April 23, 2008 > Google's strong showing renews debate over Web tracker
Google's strong showing renews debate over Web tracker
By Anick Jesdanun, AP Internet Writer
NEW YORK (AP), Apr 18 _ Google's strong first-quarter results threw into question the weight many investors place on data from a leading Web measurement company that had shown slowing growth in Google's U.S. paid clicks. That data can be misread or simply wrong.
Before Google Inc. released its earnings late Thursday, the company's market value had plunged 35 percent since December as Wall Street analysts worried that the faltering U.S. economy could bog down Google. Many analysts had cited the monthly paid-click reports from the Internet measurement company comScore Inc. as confirmation of their fears.
For example, in January, comScore showed a tiny decline rather than the usual large growth in the number of advertisements that users actually clicked on.
But even comScore warned against reading too much into the figures.
Responding to Wall Street concerns about Google following comScore's January report, Chief Executive Magid Abraham wrote in a blog posting that ``a careful analysis of our search data'' did not support the fears.
Yet investors voiced similar concerns again a month later.
``ComScore said paid clicks were down and that was it, and all the analysts were saying paid clicks were down and therefore Google was going to lose money,'' said Danny Sullivan, editor of the industry Web site Search Engine Land. ``I tend to fault the analysts much more than comScore.''
Google announced Thursday that first-quarter profit climbed 30 percent, surpassing analysts' predictions and prompting Chairman Eric Schmidt to reference the Web-measurement reports.
``It is also interesting to note that paid-click growth is much higher than has been speculated by third parties,'' Schmidt said during a conference call.
The company has acknowledged Internet users have been clicking on fewer ads. But Google attributed that to its deliberate efforts to reduce the volume of ads and deliver more compelling messages that lead to purchases. Google hopes advertisers will pay more for each ad so it can ultimately generate more revenue from fewer clicks.
Google reported that the number of paid clicks in the first quarter rose by 20 percent worldwide.
The growth is slower than the 43 percent Google enjoyed last year but still easily exceeded the 2 percent growth that comScore had estimated for the first quarter. ComScore measures the United States only and does not count clicks through Google's AdSense program, in which Google runs ads on non-search sites.
There's also the potential for error. Like its competitors, comScore relies heavily on online recruitment techniques dismissed by many traditional pollsters. Even telephone surveys have a margin of error. Yet many observers treat the numbers as if they are precise.
``The tolerance levels expected by Wall Street is much tighter than what is needed for the typical marketing and media analyses using our data,'' Abraham told The Associated Press.
He said comScore would boost educational efforts on the data's limitation and expects this year to produce numbers that are more directly comparable with what Google reports.
``We are being overly criticized but at the same time given our role and prominence in the industry, we're always going to be attacked just like Google was being ruthlessly attacked for the entire quarter,'' Abraham said.
Colin Gillis, Internet analyst at Canaccord Adams, was among those who had remained optimistic about Google despite the comScore data.
``As we kept saying, paid clicks is just one piece of the overall revenue equation,'' he said. ``I think it (Google's actual results) will de-emphasize going forward some of the weight placed on the third-party data that's out there.''
He said many of his colleagues rely heavily on the comScore numbers because Google itself generally provides little guidance about what to expect.
Sullivan said analysts should treat the data as ``rough benchmarks.''
``I feel sorry for anybody trying to predict what Google's doing off those numbers,'' he said. ``Google can change so many things behind the scenes.''
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