Did Google peak last November 6th, when its share price hit an all-time high of $742? Some people on Wall Street seem to think so. They now value the firm at around 40% less. Part of the blame belongs to the general turmoil in the stockmarket. But the bigger part, investors fear, is that Google, at the ripe old age of nine, might already be over the hill.
First, the company missed Wall Street revenue forecasts in the fourth quarter for the first time. Then a pair of reports from market researcher comScore (SCOR), the latest on Mar. 26, said U.S. growth in the number of clicks on the paid ads appearing next to Google’s search results essentially flatlined for two months running compared with a year ago. Six months ago, paid clicks were growing up to 40% annually.
However over the last couple of months Google is improving their add system in two ways. First, it offers fewer ads on each results page, and often none at all. This reduces visual clutter and pleases both users and any remaining advertisers. Second, Google seems to be trying harder to weed out those advertisers who bid low in the auctions it conducts for advertising slots linked to particular keywords. in short, with less space devoted to ads, and only higher-bidding advertisers getting through, there are fewer ads to click on.
If Google is really over the hill we will find out in the upcoming months. For now stay tuned.
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