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Google posts -23% decline in Cost-per-Click

-19% and -15% previous quarters.

     
12:36 am on Jul 25, 2017 (gmt 0)

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Google posted bad CPC numbers 6th quarter in a row.

Google posted -23% decline in Cost-per-Click in Q1+Q2 combined 2017, third serious decline after -19% in Q1 2017 and -15% in Q4 2016. Cost per click at Google are down 6 quarters in a row.

Karma is coming.

News reported:
Alphabet Q2 shows fine impact, 23% cost-per-click drop
[seekingalpha.com...]

This trend is not Google's friend:
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/GOOG%20cost%20per%20click_1.jpg

In unrelated, non-GAAP accounting world, Google revenue is still up to $18.4 Bln , income down from $8.90 to $5.01. Stock was down over $30 today on the news.
1:40 am on July 25, 2017 (gmt 0)

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@smilie brilliant cherry picking...
Aggregate paid clicks were up 52% on the year and 12% on the prior quarter. Aggregate cost-per-click was down 23% on the year and down 6% on the quarter.

So Google sold more at a lower price and as result increased revenues. As you stated revenue was up 18.4Bln. Where's the karma exactly?
6:52 am on July 25, 2017 (gmt 0)

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unit price v volume

At some point loss accrues re costs of infrastructure and delivery against net return on bid/income.
10:27 am on July 25, 2017 (gmt 0)

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Yup, that's very cherry picked highlighting all the negative.
I agree, the cost per click has been declining, we've known that and it's primarily with the advent of mobile.

Here's some balance to the cherry picking.
Ad revenue increases suggest even more ads, plus Other Bets revenues are increasing (losses decreasing), which really has to be Alphabet's goal while the golden goose thrives. Revenues of $26 billion, up 21% from a year ago.

It probably cannot keep growing in the same way, so i'm sure we'll see a greater effort into making some of these other bets come to fruition.
12:24 pm on July 25, 2017 (gmt 0)

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Don't get me wrong, this is not good news. Well for Google it is, but for myself and other Adsense publishers this seems to be confirmation that if your number of ad impressions isn't growing you will be loosing money. And for all the webmasters relying on Google, more ads also means that organic results are being pushed further down the page on more and more queries.
3:12 am on July 26, 2017 (gmt 0)

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Cherry picking?

You should all be cheer leading. This thread should be on page 1. Because THIS MEANS you, I and every other webmaster of a not billion dollar corps can finally attempt to gain profitability again in Adwords.

This means anyone running small-to-medium ecommerce gets to live another day, and judging by 6 quarters of the drop, another year. Google small merchant death grip is slowly getting weaker.

Cost Per Click is their main driver. When they went from 10 cent to $1-$2 / click based on bought Urchin data they had temporarily created a giant , billions of dollars fountain for themselves. From the money that was supposed to be distributed among advertisers - you know, fountain, clean water hole, everyone drinks?

Apparently , Google did not learn that if you are the biggest animal, you still let everyone drink and prosper. They ate everyone with 10 times or more PPC increases. And then following shaking of the SERPs up-and-down, making its traffic insanely unreliable. So that small and medium businesses dropped like flies .

And now look at that, the CPC is falling down like a rock, 6th quarter in a row. "Cherry picking"? That their main business barometer, how much more you can squeeze online merchants for.

Apparently, not much anymore. People either dropped dead, moved to ebay / Amazon, or stopped advertising altogether. And on top of that adblock market is exploding.

Total Ad revenue? What's in it for YOU and ME. Yep, they collect more revenue via completely eliminating organics above the fold, so what. There isn't anywhere to go further , the full STOP is now.
3:50 pm on July 31, 2017 (gmt 0)

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Very large advertiser, Procter & Gamble , just announced cuts in it's digital advertising budget for Q4 2017 by $100 million dollars. Because this spending was largely ineffective. The Company's marketing budget went down 7%, while income jumped 12% this quarter. Apparently, ads are clicked by bots and get distributed by thousands of automated click exchanges that are out of control.

No way , Jose, wait a minute, isn't digital advertising is all the rage, magic unicorns and stuff?

Well, apparently when Costs Per Click are 10 times above normal, and strongly support bot clicking, even the big, "brand only" spenders who basically advertise branding, find it ineffective just as well as small advertisers who need to make money on every click.

Not looking good or Google and it's CPCs that are way too high.


Procter & Gamble (P&G) cut over $100 million out of its digital advertising spend in Q4 and this is what happened: “We didn’t see a reduction in the growth rate. What that tells me is that that spending that we cut was largely ineffective.”

...
In April, P&G announced some details of its $12 billion or so cost-cutting binge over five years. This includes slashing $2 billion in advertising expenditures – among them $1 billion in media and $500 million in agency fees.

He touched on the two most common complaints about digital advertising scams:
* Advertisers are paying for ads that are viewed and clicked on by bots, not humans.
* Ads are placed by thousands of automated “ad exchanges” that are out of control of the advertiser on sites and pages that don’t match the advertiser’s products.

[pginvestor.com...]

[edited by: goodroi at 1:34 pm (utc) on Aug 1, 2017]
[edit reason] Let's be careful with the fair use quoting standards :) [/edit]

3:57 pm on July 31, 2017 (gmt 0)

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What I am also seeing here is signs of failure of Google's personalization-type, "chase the visitor around on all websites" , "re-marketing" effort. Apparently, not only visitors hate it, webmasters despise because it fails to match content (and therefore pay for it properly), but also big advertisers such as P&G.

"Ads are placed by thousands of automated “ad exchanges” that are out of control of the advertiser on sites and pages that don’t match the advertiser’s products."
1:57 pm on Aug 1, 2017 (gmt 0)

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If anyone honestly believes Google is failing and facing trouble, then now is the time to short the stock. The last 6 quarters Google stock has gained about 30% and the last 5 years it has gained about 200%. Not many wall street analysts are betting against Google so you can short the stock if you honestly think Google is in trouble and make a fortune or lose a fortune if you are wrong about Google failing.
10:44 pm on Aug 2, 2017 (gmt 0)

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I'll look at it from a different perspective.... Conversions from Google have vanished, leaving those paid visitors to be described as zombies, mis-targeted traffic or whatever synonym one wants to assign to them. To combat a falling CPC, Google has to produce more paid clicks and they have. That would help explain why Adwords has gone to crap and the bizarre/unnatural conversion patterns when they do occur. I would expect the CPC in Google to start taking deeper dives as more advertisers abandon their heavily manipulated platform that places their own profits above traffic quality.
12:57 am on Aug 3, 2017 (gmt 0)

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Could it be an aesthetic issue as well? Many of the Google ads I see are not very attractive, especially text ads, so perhaps in addition to "banner blindness," the proliferation of ad blocking, and the exponential usage of smartphones, etc., there might be what people have long told me is an issue of the plain lack of aesthetic appeal to the ads -- especially non-image ads or image ads that are not responsive to the content of the site.

Perhaps conversion is difficult when the source is not seen as a "classy" form of advertising.

I know our earnings are sinking way out of proportion to our traffic despite many experiments, and the push towards other more obtrusive ads seems intense from what I am told.
4:39 pm on Aug 3, 2017 (gmt 0)

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>> @goodroi: If anyone honestly believes Google is failing and facing trouble, then now is the time to short the stock. The last 6 quarters Google stock has gained about 30% and the last 5 years it has gained about 200%.

Google stock is part of DOW industrial index. DOW industrial index is bumped up by constant FED money printing to make it look good, like it grows. FED started it's "quantitative easing", or QEs , now to QE4 or QE5 (we talking about $ TRILLIONS here) by Ben Bernanke, "the Fed launched QE1 on November 26, 2008".

Regardless of the fact that Google makes good money, its stock also being pumped up to look good. Some people may not realize that stock has nothing to do with company performance anymore? (case in point, a low-margin-ecommerce Amazon P/E 200, Tesla P/E infinity, negative earnings should be = no P/E).

>> @goodroi: Not many wall street analysts are betting against Google

Wall Street "analysts" have 0 incentive to bet Against any stock, let alone DOW index darlings that are pumped up by Fed anyway. I use quotes here because the "analysts" are almost always part of a big financial conglomerate that either owns stock (directly or through 100 subsidiaries and "investment firms") or otherwise has a financial interest in it. Or they make new stock and sell it to you. That's why you almost never see a "sell" from them.

This is basic description of the course "Wall Street Casino 201".
12:19 pm on Aug 4, 2017 (gmt 0)

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@smilie You mention some financial terms and concepts but I am not sure you fully understand them.

#1 You claim the dow industrial index is bumped up by constant fed money. Google stock is up 20% in the last year while General Electric is down 17% in the same period. Maybe individual company performance is a more significant influence with stock price than you realize.

#2 You claim that stock has nothing to do with company performance anymore. I do not think you understand what P/E represents or its limitations in measuring a company. Amazon,Tesla & Google stock are performing well because of how the market values the short & long term prospects for these companies. The business world is not a simple place so we need to take into account current revenue, costs, as well as market dominance, patents and other factors. In the most recent quarterly report Google grew 21% and reported $3.5 billion profit despite a $2.7 billion fine. Call me crazy but a company that is growing 21% and generating $3.5 billion profit in 1 quarter seems to be a good performer to me.

#3 You claim wall street analysts have 0 incentive to bet against any stock. There is an entire investing segment that shorts stocks and/or invest in competing stocks when analysts think a stock is not a good bet. For example there is over $2 billion currently being bet against just Google right now compared to the $645 billion being bet right now that Google increases in value.

I understand people may not like Google but let's be careful not to let personal bias blind us from facts. Life aint perfect including Google and all of us. As much as we may personally not like Google, they do tend to have their business headed in the right direction. We can cherry pick metrics but it is smarter to be honest with ourselves and look at the full picture.
8:20 pm on Aug 4, 2017 (gmt 0)

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@goodroi, of course individual company is more important. But, essentially, look at the periods when dollar went off gold standard, and what is going on now with crypto currencies. The stock printing banks really don't want "gold standard" (bonds, profits, reasonable P/E, dividends etc.) , all they now want is free printing press, essentially.

FANG+T stocks are basically their "off gold standard" equivalent of a printing press (Facebook, Amazon, Netflix, Google, Tesla).

As long as Fed keeps doing QE unlimited, these stocks will be pumped for profits.

General Electric, on the other hand, is a very old stock that is paying pensions and dividends, so you have a company that's tied up with billions per year in liabilities. Banks don't like that.

Tesla makes no money and will never make a dime, probably. It is now slashing it's prices. At the same time, its not making 1/100 of the cars of competitors, and as soon as they start penetrating at least 1% of the market, Volvo, WV, Mercedes, Honda, Toyota and others will immediately switch production - that they make money on every single car sold - to electric, quickly killing it. And if you think that Panasonic who is building Musk's battery factory all of a sudden going to ONLY sell to a company that is not even 1% of the market, that's delusional. At this point it is pure speculative pump-and-dump, another WorldCom / Enron or Solyndra type government subsidies siphoning outlet.

Out of these, Google is the only really profitable company. But Google bubble reached it's borders - as I posted in page 1, it is now slashing Cost Per Click for 6 quarters in a row. It may be great news for advertisers, but little too late IMHO, as 20+ retailers are about or already declaring bankruptcy this year. And you can't make up a loss in CPC in volume, as you don't have this many opportunities to grow anymore. Sure, can replace all the space in SERPs with ads, sure can keep hiding and profiting from botnets. Sure, can buy 70% of US credit card information and try to match what I am searching with some crap to sell me - but these are desperate times.

#3 - try finding a single "SELL" recommendation. None exist.

What I don't like with Google cheerleaders is not understanding that Google makes money on YOU. Yes, some of you make money as well, and not bad ones. Some of us though got destroyed a few times. Enjoy while it lasts.
8:48 pm on Aug 4, 2017 (gmt 0)

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@goodroi, let me show you why lowering CPC is a bad sign for G.

Although they are growing revenue, they are about to hit the wall. Here's examples.
1) a mobile games company. if a mobile company pays $1/download, it needs to make $1.50 per USER to be profitable. That's a very shaky ground, how would you make that much , for instance , if it's a free app? Very narrow margin of error. Or you can make less while burning venture money (which is what is going on now with almost every one out of 200 unicorn and thousands of other app-only companies). This is also a pyramid, because as soon as a unicorn runs out of venture money to burn, it takes out a big chunk of mobile market because without it small apps would dip below $1/user in income and be unprofitable as they won't be able to pay $1/download.

2) ecommerce, needs to get maybe 10 free clicks to the site vs. 1 paid. the balance could be different for each site, but let's take this as example. As Google takes most of its SERPs with paid ads and Amazon (now you can't even see free SERPs without scrolling), it takes away more and more of these 20 free clicks. So if company had 1000 visitors per day, 900 free and 100 paid, as they now get 700 free, they can only afford 70 paid. Their budget automatically shrinks.
8:48 pm on Aug 4, 2017 (gmt 0)

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As long as Fed keeps doing QE unlimited

QE ended a long time ago and the fed is currently in a cycle of rate hikes, rolling back QE.

And you can't make up a loss in CPC in volume

You are completely wrong, the article you posted shows exactly the opposite, CPC dropped, but the number of clicks increased and profits increased. Don't forget what is Google cost to sell advertising? It is essentially nothing, and so the more you sell the more you make. So what did I miss? Wait I know it is all a scam, Google is a bubble waiting to burst and the current equivalent to Enron.

Smilie, you are free to hold any opinion you like, but please if you want to argue for them do not make up stories and half truths.

#3 - try finding a single "SELL" recommendation. None exist.

I think that was Goodroi's exact point. No established brokers or financial firms share your view. If you really feel Google is a fraudulent criminal organization like Enron, then now would be a great time to short the stock. The short sellers made a mint on the back of Enron. You will most likely end up bankrupt, but I have been wrong before.