Why do Google Ads get fewer Clicks?

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April 24th, 2008 by Click Consult

According to comScore, a research firm, “in late February Google's 'paid clicks' had decreased by 7% during January, and were flat compared with the same month a year earlier”. But Eric Schmidt, Google CEO disagrees. He claims that its all has been planned & that “this dip in paid clicks indicates that both Google and its advertisers are richer than ever” and it was achieved by increasing the quality of its ads through:
• Offering fewer ads on each results page to reduce visual clutter and to please both users and any remaining advertisers.
• Display only higher-bidding advertisers- advertisers who bid low for advertising do not expect the ads to generate much business.
This new strategy should help to turn more clicks into conversions or sales (higher CPC) & hence marketers would see this as a direct cost of sales and would be prepared to pay more.
According to com.Score report, Despite its effort to create targeted and specific ad environment, Google is still deeply interested in maintaining its high profit margins: when the campaign receives fewer clicks than normal, Google tends to send an e-mail notifying certain AdWords users about automatic matching feature which helps to utilise the remaining budget by displaying the ads against keywords “other than those the advertiser is actually bidding on”.
The scenario described above is quite contradictive- form hand the relevancy and quality are the objectives, but from another hand, Google desperately tries to grab the cash and the relevance becomes a thing from the past.
So is reduction in clicks can be attributed to other reasons, such as weaker markets & credit crunch? According to distilled.co.uk its might be a reason.
Before credit crunch, sub-prime lenders have been some of the biggest web advertisers. Since the liquidity has dried out and the rules have toughened, many decided to abandon pay per click due to high costs and fierce competition.
High levels of personal debt, unstable housing market, increased utility costs and high petrol prices leave people with less and less confidence about tomorrow.
Despite a rise in food sales by 4.4 per cent in December and February & non-food items by 0.4 per cent for the same period (Times), it doesn’t leave a doubt that luxury and expensive household items sales are leaping behind, putting many marketers in the situation where they have to pull the plug or cut their PPC budgets.
Despite or because being a global giant, Google can’t avoid the affects of uncertainty, general slowdown in consumer spending and lack of liquidity available. But due to its positioning, innovation, pricing and reach it still will attract advertisers from other marketing channels, such as TV & radio, and some say with the time the demand may outstrip the slowdown.

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