Readers Solve Click Mystery; Implications

Thanks to everyone who took a moment to add thoughts regarding the click mystery (To wit: Who, exactly, is clicking $6 billion-worth of Google ads a year?).  Reading through the comment string, a few thoughts struck me:

First, many people do find the sponsored links valuable, which is comforting.

Second, a significant percentage of people do NOT generally click on sponsored ads.  This is actually good news, not bad.  Given that Google's links appear to be getting ever-more relevant and given that plenty of smart people swear by them as a way of finding service providers, it seems likely that many of the non-clickers will eventually become clickers.  This represents latent demand, and it suggests search growth has a ways to go.

Third, in perhaps the most intriguing post vis-a-vis current market dynamics, the former president of a travel company confirmed that dollars are shifting online because the ROI is much more measurable than in other media, but that this trend will slow as online prices rise and offline becomes more competitive.  More importantly, he said that the bigger question is how ROI is measured. 

Specifically, Google has apparently convinced the travel elephants--Expedia, etc.--that the value of someone who clicks through from a Google link, disappears for 20 days, and then returns to the travel site and buys something should be factored into the ROI.  This, the former president points out, is certainly a debatable proposition, and if the big travel companies were to change the way they calculated ROI to a more conservative one-time visitor calculation, it would reduce the amount they were willing to pay.  (Personally, I think Google links often have branding/educational value even when they aren't clicked on--value that is never captured by the company--but the point is that there will always be differences of opinion about how best to calculate ROI).

Comments

[Alon]

I wonder how the coming launch of yahoo's publisher network will affect Google's margin. Right now Google is a monopoly, paying webmasters with their adsense program an undefined commission. I believe that when yahoo will enter the market full throttle it will start competing on websites real estate and as a result margins for google will decrease