Google: mobile hits margin
19 October 2012
Google’s income in Q3 was hit by fx headwinds and a rise in traffic acquisition costs (TAC) for its ad business as well as by higher than expected losses at Motorola
Headline growth in gross advertising revenue continued to slide, primarily due to the effect of the strong dollar; of more concern, rising TAC cut gross margin by 3 ppts
Mobile now accounts for the majority of growth in ad revenue, which should improve as mobile ad yields rise, though net margin could decline if Google has to pay out a greater share to partners such as Apple