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Google Paid Search Clicks Are Down - Why?

Posted on Tuesday, February 26, 2008 by Rick Breslin in Commentary

Web searchers are becoming increasingly intelligent - as the Internet progresses, so do its users.

Today, financial news organizations were all over the big announcement from comScore late Monday night that Google's PPC (pay per click) ad clicks were down fom December to January, and flat from last year's total. In this commentary, Rick makes three main points regarding these statistics:

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  • Who said what? Quoting comScore
  • Ad clicks decline, but searching increases?
  • How does "click fraud" play into this?
  • Habits of web searchers (search engine users)
  • An optimistic outlook for paid search advertising
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Today, financial news organizations were all over the big announcement from comScore late Monday night that Google's PPC (pay per click) ad clicks were down:

According to comScore, Google's so-called "paid clicks" -- meaning the number of times Web users clicked on an ad-supported link -- fell 7% in January from the previous month and were relatively flat compared to the same period last year.
Source: MarketWatch, Google shares take a hit on paid-search data

This resulted in a media frenzy, with sensationalized commentary and speculation that the Internet giant and its online marketing mechanism (paid search advertising) were on the decline. They went on to bring up other topics such as "click fraud" and tried to tie the story to the looming recession in order to further bask in the negative light of this news. All of the hoopla resulted in a 5% drop on the stock for the day (reaching as far down as 10% in the morning), and a downgrade on the stock price.

In addition to this data, comScore also just announced last week that Google has increased their market share in January 2008 from December 2007, with a 8% increase in overall searches conducted (up by half a billion).

So, if searches increased, why did ad clicks decrease?

A few major changes are occurring before our eyes:

  1. The way Google handles "click fraud" - Google maintains the relentless pursuit of providing the best search engine on the web. In doing so, they are implementing measures to reduce the amount that an advertiser has to pay if a trigger-happy web searcher clicks a paid ad more than once (or several times for that manner). This is resulting in less "actual" clicks being recorded, therefore filtering out all the junk (fraudulent) clicks. This makes advertisers (small businesses like you and me) very happy - no more large fees for "empty" clicks.
  2. Web searchers (the general public) are becoming increasingly intelligent - As the Internet progresses, so do its users (you and me and our friends and relatives). As people become more familiar with how a search engine works, they will be able to complete their goal in fewer steps. Users can now perform a web search, locate their destination (a website) and complete their goal (such as buying a product online) within a few clicks - which would most certainly result in less "clicking around" within Google and its paid ads.
  3. Websites are getting better - This is right in line with point #2. Website owners and developers are making it much easier for users (web searchers) to complete tasks by designing and developing efficient websites (again, by more effectively allowing users to complete their objectives in fewer steps). If a user is able to purchase the product they were looking for by visiting 2 or 3 websites instead of having to click through 10 poorly developed websites, then of course the overall click volume of Google ads will decline.

Personally, I am taking this news as optimistic - Google is continuing to improve our online experience and continues to set the standard for paid search advertising (Yahoo and Microsoft are desperately trying to keep up). Not to mention, this will actually drive the value/cost of paid clicks up, since web searchers are becoming increasingly sensitive to the quality of the ads on the first page of the search results. This means advertisers will need to outbid each other to reach that top, first page listing.

If you're a small business owner, don't let traditional media scare you with exaggerated stories of "the decline of Google" or its paid search advertising program (AdWords). Instead, rest assured that Google is doing its best to deliver the most accurate analytics for your paid search advertising campaigns, saving you money in the long run from erroneous paid clicks. Also, this is good time to make sure your website is up to today's standards, allowing potential customers (web searchers) to achieve their goals in less clicks.

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