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Mar. 2, 2008

Overall, clicks on ads placed on Google didn't change much from January of last year to January of this year, according to the latest numbers from comScore. In fact, on average, clicks were actually down about 12 percent from the last three months of last year.

So does all of this suggest that Google's revenues have started to flatten out?

In comparison, overall clicks on Yahoo ads also fell about 3 percent from the fourth quarter, but it was Google that was the most affected, and we won't even start talking of Google's close to 30 percent stock slide in the last few months...

Some search industry observers are starting to think that unless there's a problem with comScore's data (which is highly unlikely), the most probable scenario is that Internet advertisers are simply bidding on fewer keywords.

Seperately, Hitwise suggests that the percentage of traffic going from Google to retail shopping sites is actually increasing. Since the bulk of paid search advertising is shopping-related, the Hitwise data gives a far different picture than the comScore data.

Also, let's not forget that Google recently changed its technology to reduce accidental clicks, which could reduce the number of paid clicks, but could also make those clicks more valuable to marketers in the long run.

"An economic slowdown would likely mean less online shopping for consumers, and therefore fewer clicks on the ads that direct them to retail sites," said eMarketer senior analyst David Hallerman.

However, Hallerman warns that Web marketers should not overreact to the comScore data. "You typically need multiple data sources to get a clear picture. Even if the comScore data is perfectly accurate, one month sure isn't enough to view any kind of meaningful trend," said Hallerman.

On average, no search advertising crisis seems imminent. Taking the general state of the U.S. economy into account, eMarketer predicted in February that search ad spending would nearly double to about $16.6 billion in 2011, from $8.6 billion last year.

Additionally, there have been some differences between comScore's click data and Google's reported results in the past, according to a J.P. Morgan research note cited by The Wall Street Journal.

In the meantime, Google still dominates the market by a wide margin. It draws far more search users and search requests than all its rivals put together. An eMarketer estimate shows Google raking in about three-quarters of U.S. paid search advertising last year, up from about 60 percent the previous year.

Hallerman added "also, remember that Google tends to be more or less of a black box when it comes to its internal technology. Therefore, much of what is being written about the impact of any potential reduced clicks is, at this point, more speculation than fact."

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Source: eMarketer.