Google‘s “buy buttons” have not made an impact in the second quarter, and it could have not been otherwise. Only recently launched, and faced with fierce competition, they may need between two and six quarters to yield satisfactory results. Google’s track record in new launches is not particularly impressive, and we assume that the entire process will likely to be split into:
- a 4-month trial & beta testing program
- a 6-month trial & testing program to a wider audience
- a 6/8-month data collection period
Around the end of May, we said that buy buttons could be a distraction, although we acknowledged that Google needs innovation and new features in order to dictate strategy in the digital field. We reiterate the view that profitable volumes are not necessarily the outcome if competition continues to rise for similar features.
As everybody knows, Google must generate more ads revenue from mobile but there is no certainty that the economics of the investment will make much sense at the end of the process. In fact, its ads revenue model is based on CPC (cost-per-click), which dropped 7% in the first quarter and 11% in the second quarter.
As the two charts below show, traffic is on its way up and so are revenues, of course – BUT the aggregate cost per click, which represents core earnings, fell for the second quarter in a row.
So, Google has not bucked the trend of declining CPC, as expected. Yet to get more clarity about the effectiveness of its current campaigns, we’ll need to spend more time investigating CTR (click-through rate) for mobile devices when the data is made available.