The numbers: By any measure Google has been a fabulously successful company, growing rapidly and maintaining incredible margins. It's hard to argue with a 70% profit margin.
On 17th Apr 08, Google proved the hand-wringers wrong by reporting Q1 earnings and revenue growth above expectations. It was the 12th time in 15 quarters as a public company that Google beat estimates.
Data from ComScore (SCOR) showing Google's ad clicks to be slowing missed a key reason why. Google deliberately limited the volume of commercial links so it could serve up more compelling messages creating actual sales. Google gambled that advertisers would be willing to pay more for each ad link if doing so created more revenue with fewer clicks.
According to the first quarter's results, that gamble is paying off. ComScore should adjust the way it delivers its findings. It claims to have never passed judgment but just reported a slowdown in clicks, but reporting a slowdown without providing context made Google's situation look bad when it was actually good. If the purpose of reporting clicks is not to understand the health of the business, then what's it for? Understanding that the quality of clicks is as important as the sheer number of clicks seems like a key part of ComScore's job, and one it messed up. Little surprise, then, that its stock fell 8% on Google's strong report.