Clicks Down, Revenue Up On Google

    March 4, 2008
    WebProNews Staff

LeeAnn Prescott, EfficientFrontier’s director of research and communications and WebProNews’s favorite statistician, concurs with comScore’s recent bombshell that the number of paid clicks on Google were down in January. Wall Street’s pummeling of Google’s stock, however, was "an unnecessarily strong reaction."

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(Photo Credit: Efficient Frontier)

Though paid clicks were down by 5% from last year among EF’s clients, advertiser spend on Google was actually up about 7%. Click-through rates, though, improved by 10%.

As a consequence, fewer, better-converting clicks are high-priced, meaning that cost-per-click rose by 13%.

"This data suggests, as Comscore posited, that Google is becoming more efficient at serving ads by delivering more relevant clicks to advertisers," writes Prescott. "Thus it is able to charge a higher premium for those ads, hence the increase in CPCs."

Prescott’s assessment matches the newest leading theory about what Google is doing with their ads. What’s lost in quantity is made up for in quality. Moreover, it’s a seemingly renewed focus on the company’s core competency, which should make investors less jittery about the company’s future.