I’ve been traveling much of this week and I have barely powered up my laptop all week. It’s likely that you (like most of us) are increasingly experiencing most things online on your mobile devices rather than the desktop. That’s great for you and me…but not so great for Google. Google just released it’s Q2 results and they were pretty darn good…revenue up but also significant increases in spend, many in areas unlikely to yield revenue for a while. While the suits in Mountain View are investing in “moonshot” projects like wearable tech and self driving cars the part of the business where the bacon gets made is under pressure. The long and short of it is that the advertisers have not followed the users in any where near enough numbers to keep the average value per click sold from declining…again…a decline which has dogged Google for the past few years.
Mobile devices don’t have as much real estate, are harder to track and the advertising folk involved are still more conservative than the users. So although Google’s revenue has continued to grow investors are looking at a strategy of moonshot projects in the context of challenging key metrics in the core business with less than enthusiasm. In the same week that Google announced its numbers it also announced the departure of the guy officially running their ad business. Nikesh Arora departed to SoftBank. It was interesting to see him address this very issue of click decline a few months back. He commented then that he sees local advertisers as the silver bullet solution to this problem. We have certainly seen the impact of increased interest in online advertising by local businesses result in significant click inflation. The problem Google has is a relatively small number of local businesses currently spending like drunken sailors on clicks they don’t necessarily feel the benefit from isn’t a long term solution. Local businesses don’t have the marketing fire power enjoyed by agencies and large companies….they want leads not clicks. That’s exactly where we come in, we turn those clicks into the leads they need. There is a cultural ravine called “local” which Google will have to cross or fill in to turn the tide on click price decline. Interesting times indeed.