Google ad revenues fall short

Search engine Google has disappointed Wall Street by failing to sell as much advertising during the holiday season as it expected.

According to Reuters, the outfit’s shares fell by nine percent as the company announced that it underperformed on both revenue and earnings in the fourth quarter.

Wall Street growled at the news that there had been an eight percent drop in cost-per-click, which is the amount of money paid by marketers to the company for search ads. It had expected there to be a rise in this figure.

Mayuresh Masurekar, an analyst at Colins Stewart, told Reuters that analysts were worried that this could be something which is going to continue because the nature of the business has changed.

Google executives did reel off a number of figures during the conference call that highlighted progress in newer businesses such as display advertising, mobile and social networking. But this good news did not balance worries that its core business, advertising revenue, was suffering for the first time in two years.

Chief Executive Larry Page appeared to get cross at analysts who kept harping on over this point and during the conference call requested that “maybe we can get our next question not about cost-per-clicks.”

The ad rates were down mostly because of foreign currency exchange fluctuations and changes to the company’s advertising formats.

The new ad formats drove a sharp increase in the total number of clicks by websurfers on Google’s search ads, even though some of the format changes impacted prices negatively.

However, some wondered whether Google’s mobile advertising, which is generally believed to command lower ad rates, played a bigger part in the CPC decline than Google let on.