Puzzled tech analysts are beginning to ask the unimaginable: is Google’s historic run finally over?

The numbers don’t look promising. Google’s U.S. paid click-throughs – to be sure, its bread and butter revenue-generator – may rise by just two percent in the first quarter, according to Henry Blodget at Silicon Alley Insider, citing proprietary ComScore data. That would compare to a 25 per cent quarterly growth rate a year ago for Google, and down from a 40 per cent quarterly growth rate in the fourth quarter of 2007.

From 40 per cent to 2 per cent in the span of three months? What happened?

A drop to single-digit growth is inevitable, even for the mighty Google, but nobody expects it to occur overnight, which is why the ComScore data have been so rigorously questioned since it began showing weakness in the Google paid clicks business in January.

At first, the data discrepancy seemed easily explained. A bad January was normal, a seasonal abnormality, market observers pointed out. Others questioned the impact of a larger global economic downturn on Google’s business. But, it was assumed, Google would escape that too in the long run as advertisers ditched the more expensive forms of advertising for Google’s lead-driven ad model. Then, Google issued its own explanation saying it was cleaning up its inventory so advertisers are no longer paying for bogus hits. Investors breathed a sigh of relief as it became clear Google was addressing two of its bigger weaknesses: phoney leads and, hopefully, click fraud.

ComScore too has been put under the microscope for boldly signalling a caution flag against Google. Nobody expects a third-party measurement firm to catch every click, but they do expect some consistency in the monthly data. When the tally falls off a cliff from one month to the next, the natural inclination, among hopeful investors at least, is that there is a flaw in the counting.

The guessing game will be over on Thursday when Google reports first quarter results. Still, the early verdict is unnerving for shareholders who have already seen Google shares fall 40 per cent since November, though from an astonishing $747 per share perch to $446.84 at the market close on Tuesday.

The feeling among analysts is that Google is treading in new territory, staring at its first significant fall-off, not the best news from a tech bellweather in an already jittery market. As Blodget writes in his notoriously blunt style, “Consensus estimates for Google's Q1 have been cut significantly since the first Comscore bomb in January. We believe the current consensus revenue estimates could be met with US growth of 25% in Q1, down from 40% in Q4, which would allow for significant deceleration in the quarter”.

This is the rosy scenario. Google’s paid clicks growth rate has not dropped. ComScore is wrong. Google is right. The tech market will avoid a bloodbath.

If the ComScore data is on target, that’s another story entirely. If, Blodget says, “the Comscore data is accurate, US revenue will miss by a mile and Google's overall revenue will come in well below consensus. Thursday's earnings report will be interesting.”

Interesting, indeed.

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Bernhard Warner, a freelance journalist and media consultant, writes about technology, the internet and media industries. He can be reached at techscribe@gmail.com

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