Henry Blodget February 26, 2008 7:16 AM
Comscore reported shockingly bad US paid click performance for Google in January: flat growth year-over-year versus a 25% increase in Q4. Even if Comscore is only half right, this is a disaster.
Flash note from analyst Bob Peck at Bear Stearns:
comScore reported 532mn domestic paid clicks in Jan. 08, flat YoY, but down 12% sequentially (Jan. 08 vs. Oct. Oct. 07). The click through rate was the lowest since comScore stated reporting this data and was down 200bp from levels in 4Q and down 400bps from levels in 1Q of last year. While this is one data point for domestic google.com only and from one source, which may or may not be accurate, it is a concerning data point and somewhat reflects what we have heard from SEMs - that they were not seeing a high volume of clicks from consumers possibly due to the economic slowdown.Note that Google reported a 30% YoY growth rate in overall (global) paid leads in 4Q07 and comScore reported growth of 25% YoY for domestic google.com paid leads for 4Q. While not an apples-to-apples comparison, we will continue to monitor the comScore numbers for Feb and Mar before definitive conclusions can be drawn.
This report is so shocking it bears repeating: ComScore said Google's US revenue units (paid clicks) grew 25% last quarter--a quarter that disappointed Wall Street. In January, the same source, ComScore, says the same revenue units were flat.
What could be the explanation for this? Strapped shoppers not clicking on as many links. This is exactly why one insider argued last week that Google is very exposed to economic weakness--and why we have been concerned for six months that Google was not "immune" to a recession.
Yes, Comscore could be wrong, and, yes, it's only one data point. But hard to imagine how the bulls are going to spin this one.