New Google Ads Partnership Should Boost GOOG Stock

Google (GOOG) has entered a deal with comScore (SCOR), one of the top providers of web and mobile analytics. While it’s a big win for SCOR, whose stock is up about 11% on the announcement (the company will get an undisclosed fee), it is also critically important for the Google Ads platform.  And yes, it should be a long-term driver for GOOG stock.

goog-stock-google-adsWith the partnership — which took a year to put together — Google will use comScore’s technology for its DoubleClick ad network. This will provide for in-depth audience metrics to better measure the impact for Google ads — all with just one click (or so says the press release).  

Keep in mind that understanding the overall performance is a major challenge facing large brands advertising on digital platforms. No doubt, this is something television has worked on for decades. It has evolved something called Gross Rating Points (GRPs), which indicate the reach and frequency of ad campaigns across demographics.

So with comScore vCE (Validated Campaign Essentials) system, GOOG wants to essentially do something similar but with a focus on intensive traffic metrics — all in real-time. In fact, the goal will be to get accredited with the Media Ratings Council, which would be a huge credibility boost.

At first, the vCE system will be available for Google ads on the desktop and video. But over time, the company plans to move into mobile, which should bolster GOOG stock.

It’s true that GOOG stock continues to benefit from the company’s strong growth, especially from mobile. In the latest quarter, revenues jumped by 17% to $16.86. Obviously, much of the company’s revenues come from Google ads, so anything that might improve the performance of the ad business is good news for GOOG stock.

Yet it will get tougher for GOOG stock to keep up this level of performance. Just look at the challenges that other tech companies have faced as they have reached massive scale, such as Microsoft (MSFT) and even Apple (AAPL). It’s extremely tough.

As for the fortunes of GOOG stock, it is now a priority to get a larger share of the traditional television budget, which is about $66 billion in the U.S. It certainly helps that the company has marquee assets like YouTube, Android and its mapping franchise.

But to really get the interest of large brands, GOOG needs to act like a traditional ad player. And by striking a deal with comScore, the company is making a good first step in this effort, and Google ads should get more traction.  

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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