CPC Is Flat, But People Are Still Shopping

A recession or not a recession; that is the question

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Speculation as to why Google’s paid clicks have flattened in January has led to further speculation that a recession has caused consumers to do less search-initiated shopping. Hitwise’s Bill Tancer has information that suggests otherwise.

(It occurs to me also that investors have been spoiled by Google’s constant growth, as even when Google grows there is disappointment that there wasn’t more growth. And flat returns now might as well be declines. Regardless, I suppose market corrections are inevitable. It just sucks if you bought in at $747 per share.)

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comScore’s report of flattening CPC revenue prompted GOOG prices to fall sharply, and for theorists to propose any number of reasons, ranging from Google’s increased vigilance against click-fraud to better organic results to increasing consumer ad-blindness. One thing it’s probably not, says Tancer, is an unwilling, unconfident consumer.

"If a recession is in fact affecting search, we should see a drop in the amount of traffic going from Google to retail sites (our Shopping & Classifieds category)," writes Tancer at the Hitwise Blog.

Instead, traffic from Google to retail sites has increased continually over the past three years. Even if you look at the data on a day-by-day basis, it appears that search traffic to retail sites was up in January.

That leaves any number of theories as to why Google’s PPC revenue has reached a plateau, but I’m putting my money on a combination of ad-blindness and better organic results that bring up superbly SEO’d websites. In essence, that means consumers are not only are ignoring the sponsored ads, but are finding they don’t have to return to them after finding what they want in the organic results.  

Tancer’s analysis, and part of my guess, doesn’t take into account AdSense ads on blogs. If AdSense clicks are down, it could be ad-blindness, lack of effective contextual matching, or lack of trust on the part of the consumer (i.e., the consumer is more leery of ads on blogs than ads on search results).

CPC Is Flat, But People Are Still Shopping
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