Google hasn't had the best year in the market so far. Trading just above the S&P average and far below the average for its industry, Google is going to have to find a way to make investors happy again; and mobile ads may just be the answer. The only problem is that with more and more competition in the mobile ad space, Google may be in a bit of trouble. Today, we'll talk about how important mobile ads are for the search giant, take a look at the competition in the space, talk about whether or not things look good for Google, and discuss how to make money off of the trends caused by the mobile ad revenue war.
Why Mobile Ads Are So Important To Google
In the past two quarters, Google had to explain away lower than expected ad revenue; pointing the finger at the strong US dollar causing issues with foreign sales. However, with 78% of news websites experiencing higher levels of traffic on mobile devices in comparison to traffic from computers, mobile ads could indeed become the holy grail for Google. They're just going to need to figure out a way to effectively tap into the revenue stream.
The Big Problem Is Competition
Aside from the fact that Google has an incredible product, one of the key factors to their success is the small amount of competition they had to contend with as they grew. Unfortunately for Google, the playing field has changed quite a bit. As a matter of fact, there are a few heavy weights in the market that are taking their fair share of the online advertising market; and they're making a push to dominate mobile ads as well. Those competitors include, but are not limited to…
Facebook – Facebook is the world's most popular social network, and a heavyweight contender in the mobile ad revenue war. With a huge market capitalization and plenty of money to spend on research, they can surely give Google a run for their money.
Twitter – While Twitter's user base seems to have plateaued, the company has been able to drive more and more revenue each quarter. It's also important to mention that the company has been working to test larger mobile ads to take their piece of the mobile ad revenue pie.
Other contenders in the industry include Amazon, Verizon Communications and more…all of whom have the ability to give Google a bit of a hard time.
So, What Will Happen With Google?
While I am a big fan of Google, I have to say, I'm very concerned for their stock moving forward considering what's going on in the online ad space. As more key players continue to work to compete with Google on mobile ads, the winner of the revenue war is really anyone's game; a position that Google hasn't been in in a very long time. While only time will tell who will who will reign supreme, with amazing talent at companies like Amazon, Facebook, and more, Google is going to have to bring it's A Game to win this one.
How To Profit From The Trends
In this particular case, it's going to be important to watch Google's next earnings report. If ad revenue goes up, investors will stop being so bearish as Google takes the lead and uptrends will lead to profitable opportunities. However, if ad revenue continues to fall, we can expect steep downtrends in the near future; giving traders the opportunity to earn from put options.
What Do You Think?
Will Google win the mobile ad revenue war? Let us know your opinion in the comments below!