Last Thursday (April 17th, 2008), despite the state of the current US economy, the decreased value of the US dollar, and many other economic indicators suggesting that you run for the hills, Google surprised the stock market with better than expected paid click performance. Along with the US fiscal concerns, Google received negative projection reports from Comscore on the performance of paid clicks in the first quarter of 2008. Comscore’s boiler plate says they are a “global leader in measuring the digital world,” and their Google performance forecasts reported three months of decline in paid clicks from the Google advertising revenue model.
Based on the metrics collected from Comscore’s 2 million plus consumers and panelist, who allow their online/offline behaviors and transactions to be monitored and reported, Comscore projected a meager 2% growth in the United States versus a 30% growth in the previous quarter, Q4 of 2007. This 2% growth was interpreted by many stock and economic analysts as an indication that the factors affecting the overall economy were negatively affecting online advertising. Stock estimates for Google’s shares were lowered in accordance with lowered expectations, and Google’s shares closed down at $449.54 on Thursday. In a shocker after the stock market closed, at their earnings call, Google reported paid clicks were actually up 20% over the fourth quarter of 2007.
Google’s 20% growth figures included international paid clicks, while Comscore’s 2% expected growth was specifically reporting on the US paid clicks. Analysts are inferring that increased rise in paid clicks internationally are counterbalancing the decline of US clicks. The cheaper US dollar is translating into more clicks for Pounds and Yen.
In a polite shot at Comscore, Eric Schmidt, CEO of Google stated, “Paid click growth was much higher than has been speculated by third parties.” At the open of the market on Friday, Google’s shares were at $530.10, up 18%. Comscore’s share, however, opened Friday down 2%, at $22.90.
In a global economy, stock analysts should be weary of making economic assumptions based on US-focused sample (panel) data, from Comscore or Nielsen. Comscore conceded in their blog that they could “do a better job of explaining the meanings and the limitations of the statistics [they] publish,”
Article by Joel Collymore