Google's mobile ad business could top $4.5 billion this year, an 80 percent boost over the mobile platform provider's 2011 mobile revenues of $2.5 billion, said Piper Jaffray's Gene Munster.
mobile ad revenue will top $4.5 billion in 2012, up 80 percent from $2.5
billion in 2011, according to a prominent Internet analyst.
The prognostication bodes
well for the company's Android mobile operating system business, which includes
smartphones and tablets. Google serves mobile search and display ads on these
Andy Rubin, Google senior
vice president of mobile and digital content, said
at Mobile World Congress
this week that Google was seeing 850,000 Android
activations each day. There are some 300 million Android smartphones in the
market, he added.
Piper Jaffray analyst Gene
Munster said this kind of volume momentum could help mobile account for 10
percent of Google's gross sales in 2012, up from 7 percent in 2011.
Munster further believes 50
percent of Google's total mobile sales will come from Android handsets, up from
30 percent in 2011. Average revenue per Android device will rise from $5 last
year to $6.50 in 2012 as a result, he wrote.
"We expect volume to
significantly drive mobile revenue as Google increases ad coverage on mobile
queries," Munster wrote in a research note. "We believe pricing
improvements will come when Google develops new products catered to improving
Local commerce products,
which include Google Offers paired with the Google Wallet mobile payment
service, will be paramount for Google in 2012. Currently, Munster believes
mobile cost-per-click rates are roughly 40 percent less than desktop CPCs.
While many analysts are
skeptical that mobile CPCs will markedly improve, largely due to the impatience
of consumers who are reticent to click on mobile ads from their handsets and
tablets, Munster took a different tack.
"We believe CPCs will
naturally increase and get closer to desktop as the mobile platform accrues
similar levels of competition to that of the desktop market," he wrote.
Again, key to this is Google's mission to find a better way to make money from
mobile, local searches.
Unfortunately, Google Offers
and Google Wallet have yet to take off separately, let alone together. Wallet
is still only available on one Sprint phone.
said at MWC this week
that it expected Sprint (NYSE:S) to launch more
Wallet-enabled phones this year.