Google’s mammoth reputation wasn’t built in a day. It slowly grew over time, primarily buttressed by massive volumes of ad clicks. Display ads have been a cornerstone of Google’s enterprise. Google text ads are a staple of the Internet space and its Adwords and Adsense programs have been big profit generating titans for the company.
However, it appears that even Google may be hitting a ceiling. The Adwords system is based on an escalating bid war between competing advertisers. The thinking is that the cost for an ad click will rise with demand for a keyword market. While this has proven true in years past, this market space may be experiencing its first signs of decline.
According to an AP-NYTimes online ads earnings report article, Google “fetched less money per click on its ubiquitous online ads” in the 4th quarter of last year than expected. This was bad news for Google and their stock took a hit because of it. This comes at a bad time when Google is already in a portal war with Facebook.
However, Google wasn’t the only company that suffered in this regard. Microsoft/Bing also experienced a decline. Microsoft’s online services division “lost $458 million in the latest quarter” and was down 18 percent from the previous year.
Even Yahoo had problems. Their revenue was “$20 million below analyst projections” with the last quarter being their 13th quarter in a row of revenue declines.
Now everyone can speculate on the reasons for the declines above, which happened to occur in the 4th quarter, a time when ad revenue customarily experiences gains due to holiday shopping. However, the fact that all three major search portals have been hit by the declines is not a good sign. We may indeed be seeing the beginning of the decline of PPC marketing.
