comScore Explains What Happened On Paid Click Decline But Great Google Earnings

With two reports about Google’s paid clicks being down, comScore helped fuel a perception among financial analysts that Google might under-perform in Q1. However, Google’s earnings handily beat estimates and the stock saw a 20 percent gain in a single day on Friday as investors were buoyed by Google’s results. By comparison, comScore saw many in the press and on blogs critically question its methodology in an effort to explain what happened. Now comScore, in a blog post on Friday, attempts to reconcile its data with Google’s earnings.

Here’s comScore’s analysis:

comScore reported that Google’s U.S. paid clicks in Q1 were up 2% vs. year ago, and down 9% vs. Q4 ’07. During the earnings call, Google noted a 20% increase in aggregate paid clicks vs. year ago and a 4% sequential gain . . .

Google reported Q1 ‘08 revenue growth of 7% vs. Q4 ’07, with international revenue up approximately 14% and domestic growth (excluding the DoubleClick acquisition) essentially flat. If we take Google’s overall revenue growth of 7% and their reported 4% increase in aggregate paid clicks, we can estimate that the average cost-per-click (CPC) increase during the quarter was approximately 3%.

Now, if domestic paid click revenue was flat while CPC was up 3%, we can conclude that aggregate domestic paid clicks declined about 3% during the quarter. This brings us a lot closer to our estimated 9% decline in paid clicks. The remaining delta can likely be partially explained by strong revenue growth from Google’s YouTube and the Adsense network. In fact, comScore’s U.S. Video Metrix numbers show YouTube is up ~20% vs. Q4 in terms of video views.

As comScore itself and many others have cautioned, all these data must be carefully considered, among myriad other factors, and not simply taken at face value. All things considered, this is probably a good event, as Wall Street may become somewhat more cautious in extrapolating too much from limited information.

Related Topics: Channel: Strategy | Google: Business Issues | Stats: comScore

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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