Many of we advertisers who use Google's AdWords online ads saw a reduction in our return of investment beginning in November of 2007 and continuing through February 2008.
Most of us know that Google has continuously raised their per click prices to advertisers over the last few years while it continues to get most of its revenues from AdWord clicks. And although Google has no plans to move away from this revenue stream, the river is now flowing slower as the cost per click peaks.
The correlation between clicks and sales is becoming less predictable at the same time Web surfers are clicking on fewer ads. Investors were made aware of this new situation when comScore reported that clicks alongside Google's U.S. search ads declined 12% from last year.
Advertisers don't really care about clicks, of course. They care about selling their products or services, or creating a positive brand image with their customers. "The novelty of clicking is gone," says Mike Leo, CEO of Operative, consultant and software developer for digital media companies.
Consider the results of one study, released on February 12, 2007 by comScore, media agency Starcom USA, and the ad network Tacoda, owned by AOL. It found that just 6% of Web surfers account for more than 50% of all clicks on display ads, such as the rectangular banner ads that stretch across the top of many Web pages. In addition, most of these heavy clickers earn less than $40,000 a year, and they account for less than 15% of the actual shopping online. "What we have seen is that optimizing for [clicks] alone tends to get you an audience with a propensity to click." says Daniel Jaye, Tacoda's president.
Source: BusinessWeek, March 10, 2008
