Wall Street Buys Google’s Mobile Ad Story

Yep, Google’s Q4 seemed to confuse some investors yesterday. It definitely seemed to confuse lots of the people writing about the numbers.*

By last night, though, Wall Street analysts seemed to have come up with at least one consensus takeaway: Google’s mobile ad business is looking pretty good. Or, at least, less worrisome.

Reminder: Mobile ad volume is growing everywhere, but that’s not necessarily a good thing for lots of publishers. Right now, advertisers pay much less for a mobile eyeball or click than they do for one on a desktop. Just how big a problem that is for ad sellers is up for debate, but it’s a debate that’s top of mind for a lot of people.

But now, perhaps, Google is convincing some people that it’s not going to have a mobile ad problem, after all.

“We come out of 4Q feeling better about Google’s mobile transition and segment growth rate going forward,” writes J.P. Morgan’s Doug Anmuth. Bernstein’s Carlos Kirjner, Citi’s Neil Doshi, and RBC’s Mark Mahaney made similar murmurs.

Google doesn’t break out its mobile numbers in any real depth, but Anmuth and other analysts focused on a few metrics they thought shed light on its mobile story: Cost-per-click decline — which was slowing, even as mobile traffic increased — and traffic acquisition costs, which were stable, even though Google is presumably paying Apple, along with its own Android partners, a pile to use its search results on their machines.

But even if Google has solved its mobile problem, or is on its way, that doesn’t mean other Web publishers are on the same path.

It’s perfectly reasonable for advertisers to spend the same amount on search ads, which ought to perform at last as well on a phone as on a PC. But display ads are a different story: They don’t work terribly well on a big screen, and when you try to jam them onto a small screen, things get more dismal.

Want to hear more about Google’s take on mobile? We’ll go straight to the source in a few weeks, when we bring Google ad boss Nikesh Arora onstage at our Dive Into Media conference. See you there.

*Easy tip: Next time out, don’t worry about “consolidated revenues,” which include Motorola. Focus on “Google Revenues.” Presto!