by about 17% and its cost per click fell 15%, so Google's stock price tanked $80 in a day. Mobile devices sold like crazy in the just-completed holiday quarter while sales of traditional PCs dropped for the 1st time in 10 years, so it's essentially guaranteed that Google's cost per click dived even more in Q4. Any analyst who thinks Google's EPS is actually going to exceed $10 and hit a new lifetime record is smoking crack. Google missed its EPS estimate 2 out of the last 4 quarters, which it never used to do before, so Google's searchword business on traditional PC's that make up 96% of its revenues is undergoing a sea change and basically getting slaughtered.
The more Android share increases, the more goog's cost per click decreases because there are just fewer eyeballs to view goog's cash-cow ads on pc's. Android phone buyers just bought them because they were the cheapest available. These buyers are not interested in clicking on any of google's ads and spending money online. To them, Android phones are nothing more than feature phones. Incredibly, Android's 72% market share is still mostly cheap Android Gingerbread 2.3 phones, which still far outsell Android Jellybean phones at all the cheap phone vendors like Boost Mobile and Virgin Mobile. These low-income people never even clicked on goog's ads on traditional desktops, so they can't be expected to click on them on Android phones with smaller screens.