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October 16, 2008

What Google’s Q3 Earnings Could Mean for the Search Industry

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What a difference a day makes. Just yesterday, predictions about Google’s incoming Q3 reported earnings varied across the board from decent to dismal. But all the guessing and speculation was for naught, as today the official earnings were announced.

While skeptics anticipated a bubble-buster, Google’s earnings beat expectations. The company saw a 31 percent increase year-over-year for a net income of more than $1.5 billion.

This coming mere days after CNET anticipated dark times ahead for Web advertising and Adweek forecasted the beginning of a downturn for the ad business.

As the latter story explains:

“In past recessions, said [Jessica] Reif-Cohen, ad spending has been a ‘lagging indicator’ — meaning that typically the business doesn’t take a hit until a quarter or two after a consumer recession starts and doesn’t recover until a quarter or two after it ends.”

However, you read later that:

“The ad marketplace should be less challenging for the more measurable channels, particularly digital, according to Jack Klues, managing partner of Publicis Groupe Media’s recently formed VivaKi.”

Google Watch said it another way in the post Will Google’s Q3 Earnings Offer a Window View to the Recession? “If Google beats expectations, it’s hardly proof that online advertising isn’t suffering from a recession. All it may well suggest is that search advertising, Google’s main moneymaker, is for now better positioned compared to other online ad areas.”

Of course Google and the search marketing industry aren’t recession proof. But as Adweek reports, the ad industry in general has started bunkering down for the recession, while the person delivering the memo to search stopped for coffee along the way. The comforting fact remains that search advertising provides some of the most profitable returns available. And it looks like there’s still room left for growth.

In this time of uncertainty, we hear a lot about lacking consumer confidence — something that gets brought up around this industry as well. Considering the uneasy footing of the economy, it’s especially important to continue to provide the highest quality SEM services you can. That’s the best chance you’ve got for making it past this bumpy road.

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One response to “What Google’s Q3 Earnings Could Mean for the Search Industry”

  1. Christopher Ross writes:

    There has been a lot of doom and gloom predictions over the past few weeks, and ad revenue in general is down but I think that we can’t put the genie back in the bottle. Google will continue to sell ads, the same way newspapers used to sell ads, as long as people continue to read the web.



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