Investors are getting impatient with Google' mobile marketing strategy.
Google (GOOGL) shares sank 3% in after-hours trading Wednesday after the company posted first-quarter earnings and sales that missed expectations. Of particular concern was a 9% drop in payments from marketers per ad on Google sites.
The challenge for Google is convincing marketers to pay as much for mobile ads as they do for desktop ads, a task that's become increasingly pressing as Web usage shifts to smartphones.
Google Chief Business Officer Nikesh Arora said in a conference call Wednesday afternoon that the company's mobile ad revenue is being held up in part because merchants haven't spent enough time developing their mobile sites, assuming that customers will make more purchases via desktop.
"The journey is just beginning for advertisers on the mobile side," he said. As advertisers begin to see the potential of mobile ads, including location targeting, Arora added that the gap between desktop and mobile ad rates would likely close.
"Right now we can lead the horse to water, but we can't make it drink," he said.
Part of the way Google is addressing this issue in the meantime is through the "enhanced campaign" strategy it introduced last year, which requires advertisers to buy across multiple platforms.
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