Unhappy With Google's Mobilegeddon, Advertisers Spend More On Facebook

When Google changed its formula for showing search results in April to favor websites it deems mobile-friendly, some businesses worried their sites would disappear from results. Mobilegeddon, as the algorithm change came to be called, was intended at least in part to spur publishers to quit sending people to sites that looked terrible or were downright unreadable on the smartphones where people spend more and more of their time online.

Perhaps that will happen eventually, but for now, according to a new report out today from Adobe, the change has indeed hurt brands that weren't prepared. The Adobe Digital Index's second-quarter report on digital ads and social intelligence, which measures nearly a billion online ad impressions and 21 billion referred social visits from Facebook, Twitter , YouTube, and other social sites, shows that unprepared websites have lost 10% of their traffic compared with a year ago. And that decline is continuing to grow, says Adobe Digital Index principal analyst Tamara Gaffney.

Google has benefited, at least in the short term. Many marketers and ad agencies believe one clear goal was to boost mobile ad prices, which have continually lagged those of desktop computer ads. Indeed, prices measured as cost per click rose 16% from a year ago, according to Adobe.

But for marketers, the benefit is far less clear. Click-through rates on ads have fallen 9% from a year ago. "The bottom line is Google's mobile business got better and marketers' mobile business is getting worse," says Gaffney. "They're not getting the traffic they're paying for."

That situation obviously can't last, and already there are signs it hasn't, at least when it comes to spending on mobile display ads. According to Adobe's findings, Facebook has grabbed more ad dollars relative to Google, thanks to more radical changes to its display ad system starting late last year. It removed about half the ads on the right side of its pages, producing big improvements in click-through rates. They nearly doubled from a year ago, Adobe says.

By comparison, Google also reduced the number of ads on YouTube and the Google Display Network of 2 million partner sites by about 22%. But its click-through rates rose only 24%. That's a 75-point gap from Facebook--one that has prompted marketers to spend incremental ad dollars on Facebook instead. "Marketers feel they've reached a tipping point with Google and YouTube where the next incremental dollar is better spent somewhere else," Gaffney says.

Indeed, in a separate survey of about 400 U.S. consumers, Adobe found that 51% considered Facebook display ads, including those shown in the central news feed, to be relevant to them, compared with only 17% finding Google and YouTube display and video ads relevant.

There's a case to be made that the mobile issues aren't solely Google's fault--or even mostly Google's fault. After all, one reason Google made the change was that publishers too often provided a poor mobile experience because they'd send people to a page that was hard to read on smartphones. If they'd improved their mobile websites as they should have a long time ago, they wouldn't be suffering as much, if at all.

What's more, Google is working harder to address the issue. It recently announced plans to beef up its ad system to make it easier for marketers to reach people across multiple devices they use in a day, and to measure the impact, including on ultimate sales in stores.

Still, all this means Google's Thursday quarterly report may be somewhat disappointing, like the first-quarter report. Adobe estimates that Google's search revenues will rise only 1% to 2% in the second quarter, down from a growth rate of 4.5% a year ago.

The search giant may have to enable, or force, marketers to make more sweeping changes in how they try to reach people on smartphones, or nimbler rivals such as Facebook may keep eating away at a Google lead in digital advertising that seemed unassailable only a short time ago.