Comment by ChuckMcM

Continued erosion of the CPC number (down 2% Q2Q, 6% y/y) so for those who haven't been following this like I have here are the last fourteen quarters:

        	Paid Clicks	Cost Per Click	Paid Distribution
   	      Q-2-Q	Y-A-Q	Q-2-Q	Y-A-Q	In $M
   2011Q1	18	4	8	-1	337
   2011Q2	18	-2	6	12	355
   2011Q3	13	28	-5	5	383
   2011Q4	17	34	-8	-8	442
   2012Q1	7	39	-6	-12	468
   2012Q2	1	42	1	-16	507
   2012Q3	6	33	-3	-15	556
   2012Q4	9	24	-2	-6	634
   2013Q1	3	20	-4	-4	680
   2013Q2	4	23	-2	-6	706
   2013Q3	8	26	-4	-8	755
   2013Q4	13	31	-2	-11	824
   2014Q1	1	26	0	-9	845
   2014Q2	2	25	-2	-6	893

Cost per click is the money that Google gets per click, it keeps going down suggesting to me that the "value" of this advertising is going down. Paid Clicks are clicks on Google ads which are up impressively but my observation is that there are a lot more of them in places than before. And lastly Google is paying nearly $900M/quarter (that is a 3.6B% annual run rate) to "buy" traffic to their properties. From that I conclude that Google's "specialness" is losing its luster, and that results from other services are "good enough". Doing this same math on Bing results and you will see that Microsoft is capturing the lion share of the value that Google is losing here. (and while Blekko is a search engine, we figured out earlier that you couldn't buy traffic against a competitor willing to spend billions a quarter) The other observation is that this realistically, this can't go on. Eventually Bing will be getting equal CPC with Google, and at that point trying to buy traffic or force the use of a particular browser that will only go to one search engine reliably, will make you less competitive than the more efficient guy down the street. I can't wait :-)