SAN FRANCISCO (AP) — Google's third-quarter earnings report will provide further insights into the Internet search leader's efforts to reverse a troubling decline in its advertising prices as more digital activity shifts to mobile devices.
WHAT TO LOOK FOR: The results, due out after the stock market closes Thursday, are likely to show Google is still prospering from its dominant positions in Internet search and advertising while its steadily growing Android operating system for smartphones and tablets brings even more traffic to its digital services.
But the number that has come to matter the most to investors hasn't been working in Google's favor. Wall Street has become fixated on the average price that Google Inc. has been fetching for the ads that appear next to its search results. The price, known as "cost per click," has fallen from the previous year in seven consecutive quarters, raising worries that the popularity of mobile devices could turn into a nagging problem for Google.
Smartphones and tablets pose a financial challenge for the Mountain View, Calif., company because their smaller screen sizes fetch lower ad rates than the marketing pitches made on traditional desktop and laptop computers. The problem appeared to be waning until Google released its second-quarter results in July. The report revealed Google's average ad price had fallen by 6 percent from the previous year, slightly worse than the previous quarter.
The deterioration signaled Google's efforts to stabilize its ad prices may not be working. Earlier in the year, Google changed the way its online ad system works to force marketers to buy spots on mobile devices at the same time they plan campaigns aimed at laptop and desktop computers.
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