Google Paid Clicks Performance “Accelerate” In April
New York – After an alarming first quarter U.S. search advertising slowdown, a bunch of analysts this morning are cheerful about a 20% increase in paid clicks for Google in April, according to data released by Web measurement firm comScore after market close yesterday.
Web tracking firm comScore Inc.’s monthly report on “paid clicks” showed Google’s U.S. growth at 19.6 percent in April from a year ago, compared with growth of 2.7 percent in March and 3.1 percent in February, according to analysts…
“Yahoo, in the meantime, witnessed a year-over-year decline of 4 percent and Microsoft’s MSN saw a drop of 9 percent.”
Besides the click-through rate, which takes the total number of searches divided by the sponsored clicks, Google’s rate fell slightly in April to 10.5 percent, compared with 10.9 percent in the previous month. Yahoo posted a 12.5 percent click-through rate for April, verses 13.2 percent a month earlier. Microsoft, however, noticed a slight increase to 10.3 percent in April, compared with 10.2 percent, in the previous month.
Lehman Brothers analyst Douglas Anmuth said the growth suggests a reversal in trends seen for Google during the first quarter of the year and could spur shares higher on hopes the Web leader had reaccelerated growth in the market.
“We are cautious about reading too much into the data as they track only domestic (owned and operated) paid clicks and exclude Google’s full network and international paid clicks,” Anmuth wrote in a note to clients.
“Paid click data released from comScore is a positive read-through for Google’s second quarter,” Ben Schachter, a UBS analyst said in his report. Shares of Google were up 2.91 percent in late morning trading to $584.80 a share.
For the moment, Google’s coverage rate, which takes into account the percentage of search pages delivered with at least one paid ad on them, fell to 44.1 percent in April, compared with 45.5 percent in March.
“With fewer advertisements and more paid clicks, it appears that Google’s advertising relevancy initiative is beginning to work,” analysts Clay and Fred Moran of the Stanford Group stated in their research report.
Susquehanna Financial Group’s Marianne Wolk this morning raised her price target on Google from $600 to $635, saying that the company’s growth in paid clicks (a measure of keyword search advertising) is “accelerating.”
Wolk says that comScore accurately predicted a slowdown in Google’s paid clicks back in February, and she thinks the Web measurement firm is “directionally correct” in suggesting a pickup in the second quarter from the first quarter.
Jefferies & Co analyst Youssef Squali said Google could exceed his revenue expectations for the second quarter if growth remained on its current course.
He pointed out that paid click declines of 4.4 percent for Yahoo Inc. and 9 percent for Microsoft Corp.’s MSN could bolster the case for the two to combine, or for Yahoo to clinch a search partnership with Google that has been under discussion for weeks.
Microsoft withdrew a $47.5 billion bid for Yahoo earlier this month in a disagreement over price. Yahoo Chief Executive Jerry Yang said on Wednesday the two companies were still discussing a potential partnership or alternatives to a deal.
While analyzing Yahoo, the Stanford Group stated: “Overall, there was nothing to get excited about for Yahoo…Queries also fell on a year-over-year basis, down 3 percent, suggesting that any initial year boost from Panama (has) tapered off as the company continues to struggle to maintain share in the market place.”
Google and Microsoft, however, both posted double-digit increases in Web search queries. Google posted a 33 percent year-over-year increase in April, while Microsoft’s MSN climbed 22 percent, compared with the previous year.