Google sales hit a speed bump in Q1

Total sales grew by 12 per cent, below analysts' projections

Google's sales rose 12 per cent during the first quarter, the slowest rate of revenue growth since 2013, while the amount it charges for ad clicks continued to drop.

Total sales for the period ending March 31 came in at $US17.3 billion, missing consensus expectations of $US17.5 billion from analysts polled by Thomson Financial Network.

After subtracting traffic acquisition costs, the portion of revenue paid to partners that distribute its ads, Google's sales were $US13.9 billion, the company reported Thursday.

Google's net income was $US3.59 billion, up 3.9 per cent from the same period last year. Its adjusted earnings per share, which excludes certain expenses, also rose, by nearly 5 per cent to $US6.57, but below analyst projections of $US6.60.

The company's paid clicks grew 13 per cent compared with the first quarter of 2014. The growth rate in paid clicks has also been slowing progressively. Meanwhile, Google's cost per click, the amount it charges for ads, dropped by 7 per cent.

Google's revenue growth has slowed in recent years as people have shifted more of their online activities away from the desktop to devices like smartphones and tablets and to mobile apps. That has put pressure on Google's critical search and display ads businesses, which have been strong on the desktop.

As a result, Google has been working to demonstrate the value of mobile as a platform for services. Just this week, it changed its algorithm to give a boost in search results to sites optimized for mobile devices. The company is also trying to make it easier for consumers to move between mobile web sites and mobile apps, by improving a technology known as "deep linking."

And the company is in the early stages of launching Project Fi, a mobile Internet service that acts as an alternative to traditional carriers by letting users switch between multiple networks and does not charge consumers for unused data.

Google does not break out its revenue into separate desktop and mobile categories.

Google and Facebook still attract the majority of marketers' digital ad budgets in the US, according to the Interactive Advertising Bureau.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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Zach Miners

IDG News Service
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