Google looses money on ads

It seems Google hasn’t quite figured out the mobile ad business as it shares slipped 2% in after-hours trading after the search giant reported third-quarter sales that came up well short of expectations.

It is marked another decline in the average amount paid by advertisers when a user clicks on an ad. The figure, known as “cost per click,” dropped 2% versus a year ago.

The challenge for the search giant in the past few quarters to convince marketers to pay as much for mobile ads as they do for desktop ads but the task is becoming increasingly difficult as web usage shifts to smartphones.

The major chakMobile ads command lower prices than desktop ads, so Google’s average cost-per-click has fallen even as the number of clicks increases.

The company still reported $16.5 billion in sales for the third quarter, a 20% increase from a year ago, as web users clicked on 17% more ads than they did a year ago.

The company has a commanding position when it comes to mobile search, holding an 83% market share in the U.S. as of August, according to StatCounter.

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