Google's average ad rates just keep falling, but Wall Street no longer seems to care

Advertisement

Google had a blowout quarter yesterday. It beat earnings expectations and announced a massive stock buyback. Every analyst on Wall Street is screaming "BUY!"

Advertisement

This is despite the continuation of a trend that Wall Street used to worry about a lot: Google is making less money every time you click on one of the ads it shows. This metric is called cost-per-click (CPC), and as this chart from Statista shows, it's been dropping on an annualized basis ever since the last quarter of 2011.

For the last two quarters, Google has been blaming a new kind of YouTube ad called "TrueView," which advertisers aren't willing to pay as much for as they are for Google search ads. The rise of mobile advertising, which has lower rates, is partially to blame.

Complimentary Tech Event
Discover the future of SaaS in India
The 6-part video series will capture the vision of Indian SaaS leaders and highlight the potential for the sector in the decades to come.25th Aug, 2022 Starts at 04:00 PM (40 mins)Register Now
Our Speakers
Dan Sheeran
Sandeep Gupta

Whatever the reason, Wall Street doesn't seem to be worried about it any longer. As long as Google keeps growing its revenue and profits by expanding into new ad markets, it can survive charging lower prices for ads.

20151023_Google_Ads_BI

Statista via Google

Advertisement