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Latest Report of Google's Flat Click Rates a Nonstarter

Something about this news cycle seems a little familiar. In a mild aftershock to comScore's ["bombshell" report](/search/article.php/3730731) last month about flat growth in paid clicks on Google's search ads, the research firm has issued the same report for February. Again, growth in paid clicks held steady, and again Google's stock took a hit from jittery investors, though not as sharp as last time around.

The fallout from the first report (Google shares fell nearly 10 percent) prompted comScore to [issue](/search/article.php/3731426/comScore+Googles+Ad+Drop+No+Cause+For+Alarm.htm) a lengthy clarification, explaining that the figures were less the result of Google getting sucked into a recessionary vortex than of a concerted effort on Google's part to place fewer, more relevant ads on its search pages. As an aggregate figure, then, paid click growth would be expected to fall off. It's an apples-to-oranges comparison.

To no one's surprise, Google was mum on the comScore report, but speaking at a [Bear Stearns media event](/webcontent/article.php/3733241/Google+Paid+Clicks+And+The+Economy.htm) earlier this month, Google executives assured analysts that, yes, the change in paid clicks was by design, and the flat growth a predictable byproduct. While allowing that Google was not immune from macroeconomic concerns, the even clickthrough rates did not portend a coming financial disaster.

What's changed in a month? For starters, the days of Bear Stearns hosting analyst forums are numbered. Bear's collapse, coupled with a gathering mound of sobering economic indicators, has done nothing to assuage fears of a recession. But what's happening with Google's paid clicks should not be a surprise. The first report turned into a tremendous media blitz, but evidently the explanations did not completely resonate with investors. Still, kicking its stock down another 3 percent on the release of the report seems more panicky than prudent.

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