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Google Earnings: What to Watch For

Althea Chang
Big Data Download

Google (GOOG) reports earnings after the bell on Thursday, and while most investors will be looking at revenue and the company's bottom line, there are a few other data points analysts will be examining closely.RELATED: Earnings Season: Bright Outlook for Some Sectors

Revenue from advertisers measured in cost per click has a major effect on Google's margins, for instance, according to Dan Morgan, vice president of Synovis Trust, which owns Google shares. Cost per click refers to how much advertisers have to pay to Google for every Web searcher's click on a company's ad.

The cost per click for advertisers on mobile devices is lower than on desktop computers, but it’s not all bad news for Google as PC sales decline and smart phone and tablet use rises, Morgan told "Big Data Download."

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The total volume of advertising clicks is actually rising as consumers search on their computers and often repeat those searches on their mobile devices, Morgan explained. Ultimately, changes in advertising revenue affect operating margins, which traders will be paying close attention to during Google's earnings report, Morgan said.

"As long as margins reach 45 percent, investors will be happy," he said. If margins are higher, Google's stock will rise; if margins are lower, Morgan said, the stock will fall.