From Silicon Alley Insider:
Google’s (GOOG) US paid-click growth in March was as bad as in February–up only 2.7%–rounding out a violent deceleration in Q1, says Comscore (per Mark Mahaney at Citi). In all of Q1, Google’s US paid clicks rose only 2% year-over-year versus 25% in Q4 and 48% in Q3.
Consensus estimates for Google’s Q1 have been cut significantly since the first Comscore bomb in January. We believe the current consensus revenue estimates could be met with US growth of 25% in Q1, down from 40% in Q4, which would allow for significant deceleration in the quarter.
This 25% growth estimate obviously assumes that Google has seen a strong increase in price-per-click: If it hasn’t, and the Comscore data is accurate, US revenue will miss by a mile and Google’s overall revenue will come in well below consensus. Thursday’s earnings report will be interesting.
Mark Mahaney of Citi has the details:
Deceleration Drivers – Consistent with 2 prior months, Paid Click growth deceleration to under 3% Y/Y was driven by another month of low-teens decline in Google’s Coverage Ratio and a low double-digit decline in Google’s Click Thru Rate offsetting the 33% Y/Y growth in March searches on Google’s U.S. Websites (an acceleration vs. roughly 30% Y/Y growth in February).
Potential Causes – Assuming the data is accurate, we could see two factors behind the Coverage Ratio decline:
1. Google’s ongoing efforts to improve both lead quality for advertisers and the user experience for searches.
2. A macroeconomic dampening of commercial queries by searchers [uh oh].
[Our assumption: probably a combination of both]
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