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Report: Google to Near $5 Billion in Ad-Revenue this Year from Tablets Alone

February 13, 2013 - Written By Nathan Harbin

One of the top firms responsible for helping advertisers buy Web-search ads, Marin Software, have put out a report stating that Google could generate as much as $5 billion in ad-revenue from its search engine being used on tablet devices.

Google declined to comment on the Marin estimate, but Google has recently set out to boost the prices that advertisers pay to show their adverts on Google’s mobile search engine, especially on tablets. This move makes advertisers pay for tablet ads regardless of their target audience. Google believes that the lines between tablets and personal-computers are being blurred, with ad performance between the two being very similar in 2012.

Marin’s report makes it look as if Google knows best when it comes to making the most from ads on its search engine. The effectiveness of an ad click leading to a sale or accomplishment of the advertiser’s objective was up 31% during 2012. The report states that the “conversion rates” on tablets will surpass that of the personal computer this year. The conversion rate of tablets is currently 17% less on tablets than the PC, so the claim is not modest. Tablet market share will have to rise drastically compared to laptops and desktop computing for the mark set by Marin’s report to be hit.

The reason that smartphones are not part of the picture here is that it is very difficult to determine how many ad clicks actually lead to a sale or accomplished goal. Google and others are currently working on a way to more accurately determine the per ad click conversion rates of smartphone search engines. This is particularly difficult because users are more likely to make an in-store purchase in response to a smartphone ad and less likely to make the purchase via the smartphone. Where, when it comes to tablets and PCs, people are already accustomed to using the two as a shopping vessel.

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The increase in search revenue from tablets will also help Google increase its lead over Microsoft’s Bing search engine as Bing is much less likely to be used on a mobile device than on a Personal Computing device. Microsoft did not comment on the report.

Last year Google generated about $40 billion in total revenue from ads. If tablets account for 10% of the total ad-revenue this year, that brings the total number of dollars in revenue from tablets alone to a point near $5 billion dollars assuming that the total revenue from ads continues to climb.

The Marin Report is based on Marin’s client data which comes from Macy’s, The Gap, and the University of Phoenix. The three clients collectively spend $4 billion annually on search ads.

Source: The Wall Street Journal