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Google money machine all cranked out?

Paid click shrinkage

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Is reality finally catching up with Google's top-secret money machine?

According to those clever net-watchers at Hitwise, paid ad clicks took a significant nose dive during the past month. In the four weeks leading up to May 9, Hitwise says, 7.25 per cent of all search engine traffic came from paid clicks, compared to 9.84 per cent in the same period last year.

That's a 26 per cent drop. And with Google controlling upwards of 60 per cent of the search market, you have to wonder if Mountain View is finally feeling the Meltdown.

The same period last year coincides with Google's short-lived effort to shrink the number of ads on its results pages.

In February 2008, the equally clever net-watchers at comScore released their now famous report detailing a sharp decline in Google's "paid click rate." Google ad click growth was down seven per cent year-on-year, comScore said, and on Wall Street, company shares tumbled nearly 10 per cent over the next two days.

Backed by Google, comScore soon "clarified" its report, presenting the vanishing clicks as part of Google's master plan to improve the "quality" of ads. Google continued to shrink coverage until the Meltdown hit, when it turned the knob the other way.

And though it has continued to turn the knob the other way, the dial may have reached its limit. In the first quarter, Google says, paid clicks were up 17 per cent on the previous year. But Hitwise numbers paint a different picture for Q2. ®

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