Google stock predictions: Google’s Accelerated Mobile Pages Can Substantially Reduce The Impact of Ad-Blocking

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Google stock predictions

  • Google launched an open-source initiative called Accelerated Mobile Pages that encourages web publishers to optimize their content delivery.Google stock predictions
  • The Accelerated Mobile Pages platform hopes to optimize advertising within news-type content, which will allow mobile device users to load web pages faster.
  • Google will continue to dominate digital advertising in 2016.

As a retired employee of the advertising/marketing industry, I called for Google (GOOGL) to release a free tool for website owners to detect/block site visitors who use ad-blocking browser extensions like Crystal. Unfortunately, Google did not heed my request but instead released Accelerated Mobile Pages ((AMP)) Project.

The AMP Project is an open-source HTML framework for content publishers to optimize their content distribution system for faster loading experience on mobile devices. AMP is Google’s answer to the widespread claim that too much mobile ads slow down page loading (and causes too much mobile data usage) on phones and tablets. The AMP Project offers a universal HTML framework that only integrates compelling static ads inside news articles.

The AMP Project is Google’s polite answer to the threat of ad-blocking users. Apple (AAPL) is now allowing third-party developers to sell ad-blocking extensions for iOS 9 Safari. Google derived 75% of its $12 billion mobile advertising revenue last year from iPhones and iPads.

Apple’s excuse for its new love for ad-blocking is that its device customers deserves not to get spammed by too much data-gobbling mobile ads. The AMP Project therefore will now try to win back the favor of iPhone/iPad users by targeting them only with static, relevant, and compelling ads embedded inside web content.

Why AMP Matters

Google has recruited most of the web’s major content publishers to the AMP Project initiative. Below is a screenshot of some of the top web publishers that signed-up for the Accelerated Mobile Pages project of Google.

Google stock predictions

(Image Source: Google)

WordPress, the world’s most popular CMS (Content Managing System), also supports the AMP Project. The developers of WordPress, which is used by 24.7% of all websites today, will release a plugin that will allow big and small website owners to publish their content using the optimized AMP HTML code for mobile devices.’

By allowing one-click conversion to AMP’s optimized but still ad-friendly format, any WordPress-using website admin will continue to monetize his site’s content through targeted ads for mobile device users. Google, as the biggest provider of advertising services for content owners, have a vested interest to fight the mobile ad-blocking initiative led by Apple.

With the optimized content delivery system now made possible by the Accelerated Mobile Pages Project, iPhone/iPad users now have fewer reasons to worry about ads eating up too much of their device’s monthly data allocation. As long as content publishers can monetize their content through ads, Google’s momentum as the world’s leader in digital advertising will go unabated.

In spite of the fact that more people are now using ad-blockers on their computers, Google’s ad-fueled revenue growth appears to be unaffected. Statista’s chart below illustrates that Google is a still growth stock when it comes to the $149 billion/year advertising business.

Google stock predictions

Internet advertising (desktop PCs and Mobile devices) now accounts for 24.6% of total global spending on ads. Google still has the biggest search engine advertising business on PCs and mobile devices.

Google stock predictions

Facebook (FB) is still a faraway second when it comes to total global ad spending market share. This is why investors should still keep GOOGL and GOOG in their portfolios. In terms of loyal digital advertising clients, Google clearly still has more advertising partners than Facebook now has.

My Takeaway

In spite of the less-than-perfect one-year forecast from I Know First for GOOGL and GOOG, I believe Google or Alphabet Inc. still deserves a place in a fund manager/retail investor’s long-term growth portfolio. The machine-learning algorithm of I Know First will eventually take into account the impact of Google’s smart move to optimize ad-driven content for mobile devices.

As happened in the past, I expect I Know First to give GOOGL a better algorithmic forecast score within the next few months.

Google stock predictions

But then again I might be wrong to call for a Buy for GOOGL right now. I Know First’s computer might just be warning us all to avoid this particular entering point for GOOGL at this time since it has already posted big gains this year. A market correction might follow the gains (+30.8% YTD) of GOOGL this 2015.

Google stock predictions

(Image Source: Google Finance)

I believe that the algorithm might be giving a short position because it does not like that GOOGL and GOOGL were both trading sideways during 1H of 2015. Investors indeed suddenly made them jump up high because Wall Street loved the idea of restructuring Alphabet, Inc.

Anyway, I still believe in Alphabet’s smart decision to offer a free and open-source tool for online publishers to easily distribute their advertising-supported content to mobile devices is a stroke of genius. The Accelerated Mobile Pages Project is clearly superior to my idea of asking Google to release a free tool for website owners to detect and block ad-block site visitors. Google simply decided to take the high road and not directly fight the developers of ad-block browser extensions.