With comScore’s recent report indicating traffic from Google paid search ads showing no growth versus the same time one year ago, advertisers and Wall Street alike are left staring blankly at each other wondering if this is the first sign towards an actual decline from the once infallible search juggernaut. Taking the impact to Google as a viable and attractive investment off the table and approaching strictly from an advertiser’s point of view, let’s examine to get to the heart of the matter.
Click Through Rates Dropping
Working with the reasonable assumption the data is accurate based on past comScore reports, why the drop in click-through rates (CTR)? There are a few possibilities including greater click fraud detection which is filtering out even more fraudulent clicks and would be nothing but a positive long term impact both to advertisers and to Google itself. Also, since the Google update towards the end of 2007 which limited the actual clickable area within the ad there are simply less touch-points for a click to occur. Again, for PPC marketing that is a positive development; delivering more relevant traffic to advertisers because it filters out unintended clicks. That combined with a reduction in on-page real estate available to paid ads due to Google’s expanded “Universal Search” which incorporates images, local listings, and news among the traditional organic and paid search results leads to a shrinking environment for paid ads to operate.
One theory I saw floated was that paid clicks were in decline because of recession concerns. SEO Inc provides PPC marketing services for clients that cross the spectrum of low to high-end retailers from and so without analyzing comScore’s specific vertical data. We are relying on our client PPC Campaign performance which did not indicate a slowdown in B-to-C activity which would be the first hit especially given the plummeting consumer confidence. Also in Google’s favor is its 53 percent year over year growth in search queries. With the Google pie growing year after year a slowdown in CTR is not as alarming even if the slice is statistically smaller in comparison.
Have Paid Search Ads Become Less Trustworthy?
The truly scary premise to advertisers is if those practical theories are actually secondary causes which make way for an unsettling thought: “Are searchers becoming even more distrusting of paid ads?”We see in many industries where traffic is generally regarded as more savvy (e.g. high-tech B2B, commercial financial verticals, etc.) CTR’s are typically much lower which can lead to the disappearance of premiere listings at the top of the organic results. If this trend is creeping into other, more consumer-heavy verticals it could also contribute to the decline.
The Impact on Advertisers
But enough of theories and wild goose chases, the simple question remains: If Google is siphoning off paid search traffic/revenue, what does this mean for advertisers? For some of the big boys ($1 mil+ monthly spends) who use their budget as a weapon in their paid search strategy, the impact could be significant. The decline or even stagnant growth of overall traffic could be devastating to their bottom line. For most, their on page conversion and monetization of paid search traffic allows them to bid to top positions and so simply increasing their bids/positions will do very little to make up for lost traffic. Small to medium businesses and non-brands would likely be less immediately affected as the search inventory is still more than healthy to quench their budget-minded traffic thirst. However, if there is more competition (and thus greater cost) for top spots it could cause advertisers to reevaluate their approach and refine not just their keyword buying strategy but also landing page optimization and long term traffic retention techniques which are always beneficial no matter the environmental trend. This could then act as a springboard to enhance the public perception of paid ads as advertisers are delivering more relevant content and better user experience (which has been Google’s stated goal for quite some time and led to both the genesis of “Quality Score” and “Universal Search”) and thus improve CTR.
Now I’m not suggesting lower CTR’s are a positive long term scenario nor am I implying it isn’t in everyone’s best interest for Google to help deliver more traffic to advertisers, but if it puts greater pressure on advertisers to buy only relevant keywords and deliver only relevant (and effective, action-inducing) content which improves user experience and leads to a optimistic shift in public opinion of paid ads it may have a positive long term impact. I liken it to the green movement afoot in our country right now. If not for higher gas prices due to a shrinking supply, would there be the public outcry for greater MPG alternatives? While environmental concerns would certainly be cause for alarm, people’s pocket books are still the bottom line which moves the marketplace and advertisers are no different. With less supply and greater demand, the cause of the comScore report might just lead to the favorable effect of demanding more MPG out of your paid search campaigns.