The day’s big news of Google’s precipitous drop in share price concealed the fact that Google’s average CPC is down 15% from a year ago. This decline in one of Google’s key performance metrics has potentially far more long-term consequences than a silly printer’s mistake.
Yesterday’s premature release of Google’s disappointing quarterly earnings caused a major melt down for investors as shares for the internet giant were dumped and dumped fast. Shares dropped 9% before Nasdaq halted its trading in the early afternoon as Google promised to release its official earnings report by the end of the trading day.
But it is the reasons for Google’s less than stellar performance that are the important thing.
According to Reuters:
“Average CPC declined 15 percent from a year ago and 3 percent from the second quarter of this year. Analysts say that Google, like many of its peers in the Internet industry, has been struggling to adapt to the rapid consumer uptake in mobile devices. Advertisers pay far less for ads on smartphones and tablets than for similar ads on desktop computers.”
The fact is that while Google has been busy cementing its dominance in the online advertising market, searches on desk-top platforms have been in decline. The Macquarie Group reported the sliding numbers in September, the first decline since 2006. By the end of the year, almost a third of Internet search traffic will come from smartphones and tablets, Macquarie said. Consumers are rapidly becoming mobile search savvy, and in some categories, such as restaurant search, mobile already accounts for a 1/3 of the search traffic.
Google generally pulls in less revenue from the advertising it places on mobile devices than it does from traditional personal computers, and that’s helped create this downward trend for advertiser prices on Google.
With so much of internet searching shifting towards mobile devices, the disappearance of Google Maps on the iPhone may have a bigger impact than previously thought. And as the mobile search war continues, yesterday’s premature reporting calamity reveals that Google may just be vulnerable after all.
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