I have just spotted a post on Search Engine Land that refers to the long term decline in Google Adwords’ cost per click rates. See chart. The data refers to Google’s reported average Cost Per Click rates shown in the quarterly accounts.
Just making a visual check shows that Google has a cumulative problem. That is we see annual declines on top of previous annual declines. An example, and I’m using my dodgy eyesight rather than the actual data shows the following Quarterly year on year declines:
- Quarter 1 2012 = -12%
- Quarter 1 2013 = -4%
- Quarter 1 2014 = -8.5%
Well if you multiply minus 12% * minus 4% * minus 8.5% the product equals minus 23%.
The chart is shown in an article that discusses Google’s reluctance to provide detailed America’s SEC (Securities and Exchange Commission) with detailed data regarding the impact of mobile use on cost per click rates. These are typically discounted.
Toward the end of 2013, Simply Clicks’ spotted that desktop based searches were in absolute, as opposed to relative decline. This presented a problem for the clients involved as not all of their sites were mobile friendly. Secondly, the average unit transaction values involved with one client are in the £00s and unlikely to take place via a smartphone style device.
The other area of potential decline is in the growth of new markets, both geographic and new market categories. Part of the problem can also be attributed to fluctuations in exchange rates. Don’t be surprised if Wall Street analysts start analysing the likely impacts of each of these factors.