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Google: March Paid-Click Growth Awful (Again)
Posted Apr 16, 2008 10:18am EDT by Henry Blodget in Investing, InternetFrom Silicon Alley Insider, April 16, 2008:
Google's (GOOG) U.S. paid-click growth in March was as bad as in February -- up only 2.7% -- rounding out a violent deceleration in Q1, says comScore (per Mark Mahaney at Citi). In all of Q1, Google's U.S. paid clicks rose only 2% year-over-year versus 25% in Q4 and 48% in Q3.
Consensus estimates for Google's Q1 have been cut significantly since the first comScore bomb in January. We believe the current consensus revenue estimates could be met with U.S. growth of 25% in Q1, down from 40% in Q4, which would allow for significant deceleration in the quarter.
This 25% growth estimate obviously assumes that Google has seen a strong increase in price-per-click: If it hasn't, and the comScore data is accurate, U.S. revenue will miss by a mile and Google's overall revenue will come in well below consensus. Thursday's earnings report will be interesting.
Mark Mahaney of Citi has the details:
Deceleration Drivers - Consistent with 2 prior months, Paid Click growth deceleration to under 3% Y/Y was driven by another month of low-teens decline in Google's Coverage Ratio and a low double-digit decline in Google's Click Thru Rate offsetting the 33% Y/Y growth in March searches on Google's U.S. Websites (an acceleration vs. roughly 30% Y/Y growth in February).
Potential Causes - 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 [uh oh].
[Our assumption: probably a combination of both]
9 Comments
James - Wednesday April 16, 2008 11:14AM EDT
Get this dirt bag Henry Blodget off the air. He is a liar an dshould be in jail. Screw Him.
Kelly Leak, LF - Wednesday April 16, 2008 11:42AM EDT
I like the guy standing in the back outside the window at the beginning of the video. A growth of 2% is good condidering most companies aren't making enough profits to pay for more advertising. I have taken my nest egg and invested in billboards since Google can never compete with them. The internet is going away and will be a tale we tell our great grandchildren about.
NARENDRA P - Wednesday April 16, 2008 11:53AM EDT
I ALSO agree with ParmeleJames! Why is the scumbag, felon, con-artist who touted EBAY, Etoys, AMZN etc. and sold in the back still out on the streets. The moral I get is do bad deeds and you'll prosper.
Chris - Wednesday April 16, 2008 12:00PM EDT
I've led more than 1,000,000 visitors to my site, ExpertCredit.com, via AdWords. But...that was years ago. Today, I barely bring in a trickle of leads, and that's because Google controls the ad marketplace by using algorithms to determine the usefulness or relevance of an advertisement, rather than just let the free market do its job. Google has replaced the invisible hand with top-down control. Google needs to realize that advertisers will not waste money on ads when there's no ROI. Let the free market work. It's not technically impressive, but it works.
Yahoo! Finance User - Wednesday April 16, 2008 12:21PM EDT
Google grew when there were almost no alternatives to the type of service they offer with adwords. Now they actually have some competition, if they want to get their growth rate up they need to use their financial clout to sue and shut down as many alternatives to their system as they can. By any means. They must do evil, like most parasitic organisms. Alternatively! They could treat the adsense publishers better, pay them more and give them more freedom than other services with more click throughs that actually pay out. Also stop this sillyness of waiting for 100 dollars to be paid. Let the earnings transfer work more like paypal. THen they'll get a lot more pages and more growth. Lastly - advertising is repsonsible for getting the first conversion. After that the product has to do the work. Make the service attractive to a wider publishing audience means attractive to more types of products. As for metrics, people only really rely on a few. Goog should stop using beefing up charting options as a lure so they can better spy on the publishers. Fight click fraud or fight spam, don't try to fight them both at once with your product. It's not sexy.
Jayson - Wednesday April 16, 2008 08:54PM EDT
I agree with the report. Google ads is going too smart, Yahoo! and MSN will take advantage from it. The report sure will slump Google shares... Like Goal? Football? click to ChampionsLeagueGoal.blogspot.com LIVE Goal... LIVE MATCH....Live Show! & is **FREE** ChampionsLeagueGoal.blogspot.com ChampionsLeagueGoal.blogspot.com
just a man - Wednesday April 16, 2008 12:37PM EDT
The advertising industry will dilute further. Globalization is ruining this country. That sums it all up. Hank, I really liked your comment the other day about the people that worked hard saved their money (and continue to do so) and now are being robbed of our income by the Fed discount window. I liken it to being pick pocketed for thousands of dollars and then getting a $600.00 check in the mail from the crook.
Jayson - Wednesday April 16, 2008 08:55PM EDT
I agree with the report. Google ads is going too smart, Yahoo! and MSN will take advantage from it. The report sure will slump Google shares... Like Goal? Football? click to ChampionsLeagueGoal.blogspot.com LIVE Goal... LIVE MATCH....Live Show! & is **FREE** ChampionsLeagueGoal.blogspot.com ChampionsLeagueGoal.blogspot.com
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a - Wednesday April 16, 2008 10:59AM EDT
Based on my own experience, I feel that advertised paid by click rtates are getting too expensive and for that reason many keywords are inactive and therefore, few clicks per day are generated.