
Google's Stock Falls as Its Click-Through Rate Flatlines - nickb
http://news.wired.com/dynamic/stories/G/GOOGLE_PAID_CLICKS?SITE=WIRE&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2008-03-27-14-23-22
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Flemlord
The clickthrough falloff is not for lack of trying. I spent $500 on AdWords a
couple months ago as an experiment. I didn't get the results I expected so I
let it die after the money ran out. Since then, I've gotten eight phone calls
from Google trying to get me to re-fund the account. It's beyond annoying.

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rms
I saw mention on an SEO blog that one reason the clickthrough rate has fallen
is that previously, the entire ad copy was a link and now only the title is a
link. So there is less space to click and less accidental clicks. In the long
run this should make each click more valuable.

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Xichekolas
Headline here is a bit misleading. _Growth_ in click-through is slowing to a
halt... but people are still clicking. It's not like everyone on the internet
stopped clicking on ads.

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wanorris
I agree that it's certainly no cause for them to panic (at least not yet), but
on a sales chart, growth slowing to a halt is in fact a flat line, so I
wouldn't say the headline is misleading at all.

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ed
but it's not slowing growth, it's slowing acceleration

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wanorris
Not true. According to the article, they were seeing year-to-year growth of
their click-through rate in earlier months of 25-40%, and in the last 2 months
it's been 0% and 3%. That's slowing growth.

(Unless you mean relative to the aggregate number of clickthroughs and not
relative to the clickthrough rate. But advertisers care about conversion rates
more than total inventory of impressions, and we don't know how it affects
aggregate clickthroughs anyway until we know how the base inventory has
changed.)

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ed
That's an interesting argument but I suspect that advertisers care only about
the number and quality of referrals. The specifics of the process Google uses
to generate those referrals are abstracted away from the advertiser so they
probably don't care how many users pass over their ad so long as they get n
quality leads.

But my comment may have been a little confusing without explanation. The total
number of aggregate clicks is dependent on (a) the number of impressions and
(b) the ability to convert those impressions into clicks.

The number of aggregate clicks will increase so long as a, b, or a and b
together, continue to increase. If either a or b are increasing, there will be
growth. If both a _and_ b are increasing, there will be accelerating growth.
In this sense, we're just seeing the end of accelerating growth, not the end
of growth all together.

What's more, (b) will increase discretely as Google modifies its ad-selection
algorithm, so it should look more like a step-wise function than anything
else. It doesn't seem like a cause for alarm when the graph of (b) plateaus
for a bit!

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wanorris
All excellent points. Thanks for posting this.

I agree that 2 months should never be a cause for alarm for something like
this. It's only that for so long they had been able to keep building
significant continuous improvements in clickthrough rate that makes it a
potential warning sign.

At some point, clickthrough rate could actually end up plateauing on an
ongoing basis as they run out of ways to keep improving the rate. Then their
ad business would be solely dependent on impression growth (which I assume
would still be fine) for clickthrough growth.

Of course, as you point out, referral quality is also an important factor, so
even if they get the same number of clicks, that might be great for
advertisers if it's better traffic.

Is this the end of growth in clickthrough rate? Unlikely. But it's always good
to keep an eye on these things in case it turns out to develop into a trend.

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davidw
They ought to be working hard trying to sign up Europeans, with their strong
Euro, to the service. Maybe it's mistaken, but I actually get the impression
that they're kind of weak in Europe, and still very much centered around
Mountain View.

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startingup
I personally think Google 2008 is Yahoo 2000. We will see.

