Google eked out slightly higher earnings in the fourth quarter, despite a financial drag caused by the Internet search leader’s expansion into device manufacturing and a decline in digital ad prices as more people gaze into the smaller screens of smartphones.
The results announced Tuesday pleased investors, helping to lift Google’s stock by nearly 5 percent in extended trading.
More advertising poured into Google during the holiday shopping season, fueling a moneymaking machine that has steadily churned out higher profits since the company went public in 2004. Google’s fourth-quarter ad revenue totaled $12.1 billion, a 19 percent increase from the previous year.
Some of that money, though, has been shifting away from personal computers as advertisers try to connect with an expanding audience that relies on smartphones and tablet computers to reach Google’s search engine, email and other online services. By some estimates, about one-fourth of Google’s search requests are now coming from mobile devices.
So far, advertisers have been unwilling to pay much money to market their wares on mobile devices, largely because the smaller screens leave less room for commercial links and other marketing messages. The trend is one of the reasons that the average price for the ads that Google shows next to its search results has fallen from the previous year in five consecutive quarters —including during the final three months of last year.
In a positive sign, though, Google’s average ad prices in the most recent quarter dropped by just 6 percent from the same period in 2011. That’s the smallest decline during the economic downturn.
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