Google's Paid Clicks Spike Higher in April, Relief All Around
The collapse in Google's US paid click growth has scared the bejesus out of Google bulls for the past few months, but Comscore's April data suggests that trend has reversed. Lehman's Doug Anmuth:
comScore`s domestic paid click data for April suggest a reversal for Google from the trends seen in 1Q as paid clicks on its [Google] sites accelerated materially to +19.6% Y/Y. This compares with -0.3% Y/Y in January, +3.1% Y/Y in February, and +2.7% Y/Y in March, and is the fastest growth since November `07, when paid clicks grew 27.3% Y/Y. Although April`s growth rate could be inflated from an easier comp with Easter having been in April last year, we still believe April results were solid across Google`s domestic O&O business.
This Comscore data measures only US clicks and only Google properties--and Google's international business now contributes a far larger percentage of the company's growth (not revenue--growth). That said, it is hard to view the reacceleration in US click growth as anything but positive: One hangover concern from last quarter was the sharp deceleration in Google's US business. April's click data suggests the business may be be stabilizing.
Meanwhile, per usual, Microsoft and Yahoo took it on the chin:
Yahoo! and MSN`s paid clicks decelerated in April, suggesting improving trends were not evident across all players. Despite Google`s reacceleration in paid click growth, Yahoo`s April paid clicks fell -4.4% Y/Y and MSN`s paid clicks fell -9.0% Y/Y.
While April results for MSN showed an improvement relative to February and March where paid clicks decreased 13% Y/Y and 15% Y/Y respectively, April results for Yahoo! suggest a continued downward trend. In January Yahoo!`s paid clicks accelerated +15% Y/Y, +5.3% Y/Y in February, but then fell 3.1% in March, and fell 4.4% Y/Y in April. Prior to March`s decline in paid clicks, we note that Yahoo! had consistently seen growth in comScore`s paid clicks.
Conversely, AOL`s paid clicks appear to have stemmed their losses, growing 28.3% Y/Y in April, the first yearly growth rate reported for AOL`s paid clicks since July `07. Ask.com`s growth rate was 95.8% in April, consistent with its growth rates of 112% Y/Y in January, 88% in February, and 78% in March.



C'mon. Seriously, people went crazy over the paid click data trying to interpret what it meant without understanding all the other things that might be going on (such as are fewer clicks generating more income). They had partial data, tried to predict what Google was doing, then got egg on their faces when Google didn't tank. To make up for it, they all yelled at comScore as if it was to blame for how they interpreted the data. And comScore has to fallback on the "international" clicks to defend itself.
The click data is only one part of the overall revenue puzzle at Google. Using it in isolation is dangerous. I'd have thought last month made this point clear. So when you say the latest data suggests something, I submit it suggests nothing.
When dealing with Google, you have to realize that they have complete control.
If they want to fewer, higher paying ads, they raise the min. bid required. If they want to juice the numbers, they lower their ad quality requirements and let more ads run, which will lead to more clicks.
Its just like AdSense where they can throttle the revenue share payment up & down to make their own quarterly numbers.
If the metric is known, Google will win the game.
But if US trends now looking better that is very good news. For Google. It's lousy news for all others.
As Danny mentions, "The click data is only one part of the overall revenue puzzle..."
I've posted a summary discussion of this in comments on here elsewhere. But the most simple refutation comes in the form of a quick check on LSCB vs. Google for the same item. Here are the results for
Cuisinart DCC-1200 (coffee maker)
that is actually a featured item on LSCB's front page:
LCSB - Lowest "Bottom Line Price" (including 2% "cashback" discount that MSFT will kindly hold in escrow for us for a month or two) ==== $73.45
[note: there are other offerings with higher (phony) "cashback" percentages, but by it's own rules LSCB is listing the lowest "bottom line" price first, which in this case at least also happened to be the lowest price before the "discount"]
ON GOOGLE:
Paid Search (PPC) listing #1 by Amazon.com shows ==== $59.99
Included Google Products (Google Base) listing as part of Google's Universal Search on the same page shows ============ $68.72 - Electronic Express
Note that the Google Products listing inclusion is actually FREE (though not guaranteed to be shown with search results, Google dynamically adjusts this as part of Universal Search based on click-through rates).
Note that BOTH prices are LOWER (substantially in the case of Amazon's listing), and that neither require waiting for a refund or signing up for Google in any way.
I rest my case.
I agree that MSFT should vigorously compete AND INNOVATE in search or anything else it is involved in. Too bad that that doesn't really appear to be in its corporate DNA. Surely they have enough cash to do so, but do they have the inclination?
I searched a few more items featured on LSCB, same result for
Canon PowerShot A470 Digital Camera
Google FREE listings are $2-12 cheaper depending on color.
So far only
Bulova Marine Star Diamond Accents Mens Watch 96D14 With Black Dial
wins on LSCB with $192 (after $8 cashback) vs. $199 on Amazon (via Google PPC listing). Now this case is interesting because it would force a decision by the consumer on whether to go with LSCB even though they won't see the $7 savings for a while, and will have to create a whole new profile on Live if they haven't already done so.
Assuming that almost everyone has an Amazon.com account at this point, and knows and trusts Amazon as a reliable middleman, this is a real question.
Also note that Amazon actually shows a lot of other related/comparable Bulova watches, some of them at much cheaper prices. Where is LSCB on this issue?
They're probably overblown on the upside too.
The real reason to be bullish on Google is that it's in a natural monopoly business that's still growing 40% year on year at scale, and they have a number of potentially lucrative businesses (e.g., YouTube) in the pipe.
I think GOOG is going back to $700 by Fall.
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