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As we have said before, Google has a virtual monopoly on the search based ppc advertising market. Over the last year some markets have seen a 24% increase in the cost of advertising. For Google, Search advertising revenue still drove a better-than-expected performance in the third quarter, when revenue climbed 23 percent and net income rose 32 percent.

But for the first time Google said on a call with analysts, display ads — nontext ads with images and video on YouTube and other Web sites — are on track to generate more than $2.5 billion in revenue in the coming year, while mobile ads are on track to contribute another $1 billion.

What is surprising is that Google said paid clicks on ads on Google sites and other sites that run Google ads grew 16 percent compared with the same period a year ago and 4 percent compared with the second quarter. This is counter to what we had expected, because we had found that fewer people were clicking on the ads in some markets. However this may have come about as they increase their reach to mobile markets, with new video advertising, and as more people search for more topics online.


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