Google to generate $5bn in tablet search ads this year

nexus7Google could generate as much as $5 billion in revenue from selling mobile adverts on tablets in 2013.

According to Marin Software, the effectiveness of search ads on tablets climbed 31 percent in 2012 and that  conversion rates on tablets will eclipse those on PCs by the end of the year. Last year, the conversion rate of tablet search ads was 3.3 percent versus 3.9 percent for desktops.

This basically means that search ad prices on tablets will equal those on desktops by the end of 2012, although they are currently 17 percent lower. The report noted that advertisers are already spending more money on tablets than on smartphones.

“Either tablets have overperformed or smartphones have underperformed,” Matt Lawson, Marin’s chief marketing officer, told the Wall Street Journal.

Smartphones apparently have somewhat lower conversion rates due to the difficulty in tracking how smartphone ad clicks lead to actual purchases. By the end of the year tablets will account for 20 percent of all clicks on Google search ads in the US, up from 10.7 at the end of last year.

Marin Software’s report is based on data from several clients, including Macy’s and Gap, as well as the University of Phoenix.