The Rising Influence of Rising Affluence

[DewDiligence]

One problem with GOOG’s business model:

http://www.wsj.com/articles/google-reports-disappointing-revenue-1422566271

The amount Google receives per ad click is decreasing as the number of clicks increases, as a bigger portion of total clicks is coming from smartphones, deemed less valuable by advertisers.

In the fourth quarter, clicks on advertiser links next to Google’s search results increased 14% from a year earlier, but the amount Google got paid per click fell 3% from a year earlier.

Revenue per click has been declining for some time and shows no sign of relenting. If this persists, even with ever-increasing click volume, revenue is eventually going to stagnate.