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The Decline of Google (and Everybody's) Ad Business

Hugh Pickens writes (1984118) writes | more than 2 years ago

Advertising 0

Hugh Pickens writes writes "Rebecca Greenfield writes that during their recent earnings call, Google reported a 16 percent decline in Cost-per-Click (CPC), meaning the value of each advertisement clicked has gone down. This follows a 12 percent drop last quarter and 8 percent the quarter before that showing an unfortunate reality of online advertising — unlike the print world, internet ads lose value over time. The daily and stubborn reality for everybody building businesses on the strength of Web advertising is that the value of digital ads decreases every quarter, a consequence of their simultaneous ineffectiveness and efficiency writes Michael Wolff. "The nature of people's behavior on the Web and of how they interact with advertising, as well as the character of those ads themselves and their inability to command attention, has meant a marked decline in advertising's impact." This isn't just Google's problem. Overall Internet advertising has decreased in value over the years as online advertising continues its race to a bottom. "I don't know anyone in the ad-supported Web business who isn't engaged in a relentless, demoralizing, no-exit operation to realign costs with falling per-user revenues," adds Wolff, "or who isn't manically inflating traffic to compensate for ever-lower per-user value." For Google's overall business, this loss doesn't mean as much since it has since expanded its business beyond AdWords including its recent acquisition of Motorola. For companies that didn't just buy big hardware companies however, it's a scarier proposition. Like Facebook, for example."

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