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Apr 21, 2008

NEWS: Web Metrics and Grains of Salt


Perhaps Internet metrics should come with a warning label: “handle with care.”

Stock in the measurement firm comScore slid in after-hours trading on Thursday after Google reported surprisingly strong first quarter earnings. Why the decline? Analysts were primed for a poor performance from Google after three straight months of comScore reports showing a slowdown in paid clicks on the Web giant’s sites...

Why ComScore’s Google Paid Click Estimates Are Not Predictive Of Google’s Revenues


After Google’s earnings call last week, Google’s stock jumped on strong results and comScore’s took a temporary hit. Many analysts and pundits were using comScore’s estimates of flattening paid-click advertising growth at Google to conclude that Google’s overall revenue growth would also be flat. Yet Google reported 42 percent year-over-year revenue growth, and 7 percent quarter-over-quarter revenue growth. In contrast, comscore had estimated 1.8 percent growth in U.S. paid clicks for the quarter.

Since Google gets a huge chunk of its revenues from search ads, there should be some correlation between a slowdown in paid-clicks and a slowdown in overall revenues. Yet as we first noted last February, historically the correlation between comScore’s U.S. paid-click estimates and Google’s actual quarterly results has been hit or miss. This time was no different. During the earnings conference call, CFO George Reyes addresses the paid-clicks issue directly by saying:

Now let’s look at aggregate paid clicks growth. Aggregate paid clicks include clicks related to ads served on Google properties, as well as ads served on our partner sites. Aggregate paid clicks grew approximately 20% over Q1 2007 and approximately 4% over Q4.

The Real Google-Comscore Scandal: Investors Who Won't Take Responsibility For Decisions

goat.jpgWill the screaming never end? As we reported on Friday, investors who lost money shorting Google (GOOG) into Thursday's conference call wasted no more than a nanosecond in scapegoating Comscore (SCOR). With global anger boiling over, the Wall Street Journal and New York Times pounced on the scandal over the weekend.


It's a sexy story. If only it were true.

As we noted on Friday, Comscore's data about Google's US paid clicks:

  1. Was not just directionally accurate, but close to being plain old accurate: Google's US clicks decelerated significantly in Q1. They almost certainly grew faster than the 2% Comscore reported, but it's unlikely they grew faster than, say, 9% (Remember: As we and many other analysts made clear throughout the quarter, US paid clicks are not the same as the 20% global click number Google reported on the call).
  2. Prompted analysts to cut their estimates--which is the only reason Google exceeded consensus. In other words, by correctly identifying a trend in Google's US clicks, Comscore's data helped the market see Google's US deceleration earlier.

Ed: Complex metrics problem - comScore correctly reported decline in same store clicks. Wall Street monitors overall growth and overlooked click decline. International and search share growth will parallel USA same store results.

Google can hide the problem by growing Youtube video and DoubleClick banner revenues. So far, these results have been, as Google reports, inconsequential.

Google's Search and International Growth Hides Decline in Clicks

View NEWS: Cookie Deletion Inflates User Metrics 

View NEWS: New Study Shows that Heavy Clickers Distort Display Advertising Click-Through 

View ANALYSIS: Internet Consolidation or Fragmentation?

ANALYSIS: Who Earns the Page View?

Google AdSense Publishers Report: Clicks Not Being Counted

WebmasterWorld members are reporting that they're logging into their Google AdSense accounts and are finding that AdSense is reporting much lower clicks. One person in particular said that his ads are showing zero clicks but even had it clicked on by someone "overseas" to see if it was a problem on Google's end).

Everyone agrees that "something is weird" and only martinibuster suggests that you should check your server logs for an indication of what's happening with your ad clicks. Till then, though, on April 17th and on the 18th, this seemed to be a problem. (Ed note: As of this writing -- the 18th at 4PM EST -- this issue hasn't been resolved as no forum members report anything but strangeness.)

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