Report shows Google ad viewership flattening

By Eric Auchard

SAN FRANCISCO (Reuters) - Google Inc showed modest growth during February in a closely watched report released on Wednesday on how search sites like Google get paid by advertisers, and its shares fell 3.2 percent.

Web measurement firm comScore Inc issued a monthly report on "paid clicks" -- a key measure of how Web searchers are converted into ad viewers -- that showed Google's paid click rate grew 3.1 percent year-to-year in February, sources said.

Flat year-over-year growth by Google on the same basis in comScore's January report, which was released in late February, led to an 8 percent one-day drop in Google's stock the day afterward and a fierce Wall Street debate on whether revenue growth is slowing or if Google's own actions are to blame.

Lurking behind this discussion is investor concern that Google's growth in terms of paid clicks has slowed from around 30 percent to 40 percent six months ago, raising the prospect that the economy is to blame for some of Google's slowdown.

"You can't avoid the trend. Something that was humming along at 40 percent is now near zero: Something is going on there. Especially when the economy is getting a little twitchy," said RBC Capital analyst Ross Sandler. Last week he cut his 12-month price target on Google to a Street-low-level of $530.

ComScore declined to comment on the report, saying it publishes the data for use by clients, which include companies in the advertising industry and Wall Street brokerages, which use the statistics to gauge Google's quarterly revenue trends.

Shares of Google fell $14.52 to $443.67 in extended trade on Wednesday after the release of comScore's latest click data. The fall erased a $7.41 gain in the Nasdaq regular session.

Complicating the issue is Google's efforts in recent quarters to improve the effectiveness of advertising shown in the margins of its Web search services by paring back the number of ads per page and reduce inadvertent customer clicks.  Continued...