Why are we clicking less on Google search ads?
The latest paid-click data for search engines shows that Americans are clicking on paid search ads less than we did last year--not an encouraging trend for the state of online advertising.
For Google alone, which represents about 60 percent of the U.S. search market and is a bellwether for Internet companies, this deceleration in paid-click growth has been going on since at least October. Year-over-year monthly growth rates in paid clicks have fallen from 37 percent in October to 27 percent in November, 12 percent in December, 0 percent in January, and now 3 percent in February, according to ComScore figures published by Silicon Alley Insider. (ComScore does not disclose the paid-click data to the public, only to Wall Street analysts.)
Google representatives declined to comment on the paid-click data so we don't know exactly what is going on.
But there are several theories as to why paid-click growth is down. ComScore has noted that Google's quality initiatives designed to improve the relevancy of ads played a part.
But analysts say that can't be all that's going on, and at least one expert says the paid-click trend is backed up by other sources.
Clay Moran of Stanford Group says his informal survey of search engine marketing firms shows that about one-quarter of them are worried that a general recession could impact online ad spending.
"Typically in mid-December we get nearly almost positive feedback" from search engine marketers, he says. "But over the past few months there has been a more mixed response in our channel checks. They are concerned about an economic slowdown affecting Internet advertising."
That information, coupled with the paid-click data from ComScore, has prompted Stanford Group to cut its forecasts for Google several times. In January, before Google's fourth-quarter results missed Wall Street estimates, Stanford was forecasting earnings growth of 34 percent this year and had a price target of $735 per share. Now, the earnings are forecast to grow only 25 percent this year and the price target is $500.
"Internet search growth has slowed down materially, possibly dramatically, due in part to changes Google made to the quality of their ads, but also due to the overall macro-economic environment," Moran says.
While Google's core business is slowing, its new revenue initiatives, including display, mobile, and YouTube advertising, haven't ramped up, he said. "These are the areas we're looking at to see if Google will regain some of its momentum."
We already know that financial-services companies, the biggest buyers of paid-search and online ads, have cut back their online ad spending as a result of the housing crunch.
If we connect the dots the picture gets clearer. Just like in past recessions, people are tightening their belts and trying to spend less, which means those ads on Google are less enticing and there are likely fewer ads as retailers themselves pull back on spending.
Now the questions are how far the growth rate will dip and how long the contraction will last. All the ComScore data in the world can't help analysts predict that.
Elinor Mills covers Internet security and privacy. She joined CNET News in 2005 after working as a foreign correspondent for Reuters in Portugal and writing for The Industry Standard, the IDG News Service, and the Associated Press. E-mail Elinor.
And the proof of this is the fact that the conversion rates for search terms ads are notoriously low adn getting worse. An advertiser will get lots of clicks (and fees) but very, very few buyers (on the order of 1% overall).
In response to the poor conversion rates, the advertisers try to get more bang for the advertising buck and in doing so, they dilute the ad target and the ads become worthless to the customers and they quit clicking. Its a classic death spiral!
Paid word search advertising is finally heading towards the death that it has always deserved. It was deeply flawed from the start but it was the best thing online. Time for a new approach.
We have hundreds of clients making very large dollars from CPC programs. Our company spends about $4000 per month on Google alone and generates between $35k and $40k per month in new sales.
It's true, some people ignore the ads. There is no formal study I'm aware of, however most of the industry uses a 50/50 number. Half of people do, half of people don't. The point is, that the half that do is a huge market.
It's also true, that many a company has lost money using a CPC program. We've seen the primary reasons for this being that they don't understand how to set up their account, write their ads, manage the program, create the proper landing page and website.
It seems simple, choose a couple keywords and pay for clicks. Actually, there are numerous unseen subtleties that can change your results drastically.
In the most competitive markets CPC is not cheap. On average we spend about $8 per click, we get about 20 clicks per day, we convert about 12% to leads or 2 to 3 leads per day. We sell about a third of those leads. Reasonably good marketing results.
Trust this was useful to someone..GB
system. Publishers get screwed because they wind up getting
less than $0.05/click, and the visitor who clicks on the ad gets
taken to a come-on page that leads to an affiliate that pays a
very large sum, but has a very low turn-over.
I serve these ads all the time... I get paid next to nothing, and
the person who paid for the ad gets paid $75 for each sale. So
the advertiser only has to make one sale for every 1500 clicks.
If Google would simply set a minimum price for a click, then
they would get rid of the useless ads. In the meantime, the
publisher and the visitor all have a bad experience and thus, it
gets worse over time.
Please fix the problem, Google.
internet) I have deliberately avoided clicking on ANY ads. I can't
believe I'm alone on this. And now that the cost of living is
rising, in general wages are flat, and many companies are laying
off workers, why would anyone expect MORE folks are going to
be squandering precious resources on the services and
merchandise advertised on the web? A look at the statistics for volume of trash going into municipal landfills shows a
coincidental trend that matches the article's research - people
are being more cautious with expenses, are not using their home
equity "ATM" for discretionary expenses now, and haven't been
for many months. Consumers are generally not as foolish as the
government agencies. Spending money like drunken sailors got
us where we are right now IMHO.
- and again.. a thanks to my guts..
-
by RoodparT
March 28, 2008 3:31 AM PDT
- I recently got an great job offer from Google but job would´ve been w/i the adsense programm. I turned down saying no thanks... I kinda have the feeling as well that this business modell will not last very long anymore; If advertising budgets will be shift over to a "new" type of online advertising (not those dumb adwords stuff) Google will go doooown since they still dont really make money out of their other (spy) appz like gmail and so on.
-
Reply to this comment
-
(10 Comments)And I also agree with with the others here. I Never ever ever ever clicked one of those silly text ads. They are a: totally mismatching and b: I dont trust them to really give me the best offer.
Thanks, my dear guts; I am still awaiting the day the Blue "monopolist (of hearts)" will be replaced by something new. Way to scary what they are doing.