Google’s stock is down because its rate of growth is down according to Google’s latest quarterly financial report. Google still had a 30 percent increase in payments from clicking ads, but that was substantially down from the 45 percent increase they had a year earlier.
Google is blaming this slowdown in growth on difficulties it is having monetizing its social media properties. Boiling this down Google can’t get the YouTube kids to click ads! By all accounts Google is also experiencing a lower click rate on ads on its own search results and especially their Adsense partner sites.
This was entirely predictable and is likely to continue to go lower. Every ad type from banner ads to ads in emails received a high click-through rate when first introduced on the Internet and then progressively lowered to a norm of about .25 percent.
Google is battling this by dramatically increasing the number of ad impressions it serves via partnering with more content sites, acquiring sites like YouTube, increasing the number of ads per page and blending the ads in content more effectively so that people don’t think they are clicking ads.
The problem for Google is that there are really no more tricks possible that will significantly combat ad fatigue. I also sense another under the radar battle the Google folks are fighting and that is complaints of lower conversion on content partner sites and extremely lower conversion for advertisers on social media sites.
This is caused by a simple fact… everybody isn’t surfing the web to buy products, and especially the kids on YouTube.
Google has a great business with search precisely because there are a large number of people searching for product information. A much higher percentage of people who click an ad from a search result have a purchase intent. This is just not true when reading a news site or looking for that funny video.
