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May 30, 2008

STATS: Google Paid Clicks Rise; Rivals' Fall

Google Paid Clicks Rise; Rivals' Fall

Google saw better-than-expected 20% growth in U.S. paid clicks in April compared with the same period a year earlier, according to new data from comScore. Paid clicks for Microsoft and Yahoo meanwhile declined.

Google moves further ahead of Yahoo in paid ad clicks

...click on paid advertisements is crucial for Internet search companies and in that department Google just jumped further ahead of its main competitor, Yahoo.

Google posts strong April paid click figures

Google's U.S. paid click-through posted a strong performance in the month of April, while Yahoo and Microsoft gave up ground, according to figures released late Wednesday by ComScore.

Google's paid click-through climbed 20 percent in April, compared with year ago figures, marking its best performance since November, according to a research note by Ben Schachter, a UBS analyst.

Yahoo, meanwhile, saw a year-over-year decline of 4 percent and Microsoft's MSN saw a drop of 9 percent.

And on the click-through rate, which takes the total number of searches divided by the sponsored clicks, Google's rate fell slightly in April to 10.5 percent, compared with 10.9 percent in the previous month. Yahoo posted a 12.5 percent click-through rate for April, verses 13.2 percent a month earlier. Microsoft, however, noticed a slight increase to 10.3 percent in April, compared with 10.2 percent, in the previous month.

"Paid click data released from ComScore is a positive read-through for Google's second quarter," Schachter said in his report. Shares of Google were up 2.91 percent in late morning trading to $584.80 a share.

Meanwhile, Google's coverage rate, which takes into account the percentage of search pages delivered with at least one paid ad on them, fell to 44.1 percent in April, compared with 45.5 percent in March.

"With fewer advertisements and more paid clicks, it appears that Google's advertising relevancy initiative is beginning to work," analysts Clay and Fred Moran of the Stanford Group stated in their research report.

Google's relevancy initiative aims to reduce the number of advertisements that appear on the right side of its search results, yet make the advertisements that it does carry target the desired audience with greater accuracy. As a result, Google hopes to charge a higher cost per click.

The coverage rate for Yahoo also fell in April to 69.4 percent from 70 percent in March, while Microsoft's MSN dropped to 63.8 percent in April from 65.5 percent.

In sizing up Yahoo, the Stanford Group stated: "Overall, there was nothing to get excited about for Yahoo...Queries also fell on a year-over-year basis, down 3 percent, suggesting that any initial year boost from Panama (has) tapered off as the company continues to struggle to maintain share in the market place."

Google and Microsoft, however, both posted double-digit increases in Web search queries. Google posted a 33 percent year-over-year increase in April, while Microsoft's MSN climbed 22 percent, compared with the previous year.

Ed: comScore monitors US users on search sites. 
  • Use grew 33% y2y for google; 22% for microsoft - good news for the Internet ecosystem and for Google.
  • Ad coverage reduced to 44.1% - when ads do appear, are there more per page? what % are image ads with larger click areas?
  • CTR of 10.5% - down slightly m2m; huge drop y2y.
  • Resulting in 20% y2y paid growth
Did CPC grow more than 11% to offset reduced CTR? 

As DoubleClick's CPM model merges with CPC, comScore won't be able to distinguish a click on CPC versus CPM ads. Thus, their data will become less meaningful.

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