The Sky Is Falling on Google's Paid Clicks

 
 
By Clint Boulton  |  Posted 2008-03-27 Email Print this article Print
 
 
 
 
 
 
 

 

The latest paid click report from comScore has financial analysts in a tizzy and eying the leading search and online advertising player with suspicion and not a light undercurrent of dread. Google's paid click rate grew 3.1 percent year-to-year in February, according to the report, cited by Reuters.

This follows comScore's January report, which found that clicks on Google's paid search links fell 7 percent from December 2007 to January.

That news not only dinged Google's already falling stock but triggered a debate over whether the coming recession or Google's own attempts to weed out inadvertent clicks and efforts to game its paid click system are to blame. ComScore CEO Magid Abraham tried to add clarity to the findings later that week.

The report is for paying clients, particularly the Wall Street analysts that get paid to tell investors when the sky is falling or when the going is good. This paid click report is proving quite the source as a fount of FUD to let us see the train coming even as we are frozen on the tracks.

ComScore, by dint of these reports, is responsible for correcting what was clearly a ridiculous $750+ stock price for Google from this past summer. Indeed, Google shares dropped $14.52 to $443.67 after the release of comScore's latest click data Wednesday.

Equities analysts remain vexed. Citigroup's Mark Mahaney cited Google's ongoing efforts to improve both lead quality for advertisers and the user experience for searches, as well as the macroeconomic dampening of search queries.

However, he said in a research note Citigroup views the decline in click-through rates as counterintuitive because a decline in coverage ratio should generate a rise in click-throughs.

Brace yourselves: "So IF the comScore data is accurate AND holds for Q1, AND if it is representative of Google's global trends then it could imply risk to Q1 estimates," Mahaney wrote. "The disconnect is that this type of step-function deceleration should show up as a material fall-off in leads to search engine marketers and channel checks remain generally positive."

So there it is. Increasingly, it seems Google is on the verge of showing another quarter that could be seen as weak only through the lens of Google, which regularly blasted apart expectations until Q4 last year.

Look, Google is the Internet bellwether to look at these days. It used to be Yahoo, but no longer, so if Google shows weakness in search and paid clicks, then it is an indication that we might be slip-sliding away into the recession.

This is why analysts are freaking out. This is why the paid click sky is falling. The world will be watching intently when Google announces earnings April 17. 

 
 
 
 
del.icio.us | digg.com
 
 
 
 
 
 

Submit a Comment

Loading Comments...
 
 
Manage your Newsletters: Login   Register My Newsletters























 
 
 
 
 
 
 
 
 
 
 
Close
Thanks for your registration, follow us on our social networks to keep up-to-date
Rocket Fuel