Google's (GOOG) shares continue to be stuck below $500 where they have been since late February. Part of the reason for the fall is that comScore data showed that the number of people who clicked on ads at the big search engine was weak in January.
It looks like the stock will drop again as "click rates" for Google ads rose only 3% in February when compared with the figures for the same month last year. According to MarketWatch: "Google reported 25% growth in paid clicks in its fiscal fourth quarter ended in December. But comScore data released last month showed flat growth in Google's paid clicks in January." Now, investors can ponder another piece of bad news.
The easy answer to the Google data is that a recession is slowing down advertising activity everywhere. Google carries millions of ads in its AdSense program, so it would make sense that it should suffer some fallout.
But, the answer may be more troubling than that. Readers of Google's search pages may be discovering that the text ads next to the listings are from marketers trying to take advantage of people looking for information by clogging pages with related messages. As more people understand the system of targeting based on search results, fewer are willing to be sucked in by companies trying to reach them due to their behavior.
If the Google system of matching ads to search results is putting its customers off, that would be worse news than the effects of a recession.
Douglas A. McIntyre is an editor at 247wallst.com.
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