Google paid click growth sluggish in February; More worries emerge

Google paid click growth sluggish in February; More worries emerge

Summary: ComScore has delivered its paid click report for February--also known as the most anticipated metric in the Web world these days--and the news isn't so hot for Google.According to Citigroup analyst Mark Mahaney and Bank of America analyst Brian Pitz said Google's paid clicks were up 3.

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ComScore has delivered its paid click report for February--also known as the most anticipated metric in the Web world these days--and the news isn't so hot for Google.

According to Citigroup analyst Mark Mahaney and Bank of America analyst Brian Pitz said Google's paid clicks were up 3.1 percent in February from a year ago. That growth rate follows a 0.3 percent decline in January. The rub: February had one extra day in 2008 compared to 2007. Mahaney said in a research note that if you factor out the extra day Google's paid click growth was flat.

Overall, comScore reported February searches on Google's U.S. sites were up 30 percent from a year ago indicating a deceleration of growth from January. May the chattering about Google's paid click growth begin.

Mahaney wrote:

Assuming the data is accurate, we could see two factors behind the Coverage Ratio decline: 1. Google's ongoing efforts to improve both lead quality for advertisers and the user experience for searches. 2. A macroeconomic dampening of commercial queries by searchers. We continue to view the decline in Click Thru Rates, however, as counter-intuitive. A decline in Coverage Ratio should generate a rise in Click Thru Rates.

Mahaney also added that if comScore's data holds for the first quarter and indicates global trends Google's first quarter targets are at risk. According to First Call, Google is expected to report earnings of $4.63 a share on revenue of $3.65 billion.

Pitz at Bank of America was willing to take Google for its word that paid clicks are due to quality gains. He said:

While Google's Feb paid click data does little to calm investor fears of a slowdown in Google's core business, we believe most of the deceleration is due to the continuing quality initiatives by the company itself, which should drive significant upside longer-term. Moreover, we caution investors against reading too much into comScore numbers as they have historically been a bit noisy (but directional nonetheless).

Pitz's latter point is critical. There's a significant risk of overanalysis when it comes to these Google figures. If quality--and therefore revenue--increased these statistics are mere blips. If comScore's stats indicate something more then Google's quarter is in trouble. In any case, we'll find out soon enough. Google reports its first quarter results in mid April.

Topics: Google, Banking, Enterprise Software

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26 comments
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  • Off Topic, done with ZDNet

    I know it's "only" been 24 days since the makeover, and you posted the first blog on it here.

    http://talkback.zdnet.com/5208-11202-0.html?forumID=1&threadID=45840&messageID=846061&start=0#replyStory

    I don't believe there is any intention to bring back the old blog page, and all comments in the above and in other blogger entries saying it is coming back is just so much hot air. Guess it is the "they'll forget syndrome".

    The entire format is beyond frustrating, and after bringing history up for the 50th time to find out who wrote story XYZ I replied to yesterday, it's time to move on. ZDNet got what they wanted, a grossly inneficient web site that causes countless new clicks (200+ to be exact, what it takes to scan, just scan, all blogs here, let alone news, if you don't use tabbed browsing).

    I gave it time, I believed it when you and others said the ONE STOP SHOPPING for all blogs with titles was coming back, (i.e. 2 clicks, that's what it took, go to ZDNet, click blogs).

    In any case, No Axe will be relieved that this long time poster won't be bringing up and linking to his more memorable "blunders".

    Nothing personal, and enjoyed many good blogs here, the new one's, who can be bothered to "scan them". I only came back since the change due to RSS feeds, however, finding the same story again is beyond frustrating, and no, I don't really want to keep 50-100 rolling bookmarks to keep track of whose blog I read when.

    TripleII
    TripleII-21189418044173169409978279405827
    • Also dislike the new layout

      And what's with the "add only" thing befor being able to see page?
      dragon@...
    • Your way to hardcore about nothing at all

      Some people take this so seriously.... man ... its just not right.

      take a vacation dood, find a friend, talk it out.

      everythings gunna be ok.
      pcguy777
      • re... the word that was edited was

        hard-kore

        ***** now that is strange... since when is that a curse word.

        hard_kore means... taking very seriously... it always has...

        Weird filter lulz
        pcguy777
  • THey need to worry a bit

    Google is dominant in search yes. But they are so extremely over valued in relation to the revenue generated from services like adwords etc. They need something more to sustain those type of growth expectations.
    jimk_z
  • Go Home to your Private Island ! waaaaaaaaaaaa !

    No need to have that tarnished plate polished or make up labels for the snake oil just yet.
    I think an adjustment will be about half their projected earnings if the USA is that hard pressed with demacratising the Globe in the three to five years they have completed to this goal plan;(tothisEnd.gov). Otherwise, an adjusted dollar @ (-3/12)months is my best guess for earnings with a price drop on common stock.
    rtirman37@...
    • Are you insane?

      One, learn to spell. The word is democracy. No "a" between the m and the c. Secondly, if doing that to the globe is the plan, please share with the rest of the class how we will somehow do it to China? and Damn near all of africa? Or even South America?
      And what's so bad about democracy?

      Finally and most importantly, what does politics have to do with Google's click count?
      Go soil a political blog somewhere with your rude comments, I'm getting tired of you haters, maybe I'll put YOUR country on the list next. *rolls eyes*
      Bill F.
  • RE: Google paid click growth sluggish in February; More worries emerge

    It's hard to pay more money when you can't really manage what a keyword costs. Google often suggests how to spend more money, but they're not good at helping streamline. They need to reward you more for tailoring your ads to keywords instead of just raising per click rates. We're keeping our budget flat and just moving ad budgets around to fit our needs.
    trent@...
  • Upside for the smart advertiser

    One benefit of a recession is that it can force the consumer to be more contemplative and informed in their shopping habits. This plays into the strength of the Web and search engines, as customers do a lot of browsing before buying, looking for the best deal. It might actually move more customers to e-tailing and away from bricks-and-mortar with high overhead.

    But if the recession is deep enough, then the movement won't be enough to cover the overall decline of customers and sales per se. Whether you are a smart advertiser or not doesn't matter if there just are no customers.
    terry flores
  • I think it's Google's fault

    From what I've seen, the quality of the ads has been diminished because Google allows huge companies to take over the ad placements with totally irrelevant ads that take almost any keyword and fits them into a generic slogan.

    For example, if you type "dishes", half the ad links are by big brand names and affiliate conglomerates that say "shop for dishes" or "great prices on dishes". If you click the link most of the time you go to a page that is generic and/or irrelevant.

    The whole point of Google is incredibly well-targeted search results, and the ads have favored money over relevance.

    As someone who has placed ads on Google, I can also say that it seems more complicated and difficult to do so than it used to be, and Google penalizes small businesses by making it so difficult. The learning curve is steeper than ever, and again favors big companies that can afford to dedicate employees to the task.
    Speednet
    • NO adds for a google 4.99/month pricing plan !!! YES

      I would pay google 3 or 4 bucks a month to give me complete control over the search. meaning... when i run a search.. give me the REAL results, and not the results of your highest bidder.
      pcguy777
  • Its only a matter of time

    Since nearly every home has a computer now, people are learning about links, and ads, and learning how "NOT" to click on them.

    Also.. most people save favorites, and links in their browser, so they go right where they want to.

    All that traffic is mostly from internet noobs...

    Its a pay platform thats may fail sooner than we think.
    pcguy777
    • I have to agree...

      I will never understand how a Google has gotten as big as they have with the bulk of their revenue coming from advertizers.

      In our 'offline' lives don't we tend to do whatever we can to avoid ads? I know I do. Things like DVR's ehlp with that, but even listening to the radio in the car, when its commercial time, I play a CD or change the station.

      Google and others have allowed the online ad thing to get way out of hand by serving up irrelevant search results simply because someone paid them to do so. I can't see this market blossoming in the near future, and I hope long term users get smart to these shady tactics and start avoiding ads for good.

      Heck, even as I type this message, at least half of this page is filled with ads!!!!!

      Pat
      omdguy
      • Agreed .... IMO Google Ads are crap

        oh its a novel idea at first, pricing is modest for a modest company...but at the end of the day the ads are starting to occupy more and more desktop real estate, Gmail, apps...oh how the might buck changes philosophical thinking at a company (see Google founding member conversations 5 years ago, quite a bit different today)

        i know a company that paid Google last year for advertising on paid click, it seemed like a decent deal as they were new to the strategy...

        they won't be renewing their subscription this year or ever for that matter, more effective ways to spend advertising dollars

        while I believe Ads will always have a place in cyberspace, IMO todays the pricing strategy has peaked...time for a new scheme ( which Im sure will happen)

        a company that has revenue based solely on advertising, well is an advertising company, not many have the market capitalization like Google, so it was nice while it lasted i guess, but at the end of the day if the majority of your revenue is from advertising then your an media advertising company, not the next best technology thing (as the markets have been sucked into thinking)

        when does the next show start?
        rkostynu@...
        • I agree

          The Google Adsense stuff is becoming like the spam of every home brewed web page and blog. I hate seeing them as much as the annoying flash ads.
          jimk_z
  • RE: Google paid click growth sluggish in February; More worries emerge

    What really helps to keep googleanalytics count down is the new add-on using Firefox called "NoScropt". If you haven't installed it yet, do it now. This is the best add-on I have ever used since it prevents all scripts (including java scripts) from running on your machine when you go to a web site, unless you manually authorize it to do so. I have placed googleanalytics in the "untrusted" category so it will never execute from any web site.
    razook@...
    • Typo

      The script is called "NoScript"....
      razook@...
  • Master Joe Says...

    A poster above brought up a good idea. However, it will never become reality. Charging a monthly fee for ad-free searching would be something many people woudl consider, myself nto included. However, Google woudl enver do that. They not only want all of the revenue possible, from advertisers, but they also have an obsession with being involved in your business. Google loves knowing what you are doing, what you search, who e-mails you, who talks to you, what you like, what you want, what you NEED (yeah, right). Any GMail user SHOULD have figured this out by now. All you have to do is look at GMail's home page. They want you to NEVER delete another message again. I would definitely not want all of my e-mail sitting on Google's servers, where an admin could just casually browse it on a rainy or slow day. The fact that Google's revenue has flat-lined, and hopefully will start to go downhill, is a step in the right direction for this entire industry. People spend so much time complaining about how Microsoft does their business, but Google and Apple have become much worse now, than Microsoft ever was. Between monopolizing the search and iPod industry, and proprietizing everything, such as the Android SDK and iPhone, the proof is in black and white. They both rely on people not being interested enough to care, and that is why things are the way that they are, and will continue to go in the wrong direction.

    --Master Joe
    SteelCityPC
  • Quality initiatives? Google doesn't care...

    about the quality. Only the number of clicks. They are simply trying to head off a decline in the value of their stock with a bunch of rubbish.

    I'm willing to bet if advertisers really looked at the return they are getting fron $'s spent on Internet advertising they would see how much money they are wasting. And how much money they are overpaying outfits like Google.

    I have yet to click on a single Internet ad.
    bjbrock
  • Is earning not enough any more?

    Yet, Google still earns an astronomical amount for those bazillions of clicks. Why is this a problem? OCD reporters and investment bankers are going to ruin the World.
    Narg