Google is blaming this slowdown in growth on difficulties it is having monetizing its social media properties. Boiling this down Google can’t get the YouTube kids to click ads! By all accounts Google is also experiencing a lower click rate on ads on its own search results and especially their Adsense partner sites.

This was entirely predictable and is likely to continue to go lower. Every ad type from banner ads to ads in emails received a high click-through rate when first introduced on the Internet and then progressively lowered to a norm of about .25 percent.

Google is battling this by dramatically increasing the number of ad impressions it serves via partnering with more content sites, acquiring sites like YouTube, increasing the number of ads per page and blending the ads in content more effectively so that people don’t think they are clicking ads.

The problem for Google is that there are really no more tricks possible that will significantly combat ad fatigue. I also sense another under the radar battle the Google folks are fighting and that is complaints of lower conversion on content partner sites and extremely lower conversion for advertisers on social media sites.

This is caused by a simple fact… everybody isn’t surfing the web to buy products, and especially the kids on YouTube.

Google has a great business with search precisely because there are a large number of people searching for product information. A much higher percentage of people who click an ad from a search result have a purchase intent. This is just not true when reading a news site or looking for that funny video.

Some People Will Click On Anything

Didier Stevens, who works for European IT services firm Contraste Group, conducted a six-month AdWords experiment to see if people would click on an ad with the text "Get infected here!"

And people did, 409 of them to be exact, excluding the bots.

On his blog, Stevens remarked on the inexpensive ease of which an ad can be set up on Google. Sinister minds require the crime fighters to have sinister minds as well. Stevens’ first thought was that AdWords could easily be used to push malicious content to the first page of the search results.

One of the more interesting facets of the experiment is that Stevens wasn’t the least bit sneaky in setting it up. He bought the domain drive-by-download.info (.info is a notorious hub for malware). Google approved the ad.

The website itself has a simple message: Thank you for your visit.

(Though, honestly, it would have been much funnier if Stevens had employed the famous Douglas Adams message from God: Sorry for the inconvenience.)

Over a six-month period, the ad was displayed over 259,000 times, clicked 409 times (click-through rate of 0.16%), and cost Stevens about $23 (6 cents per click). Only seven clicks were suspected to come from bots, which Google successfully filtered out before billing.

Malware crooks are definitely targeting the right browser; 98% of the clicks came via Internet Explorer.

Stevens’ experiment echoes findings of other studies conducted by industry experts. At the Search Engine Strategies Conference in New York, a panel on searcher behavior noted: "You could run an ad that said ‘bad prices, bad products’ and people would keep clicking."

The results also seem to echo his own previous, more intensive study following AOL’s Data Valdez data leak. Upon examining that data, Stevens found that for every 2800 click-throughs, one landed on a "spamdexing" site.

Though the need, effectiveness, and benefits of cost-per-action models have been hotly debated, proponents of CPA billing will no doubt cite information like this, adding to click-fraud numbers for justification.

Indeed, the bottom line seems to be that the lowest common denominator (i.e., unskilled or unaware searchers) will be as present in the CPC world as the ever-hated clickbot. Chalk up the click-happy searcher as a cost of doing business, then, just as grocery stores put up with grape-grazers and hotels write off towel thefts.

Zuckerberg, in the meantime, will look back with yearning at the billion-dollar acquisition offers.

From Valleywag:

Media buyers…report that the college social network is a truly terrible target. They’re mainly students, with low disposable income, of course; but, beyond that, the users appear to be too busy leaving messages for each other to show much interest in advertising. Facebook’s members appear indifferent even to movie advertising aimed at their demographic. Clickthrough rates, the percentage of time users click on an ad, average 0.04% — just 400 clicks in every 1m views

MySpace, on the other hand, not only garners twice the click-through rate (for the advertisers mentioned), but has Merrill Lynch stoked about the money it’s making – about $25 million a month in advertising. Facebook, again, is looking at about half that, but if it’s true that advertisers are unimpressed with the returns, don’t expect that Facebook to reach those numbers again.

True, it’s more than click-throughs these days. It’s also about having presence with the right crowds. Jobster is a good fit for a place like Facebook, for obvious reasons. But in addition to the market itself, the click-through rates could be a flub on the advertiser’s side.

Think back to college and what life was like. You had no money – enough to grab a pizza from time to time, a few beers here and there (and there and there and there), and sometimes, go see a movie as long as it’s not "a date-date." But for the most part, you got nothin’.

It also shouldn’t be so surprising that college students are often oblivious to anything off-campus, but quite absorbed in campus life. When I was in school, if World War III wasn’t commencing at the student center, I pretty much didn’t know about it. So, anything that happened after the OJ trial but before 9/11 is still a mystery to me because I just wasn’t paying attention.

It would be very interesting to know which advertisers are reporting bad returns on their advertising investment with Facebook. It’s easy to point fingers and say it’s not working, so dump it. It could be the wrong market, or the wrong tactic.

But if it is true on a wider scale…and heavy hitters like Yahoo lose interest…Zuckerberg may look back on 2006 as the year he shoulda sold out.

New Ranking Model Gives Yahoo A Boost

This release of this data is a welcome sign for Yahoo. Let’s face it; the company has been desperate for some good press for quite a while now, and comScore’s announcement could not have come at a better time.

So what exactly do the figures indicate for Yahoo?

First you have to consider the starting point of reference, which for comScore was the week ending February 4, 2007, just before Panama’s launch. The metrics firm look at the sponsored search click-through rates (the total clicks on sponsored search ads divided by total number of s

earches) for the period just before Panama, and then the next two weeks of click-through data in order to evaluate the effectiveness of the new ranking model.

As a result, comScore’s data indicates that for each of the two weeks in question (weeks ending February 11, 2007 and February 18, 2007), Yahoo experienced a noticeable surge in its click-through rates. The first week, saw a 5 percent increase, while the second showed a surge of 9 percent.

“comScore data show that the recent introduction of Yahoo!’s new search marketing ranking model is already having a positive impact on the click-through rates for Yahoo’s search advertising,” said James Lamberti, comScore senior vice president of media and search solutions.

“comScore will continue to monitor the performance of the new ranking model and plans to issue an additional analysis at the end of the first quarter.”

"While still in its early stages, any good news for Panama is good news for Yahoo! – and this early study shows plenty of good news,” added John Battelle, chairman and publisher of Federated Media and noted author.

Add to Del.icio.us | Digg | Reddit | Furl