Buying Google Inc (GOOG) Stock? Keep an Eye on This

Google Inc (NASDAQ:GOOG)‘s stock has been red hot as of late. Over the last 12 months, the stock price has popped over 57%, and many in the media are talking about Google Inc (NASDAQ:GOOG) hitting $1,000 per share by next year.

But a company’s value is determined by much more than its stock price — it involves key factors that can make or break a company. In the case of Google, stock investors need to keep a sharp eye on the company’s search advertising paid click revenue, as well as the cost-per-click, or CPC. To the savvy investor, this may seem like a no-brainer, but given Google Inc (NASDAQ:GOOG)’s mesmerizing mix of innovations, it’s important to remember the basics.

Google Inc (GOOG)

Not all search ads are the same
Talking about search advertising and CPC isn’t nearly as exciting as talking about other Google projects like Glass, Internet balloons, or autonomous cars… but it does start to get exciting when you consider that search advertising is the crux of the company’s business.

But mobile has changed the game for Google Inc (NASDAQ:GOOG). Though paid clicks have been on the rise — they were up 20% year over year for the company in Q1 2013 ­– CPC was down 4% the same quarter ­– both year over year and from Q4 2012. This was the sixth consecutive quarter that the CPC prices fell. This drop comes in part from the explosion of mobile devices, which obviously leaves less room on screens for advertising.

Google Inc (NASDAQ:GOOG)’s advantage is that it’s successfully moved into mobile, where other tech companies have struggled. Google’s Android operating system commands 75% of the global smartphone market and 56.5% of the tablet market. That’s quite a feat, considering the operating system officially launched less than five years ago.

Clicking the future
The challenge for the tech company is if CPC continues to fall, as this can directly impact the company’s bottom line. What Google has working for it that it currently owns two-thirds of search engine market share in the U.S., and its mobile services continue to grow. If Google can offer more mobile services — or continue to improve mobile ad clicks on current ones ­– then it may be able to offset the declining cost per clicks.

An Adobe Systems Incorporated (NASDAQ:ADBE) report that came out last week showed that Google’s enhanced campaigns increased CPC by 6% over the past three months. The majority of the increase came from both mobile devices and tablets. The company’s enhanced campaigns — which merge desktop and mobile ads — are optional for advertisers until July 22. Once the change goes into effect for all advertisers, the CPC rates for mobile bids are expected to increase. This is good news for Google Inc (NASDAQ:GOOG) — and its investors should take note as well.

The article Buying Google Stock? Keep an Eye on This originally appeared on Fool.com and is written by Chris Neiger.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Adobe Systems (NASDAQ:ADBE) and Google. The Motley Fool owns shares of Google.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!