Shares of Google Inc (NASDAQ:GOOG) were down nearly 8%, following a leaked Q3 earnings pre-release blunder which resulted in the stock being halted for hours. However, looking beyond both the premature earnings release issue, and setting aside the fact that the financial results for the quarter did not meet Wall Street’s revenue and profit expectations –there may still be good reason for investors to cheer.
This week, new research from Search Engine Marketing firm, WordStream, Inc, shows that over approximately the last two quarters, the average cost per click on Google Inc (NASDAQ:GOOG) Search has declined by an estimated 16.5% , but the resulting declines in ad revenues were more than offset by a substantial growth in the total number of ad clicks, which was estimated to be up 21.6% over the same period.
The net effect of these trends is that the typical advertiser on Google Inc (NASDAQ:GOOG) can (on average) gains access to a much larger inventory of available clicks, at significantly lower costs – meaning they can literally get more customers for less money. The benefit to Google Inc (NASDAQ:GOOG) and Google investors is that it greatly increases the value of their advertising product in comparison with other, competing advertising venues. In the long run, it’s a more sustainable model for ad revenue growth than leaning heavily on rising ad cost per clicks (CPC).
The trend of lower CPC’s and a higher number of available clicks is welcome relief for small & medium sized businesses, many of whom have limited advertising budgets, and may have struggled with a previous trend of rising CPC’s. For the complete details, see WordStream’s full analysis included here below: