Tuesday, April 15, 2008

Fret no more about Google

The decrease in paid clicks on Google's online advertising network has been one of the worrying news of the first quarter for modern day advertisers. The Economist has done a good little piece of analysis showing why the decrease may only be the result of Google's own aspiration for more relevance and better performance of ads. And I think it shows pretty well why Google is here to stay and very far from being already "over the hill" as some put it. It is perhaps the most telling testimony of the company's ambition to build a sustainable position in the elusive field of online advertising and beyond that narrow perspective an indication of the stringent demands the company has on itself.

So emails may be flying around showing how great a working environment Google is, but nobody should infer it's a corporate version of Club Med. And judging from their ambitious cooperation with SalesForce , these guys are going for a cut of every significant business transaction they facilitate. That is some business quest!

clipped from www.economist.com

The case of the missing clicks

What does it mean when people click on Google's ads less often?

The scare started when comScore, a research firm, reported in late February that Google's “paid clicks” had decreased by 7% during January, and were flat compared with the same month a year earlier.

the ratio of paid clicks to searches dropped even faster than the number of paid clicks: it was down by 16% in the month of January.

eMarketer, another research firm, projects that online advertising in America will grow by 23% this year, economic troubles notwithstanding, because the measurability of the medium is too compelling for marketers to ignore.

the likeliest explanation is instead that Google itself is to blame—by, paradoxically, increasing the quality of its ads

this is what drove Google's revenue last year: it grew by 56% on the back of a 21% increase in revenue per paid click.

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