Even though Google blew it out of the water last quarter (Q3 11) with revenue up 33% to just over $9.5 billion, there was a little note attached to their financial statements indicating the average cost per click has decreased by 5%.
One quarter does not a trend make, but the summit has to be reached at some time. There is still growing competition to be at the top of the list, on the front of the SERP pages resulting in an out-of-control increase in the cost of clicks businesses are willing to pay. An example is in the real estate industry where back in the early 2000’s, the cost per click was running at about a nickle to over a dollar today. That’s a $1.00 cost for every ad click that takes place on the real estate’s web ad. At some point it will become too cost prohibitive for companies to continue seeing an ROI for their pay-per-click investment.
Some industry analysts are pointing their fingers at social media (Facebook in particular) as a potential cause for Google’s cost-per-click decline.
While it is too soon to tell when or where pay-per-click marketing will peak, the writing seems to be on the wall and definitely begs the question as to whether buying traffic has finally become too cost prohibitive for most companies. The results over the next quarter or two will be something to watch.