March 28, 2008, 12:00 AM

Google sacrifices ad click quantity for quality

While Google ad click volume decreased in January, the number of clicks per ad increased, according to some reports. Google, meanwhile, says it has tweaked its software to improve the click-through performance of its ads.

Clicks on Google ads increased 25% among U.S. web users in the fourth quarter of 2007 compared to the prior year, according to comScore Inc. So when the web measurement firm reported that January 2008 clicks fell slightly year-over-year, some analysts concluded that economic woes were crimping online shopping. But a more likely explanation is that clicks declined because of changes Google made last fall to improve lead quality, experts say.

One important change reduced the area of an ad that would cause a click-through to the ad headline and web page address, a change aimed at reducing accidental clicks.

“Google told advertisers they could expect lower clicks, and that likely was a big contributor to the decline in January,” says David Szetela, CEO of search marketing firm Clix Marketing.

Google said in a November blog post that the change should improve the performance of Google ads. And there is some evidence that is occurring.

Better click-through rates

Click-through rates on Google ads improved by 10% in January, according to search marketing firm Efficient Frontier, based on its analysis of more than 20 million paid clicks on its clients’ ads. Total clicks went down because of reduced ad spending in January, Efficient Frontier says, but there were more clicks per ads displayed. Cost-per-click also went up 13% as lead quality improved, the company adds.

“Google is becoming more efficient at serving ads by delivering more relevant clicks to advertisers,” LeeAnn Prescott, director of research and communications, wrote on the company’s blog. “Thus it is able to charge a higher premium for those ads, hence the increase in cost per clicks.”

Those trends continued in February, when the click-through rate went up 15% and cost-per-click 8% for non-mortgage advertisers, Efficient Frontier says. The firm says Google accounted for 79% of search spend in February, up from 73% a year earlier.

The Google ad click figures caused a stir when Wall Street analysts quoted comScore as saying there were 532 million U.S. user clicks on Google ads in January, down .03% from January 2007 and 12% fewer than October 2007. ComScore provided the data only to clients, but confirmed the analysts’ reports. Google declined to comment on the reports.

But not everyone agrees there was a decline.

Internet tracker Hitwise reported 13.03% of traffic to its Shopping & Classified category of web sites came from Google in January 2008, versus 11.97% a year earlier, although that figure represented natural as well as paid search.

Search marketing firm Apogee reported a 17% increase in January in paid clicks from Google to its retail clients, mostly retailers of moderately priced goods like clothes and sporting goods. “We haven’t seen anything hit those sectors from a click perspective,” says Bill Leake, Apogee CEO.

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