As the world recovers from the Comscore report that floored Google’s stock two days ago, a theory is gaining steam that the whole click problem can be attributed to Google’s “accidental click reduction” program. Google may not be as badly off as the Comscore report suggests, but the accidental-click theory is flat-out wrong.
Google’s “accidental click reduction” program changed the “clickable area” associated with text-based AdSense ads. The program reportedly started in early October last year. This program, the company says, reduced the number of accidental clicks on these ads, thus slowing the growth of paid clicks in Q4. That much makes sense.
Accidental click reduction in AdSense, however, was NOT the reason Google missed its revenue number in Q4. It’s also NOT the reason Google’s paid click growth plummeted in January (per Comscore).
WHY THE ADSENSE CHANGE DID NOT CAUSE THE Q4 REVENUE MISS
Google’s AdSense product is distributed on third-party sites. Google accounts for AdSense revenue as revenue from “Network Sites.” Google’s revenue from “Network Sites” in Q4 was not the reason Google missed revenue in Q4. It was the revenue on Google’s sites that missed.
See for yourself. Here’s the quarterly progression of year-over year growth in 1) NETWORK SITES (AdSense, et al), and 2) GOOGLE SITES.
Networks Sites Revenue, Y/Y Change:
Network Sites revenue was lumpy throughout the year, with a modest slowdown in Q4. No problem there. Now look at revenue from Google Sites:
Google Sites Revenue, Y/Y Change:
Whoah. Relatively steady deceleration in the first three quarters–and then a sudden drop-off in Q4. There’s your revenue problem. Whatever caused the slowdwon, it had nothing to do with the reduction of Adsense accidental clicks–because AdSense revenue isn’t booked in the Google Sites revenue line.
WHY ACCIDENTAL CLICK REDUCTION DIDN’T CAUSE THE JANUARY PROBLEM
SEO Black Hat and Rich Skrenta argue that the accidental click reduction program caused the flat clicks in January (with the corollary being that Google’s revenue per click will soar). This theory is based on a comment by Marcus of Plentyoffish:
“The CTR on text ads declined about 60% in the last 2 months with Googles changes, Image ads on the other hand stayed the same.” –January 4th, 2008 Marcus of Plentyoffish.com
If Google launched its program in October, the program should have clobbered clicks in November and December in addition to January (as Marcus said it did). Google’s click growth (per Comscore) did drop in those months, but they didn’t get full-on pole-axed like they did in January. Here are the Comscore numbers:
Paid Click Growth, Y/Y Change
Did the “accidental click” change affect click growth? Almost certainly. But it almost certainly wasn’t the only problem. The steady click-growth downslope from November to January, combined with a decelerating economy, makes economic weakness a far more likely explanation.
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