As reported Google ad drop may not signal problems There seems to be a decline in the click thru rates on Google ads of late. ComScore reported a 7 percent decline in consumer click thru on Google ads in search results in January, while Hitwise reported that traffic going from Google to retail sites continues to rise.
In my experience there is always a drop off when you compare January to December on a click thru basis. November and December are the two highest click thru months for Google Ads due to the retail business for the holidays. How is this really news that could drop Google’s stock by 4%? It’s a ridiculous comparison.
Now the fact that the IAB (Internet Advertising Bureau) has been predicting a decline in Google Ad usage by advertisers in favor of using those budgets towards the Social Networks advertising market. This is more of a danger to Google Ads then any short term decline in clicks. Even though conversion rates among Google Ad users is much higher then Social Networks ad users advertisers want to go where the numbers are highest and the number of people using Social Media sites and the length of time they are on those sites is on the rise. How will Google compete? Can they compete with Social Networks?
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Long history of social network sites
When has a social network site made money? People socialize online, but if you could make money advertising to people who were in the middle of a conversation, TheGlobe.com, Friendster, or Yahoo Groups would have already been bigger than Google. Orkut would be a revenue producer for Google. Rubbermaid and Wal-Mart would be out of business, because everyone would buy stuff Tupperware party style.
Podcast with Doc Searls: "Web 2.0, social sites, and advertising".