Why the Google Rally Is Far From Over

Mobile advertising may get more expensive soon. Last week, Googleintroduced AdWords enhanced campaigns, effectively blurring the lines between desktop and mobile ads.

Not literally, per se. Instead, Google is asking clients to create a single campaign and then specify their targeting by bidding higher on certain variables. For example, a local ice cream parlor might bid highest for ads on mobile devices when the customer is within a half-mile of its shop.

Previously, Google required advertisers to specify different campaigns for different devices. The resulting system, while complex, allowed advertisers to keep costs low by bidding cheaply for smartphone and tablet ads. Enhanced campaigns change that.

Some advertisers aren't happy about the shift. "Yea, that is nice in theory. But I think advertisers may want more control, not less. Of course, Google wants more advertisers, more spend, more impressions and higher [cost-per-click]," writes Barry Schwartz of Search Engine Roundtable, which closely tracks Google's search ad business.

No doubt that's true. Both Google and Facebook, its primary competitor, are working overtime to figure out how to monetize the deluge of mobile data flowing through their networks on a daily basis. Already, more than 10% of Facebook's active users -- or 157 million -- engage with the social network using nothing more than a phone or tablet.

Google, meanwhile, has seen cost-per-click for mobile ads decline for five consecutive quarters despite surging use of Google services on mobile devices. CEO and co-founder Larry Page had to do something to reverse the trend.

Not that enhanced campaign is a gimmick: it isn't. Rather it's a smarter, simpler system for bidding on ads in a world where "computing" no longer means sitting down at a desk.

Also, context matters. Advertisers want the opportunity to pitch their wares at moments of maximum opportunity, and they'll pay for contextual data that tells them when those moments are. Everybody wins, especially investors.

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The article Why the Google Rally Is Far From Over originally appeared on Fool.com.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool owns shares of Facebook and Google. The Fool has bought calls on Facebook. Motley Fool newsletter services recommend Google and Facebook. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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