Weak Google paid-clicks data spur debate

New data confirming slowing growth in Google Inc.’s paid clicks renewed debate Thursday on Wall Street over whether the Internet search company’s revenue can quickly adjust to changes it made in how it generates clicks.

Citing data that ComScore Inc. released after the market closed Wednesday, analysts said growth in Google’s click-through rate has nearly ground to a halt. Shares of Google fell $14.11 Thursday to $444.08.

The click-through rate grew 3% in February compared to a year earlier, and January saw no increase compared to January 2007. Several months earlier, the rate was up 25% to 40% compared to a year earlier. The new data are in line with click-through declines Google reported last quarter.

Google, which gets paid when users click on a sponsored ad that comes up as the result of a Google search, has reported steadily rising revenue per click.

The Mountain View, Calif.-based company said in January that the drop in click-through rates was a result of its efforts to boost the usefulness of each click to its advertisers’ sales performance. For instance, the company decreased the space around a word that would result in a click, so more clicks would be intentional.

Analysts disagree on how long it will take Google’s per-click revenue to adjust to any increased value per click it has created.

Piper Jaffray analyst Gene Munster predicted that Google would fall short of Wall Street expectations in the current quarter because of the click-through rate.

Lehman Bros. analyst Doug Anmuth cut his 2008 profit estimate for Google and reduced his price target to $580 a share from $644, citing the click-through rates.

He also said advertisers may be trimming their budgets -- and not responding to the changes Google has made.

Google, which will report first-quarter earnings April 17, declined to comment on the ComScore data.