Continued erosion of the CPC number (down 2% Q2Q, 6% y/y) so for those who haven't been following this like I have here are the last fourteen quarters:<p><pre><code> Paid Clicks Cost Per Click Paid Distribution
Q-2-Q Y-A-Q Q-2-Q Y-A-Q In $M
2011Q1 18 4 8 -1 337
2011Q2 18 -2 6 12 355
2011Q3 13 28 -5 5 383
2011Q4 17 34 -8 -8 442
2012Q1 7 39 -6 -12 468
2012Q2 1 42 1 -16 507
2012Q3 6 33 -3 -15 556
2012Q4 9 24 -2 -6 634
2013Q1 3 20 -4 -4 680
2013Q2 4 23 -2 -6 706
2013Q3 8 26 -4 -8 755
2013Q4 13 31 -2 -11 824
2014Q1 1 26 0 -9 845
2014Q2 2 25 -2 -6 893
</code></pre>
Cost per click is the money that Google gets per click, it keeps going down suggesting to me that the "value" of this advertising is going down. Paid Clicks are clicks on Google ads which are up impressively but my observation is that there are a lot more of them in places than before. And lastly Google is paying nearly $900M/quarter (that is a 3.6B% annual run rate) to "buy" traffic to their properties. From that I conclude that Google's "specialness" is losing its luster, and that results from other services are "good enough". Doing this same math on Bing results and you will see that Microsoft is capturing the lion share of the value that Google is losing here. (and while Blekko is a search engine, we figured out earlier that you couldn't buy traffic against a competitor willing to spend billions a quarter) The other observation is that this realistically, this can't go on. Eventually Bing will be getting equal CPC with Google, and at that point trying to buy traffic or force the use of a particular browser that will only go to one search engine reliably, will make you less competitive than the more efficient guy down the street. I can't wait :-)
If you come to this link about Google from Google.com by searching "Google Reports 22% Revenue Growth" you can skip the pay wall.<p><a href="https://www.google.ca/search?q=google+reports+22%25+revenue+growth" rel="nofollow">https://www.google.ca/search?q=google+reports+22%25+revenue+...</a>
\tangent Google is commited to increasing revenue, but I loved their early idea, of showing you relevant ads that you would <i>want</i> to see. Similar enough to goto.com/overture's idea, of search <i>purely</i> for ads. You're far more likely to pay attention, to click, to buy. And it's sustainable indefinitely because net-better for the world.<p>Although, judging from advertising in general, it may be better for advertisers to get your attention whether you want it or not. And they are the ones who decide whether the advertising occurs.<p>But if another company did ad-relevance better than Google, more efficiently (cheaper) and effectively (clicks, sales), it seems that Google couldn't beat them, because the revenue at first would be lower and Google is Wall St-committed to increasing revenues. They would have to acquire the new company (if they could).<p>Unfortunately, ad-relevance requires data about the person, and Google is best placed for this (alongside Facebook). Despite the privacy-backlash, people increasingly live online and accept the loss of privacy. So, instead, we have startups with new ways to gather new personal data, and are acquired by Google/Facebook.
It would be interesting to know how much removing the background color from the Adwords ads above the organic results effected profits.<p>I find myself clicking adwords ads frequently since the change. They practically look identical. I imagine it was a nice boost to revenue.
Direct link to the filing if you are interested: <a href="http://www.sec.gov/Archives/edgar/data/1288776/000128877614000058/googq22014exhibit991.htm" rel="nofollow">http://www.sec.gov/Archives/edgar/data/1288776/0001288776140...</a>
Fancy, Google's stock box now has after hours charting.<p><a href="https://www.google.com/search?q=goog" rel="nofollow">https://www.google.com/search?q=goog</a>