Posted July 20, 2009 5:11 pm by with 6 comments

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google happy sadLast week, we highlighted the good news from Google’s Q2 earnings report—they beat expectations and they expect YouTube to be profitable soon. But there was more to the full report, as Econsultancy points out today.

In the paid search arena, Google’s bread and butter, the results weren’t as bright as the hope that YouTube will be in the black soon. Overall paid clicks were down 2% from Q109, and down 13% YOY.

Efficient Frontier agreed, according to Econsultancy.

According to Efficient Frontier, Q2 saw a 20-31% decline in CPCs amongst the advertisers in its Customer Index. Google CPCs dropped 31% while CPCs on Bing and Yahoo dropped 30% and 20%, respectively.

EF says that advertisers benefited the most. In the UK, for example, advertisers “were able to cut their spend 11% year-over-year while boosting ROI by 2%. Across the pond in the US, advertisers fared even better. They were able to reduce spend 21% year-over-year while boosting ROI by a whopping 29%.” With lower CPCs, says EF, now is a good time for advertisers to reevaluated their paid campaigns.

However, Efficient Frontier has been wrong before (like, say, last quarter when it said something very similar). What do you think? Is Google falling off, or is Efficient Frontier way off? Will you be taking a look at your paid campaigns?

  • maybe Google ought to go for higher CPM if CPC is down the toll… advertisers get all the exposure yet their costs are held at a bay…then again, it could be a transient phenomenon and we might see altogether diff results later

  • Olivier Le Sayec

    What’s missing is the revenue breakdown by region. I assume that revenue from China and EU (excluding UK) are raising while US & UK are on the down side.

    As per EF, while they are delivering interesting trends, they lack volume to be totally accurate.

  • That’s great to know. I have sites monetized using Google tools, I have not much success and my earnings are by far not any near the minimum pay out but I guess, am just around the learning curve. Will definitely get there. 🙂

  • Willy

    Google is very hard to read when it comes to earnings reports. They’re saying that YouTube will soon be in the black, but this post of GigaOM says that may have already happened: So I guess you have to take it all with a grain of salt, at the very least.

  • The decrease in CPC’s will eventually benefit both Google and the advertisers. Just like devaluation of a currency boosts exports, decrease in CPC’s will boost business volume which will monetise Google to a larger extent. One thing worth noting here is that the content network is yielding better results for advertisers which is again a win-win situation.

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