Google First Quarter 2013 Average Cost Per Click Decreases 4 Percent, Here’s Why

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More Reasons Google’s Average Cost Per Click Won’t Turn Positive Anytime Soon:

Google reported quarterly earnings today that beat most expectations although average costs per click decreased.  For the first quarter of 2013, Google’s revenue grew 22 percent when costs are excluded.  Average costs per click decreased which has been occurring for several quarters.

We reported on Google’s struggling cost per click issue in 2012 and not much has changed.  See 6 Reasons Why Google’s CPCs Were Down Year Over Year by 12 Percent – Google Q1 2012 Earnings Highlights: Google hasn’t changed its algorithm for the better, sites are getting less traffic from Google and more from Facebook as well as Twitter.

Google will continue to see its average costs per click decrease as social media becomes a bigger source for news and Google+ may not be enough to buttress the Facebook effect.  Google is giving unbiased results to customers so they are leaving the search engine giant to find news elsewhere that they can trust – from friends on social media.

Serving up biased results such as queries from Google+ shares may benefit the company’s short run efforts to increase social media market share but it has a negative long term impact if users feel results are not robust.

Google started losing average cost per click growth in the third quarter of 2011 when it went from 5 percent to negative 7 percent in the fourth quarter of 2011.  A year ago, average cost per click fell by 13 percent.

Our prediction that the decreasing average cost per click problem will be perennial hasn’t changed and is confirmed by a year of data since we first noted it.  Without some changes in how sites are ranked, expect Google to lose investors but perhaps not market share, Yahoo isn’t sneaking up anytime soon although Facebook’s Graph Search could have a significant impact.

Google started losing average cost per click growth in the third quarter of 2011 when it went from 5 percent to negative 7 percent in the fourth quarter of 2011.  A year ago, average cost per click fell by 13 percent.

5 percent q3 2011, -7 percent q4 2011, -13 percent q1 2012

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