Don’t Freak Out About Google’s Cost-Per-Click Decline
Estimize | Oct 17, 2014 07:06AM ET
Google's (NASDAQ:GOOGL) cost per click (CPC) fell 2% this quarter compared to the same period of last year. If you’re reading the financial news headlines like we are, you might think that the sky is falling.
It’s true that Google’s profits depend on maintaining pricing power in its advertisements. But this blip is not worth panicking over. In fact, as seen above the 2% drop was the lowest year over year CPC decline that Google reported in any of the previous 7 quarters.
And compared to last quarter, Google’s cost per click is flat. Now this post isn’t meant as an excuse for Google, the tech giant missed the Estimize earnings consensus by 20 cents per share and missed on revenues by $220 million (1.6%). But it’s no secret that Google is under siege. Other companies like Facebook and Twitter have seen how much money Google is making on mobile advertising and they are fighting to take away a piece of that pie.
Another threat comes from Apple. The iPhone 6 and 6 Plus could wrestle some market share away from Google’s Android operating system and win it for iOS. That might dent Google’s mobile search dominance, where it controlled roughly 90% of the global market at the end of last quarter.
When you’re on top you have to expect the competition to come out swinging. This was not a great quarter for Google, but don’t freak out just yet.
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