Forum Moderators: goodroi
Google (GOOG) shares last fell 4.6% to $345.20, trading below the $350 mark for the first time since late October. The Barron's article argued shares could fall further due in part to growing competition from heavyweights Microsoft Corp. and Yahoo Inc.
MarketWatch article [marketwatch.com]
The Barron's article called Google Gets the Gong [online.barrons.com]
Shares of Google Inc. (GOOG.O: Quote, Profile, Research) fell nearly 5 percent on Monday and have lost a quarter of their value this month as the Web search company that once could do no wrong faces up to the realities of a business that must face the bad with the good.But despite several bouts of negative news that have knocked a stock once thought headed to $500 back below $350, the vast majority of Wall Street analysts remain sanguine over Google's prospects and advise investors to buy the stock.
It would seem it would be simple for google set a onclick cookie and not count subsequent clicks until a timeout period expired...but there seems to be little incentive for google to do so.
As this is relative to google's current market value...adwords advertisers are now having to discount bids to offset the unnessecary added cost of click fraud...whether the fraud is perpetuated intentionally by a competitor or unintentionally by an ignorant surfer.
Therefore the value of googles one main commodity is worth much less than it could be if they would simply use their unlimited technological firepower to protect its value.
Aside from this...google's market valuation is inflated somewhat (P/E ratio). Investors have been banking on continued rate of earnings growth. Now that it has slowed below expectations...the speculative potential is less appealing.
Google needs to pay more attention to protecting and adding value to adwords instead of venturing off into niches were competition already exists (ie; itunes, gbuy, etc.)
As an adwords advertiser that spends a substantial amount...I would be more than willing to increase my budget and bids if I was assured my money would not be wasted on worthless clicks. The cumulative net effect for google would be a continued high rate of earnings growth.
[edited by: oldpro at 12:14 am (utc) on Feb. 14, 2006]
There will always be time to go back and deal with click-fraud, but if G falls behind in any area then they will have to spend considerably more resources to catch up.
To me this carries ZERO weight, actually even less, it's a negative. How many of these "analysts" pushed net stocks in the late 90's even as they reached $400 levels?
If click fraud is as high as some estimates project, they better work it out or it seems rather likly that advertisers will adjust bids accordingly.
I classify "click fraud" as both malicious intent and for instance a bored surfer clicking back and forth. Both have the same consequences. 50% of our clicks are unnessecary...no matter the argument that a surfer may be comparision shoppping...it doesn't usually take a person 10 visits in a matter of minutes to make up their mind.
We obviously need PPC to remain competitive in our niche...as does any serious online business. But when our profits remain the same by lowering our budget and adjusting our bids to compensate for click fraud...google loses and we win. If google would protect its advertisers interests better we would spend more...profit more...and it would be a win/win situation for both google and the advertiser.
Adwords was the horse that got google to $450.00 per share. They need to ride that horse till it drops.
At this point Google is more concerned with shutting out Y! and MSN
If this is the case...think of the competitive google would have if they could assure advertisers protection from click fraud and unnecessary clicks. Overture would soon be in shock from revenue bleeding.
[edited by: oldpro at 12:51 am (utc) on Feb. 14, 2006]
Not before they have a few other foals running around ready to take the main horses spot right after it 'drops'. No? :)
Google can still have in other ventures in incubation, but still google will remain a one trick pony for a few more years. In my humble opinion they have temporarily lost sight of their priorities. This is probably because of the tremendous amount of capital generated from the sale of outstanding stock as opposed to retained earnings from ongoing operations.
Adwords is still their cash cow.
That's exactly what advertisers do. Click fraud merely lowers the price that advertisers would be willing to pay otherwise, because it lowers the effective sales conversion rate. Any legitimate publisher should despise parties involved with click fraud because it takes money right out of our pockets.
I’m quite unsympathetic to posters here talking about clicking on their own ads. That’s because I’ve spent thousands of my own money advertising and I know fraud exists. You can see it in you logs when a stream of traffic suddenly appears and your conversion rate plummets.
Google understands this and protects their advertising clients as well as anyone out there.
Google understands this and protects their advertising clients as well as anyone out there.
Agreed, but...
The point is there is much room for improvement when it comes to protecting advertising clients. This is a pervasive problem throughtout the PPC advertising medium. Protecting clients was well as anyone out there is not saying much...especially when the technology exists to practically make click fraud almost non-existent.
Investors and Wall Street outside "our fishbowl" see this major flaw in the PPC advertising concept. This is because they see PPC as alternative advertising which competes traditional mediums. We webmasters swimming inside our fishbowl are oftentimes quilty of not seeing broader marketing opportunities. Case in point...Our company can take what we spend monthly on adwords and ysm alone and buy full page ads in several national magazines targeted to our industry and drive way more traffic to our website than we could ever hope for with PPC keyword searches. I know this...we do it from time to time and it produces very profitable results.
We webmasters can complain till the cows come home and still nothing will be done about it. When Google loses half its market value, then it will dawn on them that they should correct the problem. I am not just knocking Google alone...YSM is no less quilty of ignoring the problem.
Notwithstanding my frustration with the click fraud problem, I still think PPC is the best idea since sliced bread. However, why not correct this problem when the solution is so simple?
Otherwise, doing nothing now will in the long run ruin the reputation of the PPC concept. If this happens there is a silver lining in the cloud for us webmasters...the days of .05 bids and above the fold positions will be back and google stock will be trading below $10.00 per share.
agreed
Almost at my expected 300 share price called it at 450/share.
Stocks just get to excited many times, to bad all my posts were removed, gotta love free speech on Webmasterworld. (Yah right)
I still think 300 is where this company will be healthy again and there is nothing wrong with talking about technical analysis, it is all based on fact and historical norms.
The next thread soon should read
"GOOG Falls Below $300 (first time since late Oct 2005)". But unless you are in bed with the search engines your post will be removed.
We rely alot on AdWords and have had mixed results so far, but in our niche its necessary. I just hope that their click-fraud filter is set up not to charge us for questionable clicks.
analysts = sales people. Plain, simple, and straight forward. Do you own homework.
Agree, and in some situations there is even what most businesses would deem a "conflict of interest."
the vast majority of Wall Street analysts remain sanguine over Google's prospects and advise investors to buy the stock.
We are without a doubt much more qualified to analyise Google's prospects than Wall Street salesmen. Webmaster World is as close to insider information as you can get besides being a fly on the wall in the Mountain View boardroom.
Whatever the case may be...Google's current stock crisis will have no negative effect on advertisers. However, nothing but good can come from this...improvements benefiting advertisers will take place. For me...I will wait until the stock is trading around $150/share if major changes are not made to correct the flaws in their PPC model.
And with respect to click fraud, who is the furthest ahead in detecting it algorithmically? Google, probably. Who has the broadest infrastructure for gathering information about web browsing habits, both for generalizing about browsing patterns and for looking at the behaviour of specific sites? Google, unquestionably.
So if Google can keep click fraud at a manageable level, this capability has the potential to become a competitive advantage that helps them defend their territory against Yahoo, MSN and Amazon.
It may prove especially valuable in keeping competitors from expanding beyond the "safe zone" of English-speaking industrialized countries. For example, in their beta testing YPN isn't addressing that issue at all, dealing with US webmasters only and paying for US traffic only.
