Google results cast doubt on search ads

Jennifer Scott News
20 Jan, 2012

The first decline in cost-per-click since 2009 leaves investors in the web giant worried.

Google today announce its fourth quarter results for 2011, but despite revenues of $10.58 billion (£6.84 billion), investors had concerns around its search advertising figures.

During its earnings call, the company admitted its cost-per-click (CPC) – the cash forked out by marketers for search ads – had fallen by eight per cent year-on-year; the first annual decline since 2009.

The numbers came as a shock to investors, as analysts had predicted a rise in CPC for 2011.

Google blamed the drop on difficulties with foreign exchange rates, which have suffered during the global recession, and defended itself with a 34 per cent rise in clicks on the adverts by web users.

However, it didn’t prevent a harsh reaction from the stock markets, with shares falling by nine per cent in the aftermath.

There were a lot of positive results throughout the earnings as well, even if Wall Street chose to ignore them.

It was the first time Google had broken the $10 billion revenue mark in a three month period, revenue for the entire year was up 29 per cent and the UK still managed to be responsible for 10 per cent of the fourth quarter, making $1.06 billion in revenue for the firm.

"Google had a really strong quarter ending a great year,” said Larry Page, chief executive (CEO) of Google.

“I am super excited about the growth of Android, Gmail and Google+, which now has 90 million users globally – well over double what I announced just three months ago.”

He concluded: “I’m very excited about what we can do in 2012 – there are tremendous opportunities to help users and grow our business.”   

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