What to make of Google's slowing 'paid clicks' growth?
New data confirming slowing growth in Google Inc.'s paid clicks renewed debate Thursday on Wall Street over whether the Internet search company's revenue can quickly adjust to changes it made in how it generates clicks.
Citing data that comScore Inc. released after the market closed on Wednesday, analysts said growth in Google's click-through rate has nearly ground to a halt.
Google's stock dropped US$16.09, more than 3.5 percent, to $442.10 in afternoon trading.
The click-through rate grew 3 percent in February compared to a year earlier, and January saw no increase compared to January 2007. Several months earlier, the rate was growing 25 percent to 40 percent compared to a year earlier. The new data is in line with click-through declines Google reported last quarter.
Google, which gets paid when users click on a sponsored ad that comes up as the result of a Google search, has reported steadily rising per-click revenue.
The Mountain View-based company said in January that the drop in click-through rates is a result of its efforts to boost the usefulness of each click to its advertisers' sales performance. For instance, the company decreased the space around a word that would result in a click, so more clicks would be intentional.
Analysts disagree on how long it will take Google's per-click revenue to adjust to any increased value per click it has created.