Results released July 16 showed a big drop in so-called revenue per click, a measure of the value placed by marketers on ads shown by Google, and more generally a barometer of the health of online advertising. The average amount paid by advertisers when a Web user clicks on an ad placed by Google dropped 13% in the period that ended June 30. The decline in revenue per click overshadowed other results, including sales that bested Wall Street's expectations by a hair and better-than-expected earnings that showed Google is keeping costs under control.
Shares of Google fell 3.4% in extended trading after closing July 16 up 4.43, or 1%, at 442.60. "The downturn is finally getting to Google," says Jeffrey Lindsay, a senior analyst at Sanford C. Bernstein who has an outperform rating on Google's stock. The drop in revenue per click shows that Web users are clicking on ads to comparison-shop without buying products, and buying lower-cost items online compared with a year ago, Lindsay says. Those behaviors mean ads are less valuable to marketers, and result in lower payments to Google.
Business Week [businessweek.com]