The general economic slowdown is changing the way that advertisers are valuing their search engine marketing spend, Google’s recent 10-Q suggests.
First, average cost-per-click declined in the quarter.
Average cost-per-click on Google web sites and our Google Network members’ web sites decreased 14% from the three months ended March 31, 2008 to the three months ended March 31, 2009 and 6% from the three months ended December 31, 2008 to the three months ended March 31, 2009.
Google attributes the decline to a number of factors, including a decrease in bid levels from advertisers.
“Specifically, we believe that as a result of the general economic downturn, advertisers, in aggregate, have lowered their bids for keywords in response to a decrease in the sales they are able to make per paid click,” the company said.
This trend aligns with a general pattern on the part of consumers to buy goods and services for less than they did in the past. It’s not really bargain hunting; it’s a shift in value perception. Consumers appear to be saying, “If you want to sell me something, this is what I’ll pay.”
Advertisers are doing the same thing.
You can find the 10-Q here.