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Google (NASDAQ: GOOG), the search engine giant, relies heavily on its paid advertising… but just how good are things going for this part of the company’s business? That question is at the heart of the current debate of the future value of the California based search engine company.

The reason for the current controversy comes from a recent report from comScore Inc. which states that Google’s click through rates have slowed to a crawl this year. Looking at the February numbers, comScore Inc. reports that the company saw just a 3% increase from February 2007. If that sounds bad, the company also reports that January saw ZERO growth from January of last year.

These are not exactly the sort of numbers that Google investors are used to seeing. Consider that only a few months earlier the search engine giant was seeing growth rates in the upper 20 to 30% range. Definitely a large slowdown, assuming you can trust the comScore Inc. report.

Google itself announced last quarter that its click through rates had been falling, and that has led to the stock selling off pretty sharply over the past 3 months.

The company used to be the unstoppable Wall Street phenomenon, but that has clearly changed recently and now the analysts are turning against their once beloved high flying stock. Lehman has lowered their price target from $644 to $580 (Google stock closed yesterday at $444, so at least even though their lowered their price target, they still see some more upside potential). The main reason for the price target adjustment was blamed on the recent click through declines. Piper Jaffray used the same justification in their forecast that Google will miss earnings for the current period.

While many are debating that the current slow down is due to advertising trimming their budgets, not everyone is buying that. Some analysts debate that the reason for the drop is more a result that advertisers are typically buying sales, and not clicks, so if Google can improve the value per click the ad revenue will shoot higher very quickly.

Rob Sanderson, an analyst with American Technology Research stated that the comScore Inc. have a wide margin of error, and investor’s would be wise not to assume that the recent report will lead to a poor earnings report from the company. Only time will tell.

Google will next be reporting earnings on April 17, and you can be sure that we will see a big move one way or the other once traders get to se just how bad things have gotten over the past few months.

related: Google remains the king of search engine traffic

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