Google ad drop may not signal problems

by Dan Nystedt

February 27, 2008 —

A report by Internet market researcher ComScore detailing a 7 percent decline
in the number of times U.S. consumers clicked on ads next to Google search results
in January sent analysts scurrying to explain the decline.

Some analysts say the decline, the second straight for Google, shows that business
on the Web is slowing down.

The news certainly hit Google's stock, which fell 4.6 percent, or US$22.25
on the Nasdaq to end trading at $464.19 Tuesday. The shares fell further in
after-market trading, to $463.

But rival Internet number cruncher Hitwise says there may indeed be no problem
at all, and pointed to different data to support the idea that the amount of
Web traffic going from Google to retail sites continues to rise.

"Google traffic to retail, on a monthly basis, is on the increase compared
to previous years. If we focus in on daily data (year-over-year comparison)
we see that Google traffic to retail is also up on a daily basis when we compare
January/February 2007 with 2008," said Bill Tancer, general manager of
global research at Hitwise, in a blog posting.

If economic troubles in the U.S. are really affecting Internet search, then
the amount of traffic going from Google to retail sites should show a decline,
he said. Instead, Hitwise data shows a 13.3 percent rise over the past three
years, and a steady increase in January over the same time last year.

IDG News Service