This week, various news outlets reported the results of a ComScore analysis showing that CTR’s on Google ads have essentially flattened out (http://biz.yahoo.com/ap/080328/google_paid_clicks.html). YOY January data showed no change, while February was up only 3% from last year. This compares unfavorably with the historical double-digit YOY growth.
As a web analyst, there are so many reasons this doesn’t surprise me: AdSense ads have now been around for years, and web-users may have become immune to their novelty; saturation of Google ads on top keywords probably reduces user interest or confidence. But above all, it boils down to the inconvenient truth that as a PPC campaign expands, using new keywords, Content Match, Broad Matching, and the like, the quality of leads goes down, with the result that (eventually) advertisers take notice and scale back. It’s a quality-over-quantity calculation that many times leads to the axing of Pay-Per-Click altogether from a company’s media spend, and there’s very little Google can do about it. When PPC visits see bounce rates of 80% or more, or when brand-keywords are used primarily as a substitute for the browser’s address bar, or when most content match referrals come from AdSense gamesters’ auto-search websites or trashy foreign blogs, no wonder advertisers scale back ad placement on Google.
But advertisers don’t know any of this unless they have a web analytics solution in place. Google’s own spin in response to this week’s articles has been that they are going after quality of clicks, not quantity, in order to make each click more “valuable” to the advertiser. That’s good rhetoric, but how is anyone going to validate this, and what will Google do to act on this initiative? Google’s algorithms are still, after all, CTR-based, because, for the most part, they don’t have insight into website engagement or conversion, for which there are few standards anyway.
Enter Google Analytics. Many have puzzled why Google launched this free application to begin with, much like other free toys available from Labs.Google.com (?Google Mars?). But Google may use this flattening of CTR’s to re-think how they market – and use – web analytics. Google may now discover that it might be worth investing in – and supporting – an Enterprise Level Web Analytics Solution that would be able to measure and analyze all these pieces of PPC engagement. By providing this application (for a price), Google might be able to both control and exploit the data it generates to optimize its ranking and bidding algorithms, while putting some action behind the rhetoric of “more valuable clicks”. It could even do this without the advertiser or client ever knowing, just as Google exploits its page-content databases to syntactically model the English language for Search Algorithm refinement. The dozen or so SEM Analyses possible with a robust, enterprise-level web analytics solution could be automated and streamlined by a Google version – much like Omniture’s Search Center but without the third-partly hassles. And because Google has a vested interest in tying this to its PPC, it can probably afford to price such as solution much lower than those currently on the market.
We’ve often pondered whether Google will enter this space, and one answer has always been, “Why would they?” Flat CTR’s and rhetoric about click-value might be a good excuse.