E-Commerce Proven Healthy by Google’s Robust 20% Ad Click Increase [4/18/2008]

Google recently reported revenue of $5.19 billion in the first quarter of this year. This eased the fears of many Internet marketing experts who had been worked up about the health of the e-commerce industry.

What was particularly interesting to many e-marketers is that 20% of this income came from pay-per-click advertising, which is the largest revenue generator for the search engine giant. The pay-per-click statistic had caused disagreement among some Internet marketing data experts. comScore, a web measurement firm, had put the pay-per-click increase at only 2%.

However, Google was quick to point out two things that comScore’s reporting didn’t take into account. First, that its (Google) statistic included worldwide revenue, not just U.S. consumers. And, secondly that it included all ads served, not only search ads.

While comScore stood by its reporting that paid search advertising is declining in the U.S., Google defended its position as well. The company noted that more than half of its revenue (51%) came from outside the U.S. last year.

What both comScore and Google agree on is that the economy is not to blame for any softening in paid search advertising in the U.S., as it’s not happening across the board (e.g., with MSN and Yahoo!). Google has taken pains to improve the quality of its search results, leading to things like less accidental clicking of ads. This, experts agree, is likely the cause of the decline in ad clicks.

If numbers tell the tale, then improved ad quality does indeed account for the decline in ad clicks. Advertisers’ ROI improved 24% in the first quarter of 2007, a bigger return for their investment in spite of the decline.

Other Findings in Google’s Income Report

Almost all of Google’s revenue comes from advertising (99%). Exactly two-thirds (66%) of that comes from ads served up by its own sites.

Google posted an astounding 52% in ad growth from Q1 of 2007 to Q1 of 2008 (from $2.23 billion to $3.40 billion). Publisher sites that run Google’s AdSense program contributed $1.69 billion.

Net income for Q1 of 2008 was $1.31 billion, an 8.3% increase from the same time period a year earlier.

For more insight visit Ecommerce development Services

Back to Article Listing  |  Email to a Friend