As three makes a trend, Does a third quarter in a row of cost-per-click decline for Google advertising make an unsettling norm not only for the search company, but also for Internet advertising efforts elsewhere? During yesterday’s earning call, Google reported a 16 percent decline in CPC, meaning the value of each advertisement clicked has gone down. That follows a 12 percent drop last quarter and 8 percent the quarter before that. Even at the company that managed to make money off of Internet advertising, those online ads are continually losing value.
In the scheme of the Internet, Does Google’s loss shows an unfortunate reality of online advertising? Unlike the print world, Do Internet ads lose value over time? Technology Review’s Michael Wolff Beleives so: “The nature of people’s behavior on the Web and of how they interact with advertising, as well as the character of those ads themselves and their inability to command attention, has meant a marked decline in advertising’s impact,” he writes. Google eluded online advertising woes by making itself a necessary middle man, via Ad-words, Wolff continues. And it did this early, which also helped, explains SmartMoney’s Jack Hough. But some believe even that hasn’t stopped the core inevitability that online advertising is a race to a bottom, as evidenced by the last three quarters.
But another factor can definitely be in play here. Unfavorable foreign exchange rates and “economic head winds” affected Google’s sales, Patrick Pichette, Google’s chief financial officer, said on a conference call with analysts. Most of Google’s revenue — 54% — came from outside the U.S. On a constant currency basis, Google’s revenue would have risen 25%, he said. Pundits need to look at the whole picture before making such sweeping statements.
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Google Q2 EPS Ex Items Rise 16% And Beat Analyst Expectations, But Revenue Misses GOOG – Investors.com