A month ago, at the suggestion of a reader, we proposed a Google-earnings pair trade for people with balls: LONG Google, SHORT Comscore. This morning, traders who played that ticket are winning big. In the wake of Google’s solid Q1, GOOG is flying, SCOR is getting smashed, and all the world is peeing on the web rating firm’s credibility.
And that’s all fine and good, but before you waste too much energy trashing Comscore, at least acknowledge that the firm’s data got a lot right. Contrary to popular perception (and Google’s quiet crowing on the call last night), Comscore’s US paid-click reports were directionally accurate. Moreover, if the reports hadn’t spooked analysts into cutting their estimates, Google would have missed consensus.
As was discussed ad infinitum in Q1, here and elsewhere, Comscore reported that Google paid clicks in the US in Q1 grew only 2% a year. According to Comscore, this was a major slowdown from Q4, in which Google reported US paid click growth of 25%.
Last night, Google reported global paid click of 20%, which was a sharp deceleration from 30% in Q1.
So how does this square with Comscore’s US data showing a 2% rise? The majority of Google’s click growth in the quarter likely came in the international business. Paid clicks in the US business likely grew only in the high single digits (less than half of the 20% reported growth). So, after accounting for the international contribution, Comscore’s US reports were likely actually relatively close to being accurate.
Most importantly! Comscore alerted analysts to a surprising deceleration in the US, one that was borne out in the Q1 results. If analysts had dismissed the Comscore data out of hand and refused to cut their estimates, they’d be nursing some major wounds this morning.
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