March 27, 2008
Unanswered questions from the Google click-rate conundrum
So the fall-off in paid clicks on Google wasn’t a one-month phenomenon. The comScore report a month ago that the number of clicks on the search engine’s adverts had fallen slightly in January from a year before touched off fears that the Great Google Slowdown had set in. It didn’t matter that comScore itself later argued that quality improvements in Google’s ad system could account for the decline: the seeds of doubt had been sown.
The latest figures show that this was not an isolated phenomenon. The research firm now says that Google’s paid clicks in the US edged up by 3.1 per cent in February, which is at least better than the 0.3 per cent decline the month before. But this still represents a major deceleration from the 25 per cent increase in the fourth quarter of last year, and with search queries still growing strongly it points to a big change in the way searchers respond to adverts.
Only Google’s next quarterly earnings will reveal whether an advertising slowdown is setting in, but even the most rosy interpretation of events has to account for questions like these:
- Why is the click-through rate on adverts falling? It’s one thing for the number of adverts to decline - that shows that Google is pruning the least effective/ relevant. But shouldn’t that actually lead to an increase in the click-through rate? Intead, it fell 5 per cent in the latest month.
- How quickly does pricing in the Google ad market respond to quality improvements? Higher quality ads should produce better leads, which should feed through into higher prices per click. But this won’t happen overnight. Effective as Google’s ad system is, this is not a perfect market. For now, the fall-off in clicks is the only verifiable fact (at least if two months of comScore numbers are to be believed.)
there could be a very simple explanation. Increasing numbers of companies are preventing employees from using click-throughs at work by blocking them. One can still use the main Google search, but not any of the paid-for links that come up. This has been brought in due to previous quality issues with the paid-fors, whereby employees clicking in good faith after a harmless search find themselves on an undesirable site.
Posted by: Alison | March 28th, 2008 at 7:56 am | Report this commentAt the beginning of the period you are quoting, Google made a pretty substantial change to the way the ads work on their partner network (by making just the link on the syndicated ads clickable and not the whole thing). Official reason was to reduce accidental click-throughs. In real terms, what these figures are probably showing is that Google was making a massive amount of money from people misclicking. Given this change, it is very hard to draw any strong conclusions either way about how their business might develop. There is one straightforward ‘take-away’ from this, why did it take them so long to do this? The same change happened on the ads on the main site quite a time before…
Posted by: Simon Lynch | March 28th, 2008 at 9:43 am | Report this commentAdvertising on most websites is incongruous with the design of the rest of the website, and therefore annoying. And tools to get rid of the damn things are easily and widely available to anyone who is slightly more technically minded. Cannot remember the last time I saw an ad on most sites. I imagine the number of people like me is growing a bit as well.
Posted by: Andrei Timoshenko | April 1st, 2008 at 11:47 am | Report this comment