Google Ramping Up For Advertising Dollars

Mark Bergen says Google on Tuesday plans to introduce its latest updates to AdWords, its core search product, and allow app developers to buy ads promoting installed apps in paid mobile search and YouTube. In 2011, Google introduced app-install ads in mobile search. Consumers have been able to open pages within apps via organic search results on mobile since November, but now the company is offering the capability to paid search advertisers.

The news comes a weeks after Twitter started selling app install ads, following Facebook's lead. Yahoo is floating the idea as well.

YouTube's app install ads will run with TrueView, the in-stream service that allows users to skip through videos, the company said. It was added to mobile in August of 2012.

While TrueView videos are priced on the high end, brand advertisers are generally fans of the offering, which charges advertisers only when viewers opt to watch the ad. Mobile videos are more time-intensive and expensive to create than display ads, but the quantity of video ads on mobile is expected to expand dramatically. According toeMarketer, around $660 million in digital video spending went to mobile in 2013, about 16% of the total. In 2018, 44% of digital video spending is set to go to mobile, with $5.4 billion in spending.

YouTube's slice of Google's ad dollars is growing rapidly, too. In 2013, YouTube brought in nearly $2 billion in net revenue, accounting for 5.6% of Google's overall net ad revenue, according to eMarketer. By the end of this year, eMarketer predicts YouTube will represent 7.2% of its parent company's ad intake.

"It's clear in mobile, the future for Google is with YouTube, not search," said Simon Khalaf, president and CEO of mobile analytics firm Flurry.

Mobile video advertisers end up paying roughly $2.50 per install and $5 per user engaged with the app after a week, according to Mr. Khalaf. Display ads can be cheaper, but rarely see such solid returns for engagement, he said.

In addition to the YouTube units, Google is introducing the ability to link directly within an app on search for AdWords. If a user has a particular restaurant's app installed, for example, the restaurant can buy mobile search ads with Google that bring consumers to a particular page in the app.

This capability -- referred to as "deep-linking" -- was offered with organic search earlier. Under the tweaks, AdWords clients will be able buy it as an ad unit as well.

The company has been gradually integrating its mobile network, AdMob, with its other products, including AdWords and Google Analytics, as its core search business becomes more focused on mobile apps.

"We'll enable you to reach people who are your most likely customers, based on the apps they use, the frequency of use and the types of in-app purchases they make," Jerry Dischler, VP-product management at AdWords, said about the new offerings for clients.

The adjustments to AdWords are expected to come into the effect in the coming months. Google will offer additional details at its search marketing forum today.