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    Google Mobile Business to Grow 80% in 2012: Munster

    By
    Clint Boulton
    -
    March 3, 2012
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      Google’s (NASDAQ:GOOG) 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 devices.

      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.”

      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.

      However, Google said at MWC this week that it expected Sprint (NYSE:S) to launch more Wallet-enabled phones this year.

      Clint Boulton

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