Google Evolves Back to its Core

by Admin


02 Feb
 None    Search Engines


by Gord Hotchkiss


by Gord Hotchkiss
http://www.enquiro.com

Last week, I talked about how the economy will sort out winners and losers even faster. This week, a trio of news releases seems to confirm that search, and Google, in particular, will be a winner. Unfortunately, almost no one will recognize that they’ve won.
Reports out of AdGooroo and Covario  show that search is still ticking along better than ever. AdGooroo has Google and Microsoft on track for the best Q4 in history. Apparently, despite the gathering storm, people still search and still click on ads. And, relatively speaking, there’s been minimal impact on search ad budgets. We saw a lot of advertising budgets hold the course for 2009. This was a good news/bad news scenario. The good news was budgets weren’t cut. The bad news was that planned increases, in some cases aggressive increases, were put on the shelf.
 
So, are there smiles in Mountain View? Not according to a MediaPost article from yesterday. Google is jettisoning every piece of financial baggage they can, drastically cutting costs to keep the financial boat upright in advance of the earnings report (due out today). The latest cut? Google’s newspaper business.
 
What does it all mean?
 
By any sane analysis, Google is doing very nicely, thank you. Jeffrey Lindsay, an analyst quoted in the MediaPost article, expects to see 23% year over year revenue growth, with 14.3% growth expected for 2009. In the rational world, that would be cause for popping champagne corks and backs bruised from vigorous patting. Given the performance of every other company on the planet, double digit growth is nothing short of miraculous. But in Google world, it’s an “all-hands-on-deck” disaster. True, Google’s stock price has retreated to levels not seen since 2005 (psst..stock tip…Buy!), but the financial engine is ticking over very nicely, thank you.
 
What is happening is a bit of natural selection and forced evolution at the Googleplex, and although this will be painful, it will be very healthy in the long term. Google is picking its winners and culling the losers. At the same time, they’re redefining themselves into a sustainable business model. I suspect Eric Schmidt and CFO Patrick Pichette have stolen a page from Rahm Emanuel’s book: “Never let a serious crisis go to waste”.  The economic  freefall  and irrational pessimism of analysts gives them the opportunity to impose some logical constraint on the over exuberance we saw from Google in days gone past. Google was going to reinvent everything, from advertising to telecommunications to sustainable energy. Now, it appears Google realized there’s more than enough in its core mission (organizing the world’s information) to keep it busy for the foreseeable future. I always thought that the starry eyed idealism was commendable but not sustainable. Google is growing up.
 
Think Search is Strong now? Wait..
 
In the meantime, think for a moment how search has positioned itself. Despite one of the worst economic years in recent memory, Google showed 23% growth in revenues. During the same time period every other economic metric went into free fall. Consumer confidence plunged to its lowest levels ever. Retails sales and online sales both hit the skids. Let’s not even talk about home sales. The Dow Jones is down 40% in the past year.  The economy didn’t just slow down. It screeched to a halt. But in this same time, search kept plugging through without a hiccup. Did the astronomical growth continue? No, but 23% is pretty damn good in anyone’s books.
 
People kept searching and clicking on ads. In fact, according to AdGooroo and Covario, they did so more than ever. The only thing impacting search right now is the sheer fear of advertisers who are being assailed on all fronts.
 
Understandable? Yes. Rational? No.
 
So, when we hit bottom and start climbing out of this economic black hole, Search will have consolidated its position as the most accountable of marketing channels. It will form the basis of a new marketing model: consumer driven, immediate, measurable, effective, interactive. And Google will be the post powerful player on the block. Best of all, they can do it without worrying about selling newspaper ads, redefining America’s power grid or colonizing space. All they have to do is focus on helping people find what they’re looking for.


Copyright 2008 - Enquiro Search Solutions.


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