Google blames social networking for slow down

Google has attributed a slow down in growth for the fourth quarter of 2007 to the difficulty of making advertising work on social networks. The search company has reported a 17% increase in profits, but says that it has seen a drop in the “paid clicks”.

It has reported revenue of $4.83bn (£2.43bn) for the quarter to December 31, which is a 51% increase on the same quarter in 2006 and a 14% increase on the previous quarter.

Google says a revision in the company’s formula for showing advertising clicks led to the reduction in revenue.

The search company’s founder Sergey Brin says: “We had a challenge in Q4 with social networking inventory as a whole. I don’t think we have the killer best way to advertise on social networks.”

The company says it has been the reducing the clickable area around its ads to decrease the number of accidental clicks and increase effectiveness for marketers.

Google paid MySpace owner News Corp $900m (£452m) in 2006 for the right to deliver ads to the networking site’s 70 million-plus users.