Consumers' growing love of mobile devices has created growing difficulties for technology companies as they seek to reach their audiences through advertising on smartphones and tablets.
Reuters took a look at the issue today following disappointing earnings reported this week from the likes of Intel, Microsoft, and most dramatically Google, all of which are struggling to maintain consistent revenue.
Thursday Google reported that its core advertising business had slowed and lost a stunning $20 billion of market value. The loss in net revenue and earnings is attributed in part to a 15 percent decline in the amount of money advertisers pay per click (cost per click), over the same period last year, industry wide.
"Click prices declined for the fourth consecutive quarter after rising for eight consecutive quarters before then. That's a negative. This is the mobile problem," said global brokerage company BGC analyst Colin Gillis, as reported by Reuters.
Gillis added that although mobile brings in new customers and advertising, mobile ads bring in less money than conventional desktop advertising.
Reuters called the rise of the mobile market, "the most significant tectonic shift in the industry since the advent of the Internet."
Amazon and eBay Inc. have been the most successful in reaching consumers through mobile devices, especially Amazon with its Kindle Fire tablets, Reuters reported. The transition to mobile is particularly hard on companies like Intel that are closely tied to PCs.
"Companies are realizing that it is not easy to find a formula that works with mobile," Gartner analyst Carolina Milanesi told Reuters. "Mobile is not proving to be as straightforward as people thought."
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