Google is out with their Q2 earnings report and, like always, things are going well for them. Earnings are up 22%, year over year, and the international share of that is now 58%.

But from a brand and media perspective, what's interesting is their earnings per click, as in how well each individual ad performed. The trend that we have seen for many years, is that the effectiveness of advertising is declining, even though the digital ad market, as a whole, is growing. 

In other words, each ad is getting less and less effective for both brands and publishers. 

And Google's earnings report shows a very clear continuation of that trend. As they write:

"Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 6% over the second quarter of 2013 and remained constant from the first quarter of 2014. Cost-per-click for Google sites decreased approximately 7% over the second quarter of 2013 and decreased approximately 2% over the first quarter of 2014. Network cost-per-click decreased approximately 13% over the second quarter of 2013 and increased approximately 3% over the first quarter of 2014."

This is combined with a continual decreasing CTR and ad awareness rates that we see from almost all ad networks. 

Arguably, the digital advertising market still has a lot of room to grow (Google is in no trouble), but it's an interesting, but also a troubling trend, that the effectiveness of each individual ad continues to drop.

What we need is a new concept. I am hoping that we will see something interesting in relation to native advertising, but, so far, most native ads are as misguided as most banner and search ads. 

What we need is a format that isn't defined by volume, but is instead define by measurable outcomes. And there are some interesting potential in the field of predictive analytics and how we can use that to target things in a far superior way.

But in the short term, know that the trend is continuing to show a decreasing effectiveness of digital advertising per click. If you want to be successful online, you have to do more than just ads.

https://investor.google.com/earnings/2014/Q2_google_earnings.html
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