Google Will Hit $5 Billion in Ad Revenue from Tablets in 2013: Study

The increasing popularity and usage of tablet computers will lead to the increases, according to a new study from Marin Software.

Google's search ad-click revenue from the spreading use of tablet computers alone in the United States will increase in 2013 to $5 billion, based on new analysis by Marin Software.

One of the key findings of the new report is that by the end of 2013, tablets will account for about 20 percent of Google's paid search clicks in the United States, which is more than three times the 6 percent in paid clicks Google Search received from tablet users back in January 2012.

The white paper "Mobile Search Advertising Around the Globe: How Smartphones and Tablets Are Changing Paid Search" was produced by Marin as a snapshot into the online ad usage of its customers, which place more than $4 billion in online search ads using Marin's management platform each year.

Gagan Kanwar, director of research and partnerships for Marin and the author of the white paper, told eWEEK that the $5 billion tablet ad revenue estimate was reached by making projections based on Google's $40 billion in overall search ad revenue from 2012. Google's ad revenue typically increases by 20 percent each year, said Kanwar, which would mean that Google's search ad revenue is expected to be about $48 billion by the end of 2013.

Because 20 percent of Google's paid search clicks are estimated to come from tablets at that time, that means that the total tablet ad-click revenue will hit about $5 billion, he said.

"If you look at the macro trend, tablets are basically replacing PCs, as in desktops and laptops," he said. "Year-over-year there have been revenue declines for the PC business. It's not a shortage of population, but people are just not replacing their PCs as much."

Using the data from real-world ad-click experiences of the customers that use Marin's ad platform, the company extrapolated the numbers from its customer base to reach its estimates, said Kanwar.

The white paper is Marin's second annual report on the mobile ad marketplace. The company also produces quarterly benchmark reports.

The report says that "conversion rates on search clicks originating from tablet devices increased dramatically in 2012, rising 31 percent from January to December," meaning that consumers were following through with purchases after seeing and clicking the ads that were served up to their tablets.

The study also estimates that by the end of 2013, the conversion rate of tablets will exceed the conversion rate of desktop computers.

Dan Maycock, mobile IT analyst with Slalom Consulting, said that based on the spreading usage patterns of tablet computer owners, the Marin estimates make sense because most tablet use involved Web searching and consuming information, rather than doing work tasks such as email or writing documents.

"If you think about every television commercial that you've ever seen for an iPad, about 90 percent of what they're doing in it is consumption of information, which is what tablets are ideal for, compared with production of work and interaction such as email," said Maycock. "So this report confirms that sure enough, people consume more on their tablets than they would on their mobile phones or desktop computers."

That makes perfect sense when you think about how consumers actually use their tablets, laptops or PCs, he said.

"If you think of the physical position you are in using a desktop PC or a laptop, you can't get into a comfortable chair with them," he said. "A laptop can overheat on the upholstery. Tablets conform to that kind of physical position in the easiest ways."