Wednesday, January 30, 2008

Is Google Recession Proof?

I've seen this question a couple of times in some other blogs. Here is what Yahoo said about the question of ad search revenues being resistant to any economic downturn.

Question

"What kind of impact in a hard recessionary environment do you think you could see in your display and search advertising, whether one would be more insulated than the other? Specifically in Search, to the extent that you were to see a major negative macroeconomic impact, do you think you would see that more in terms of advertiser demand or a change in user or searcher behavior?"

Answer

"We have, from time to time, seen pockets of weakness and certainly a couple of pockets in the fourth quarter as I outlined. We’ve also had areas of strength that have been offsetting."

"The challenge in answering your question is clearly the secular trends in online advertising have historically, and even today, very much been overwhelming the cyclical environment. It’s early to tell though if the weakness in the housing and financial and travel sectors -- a little bit in retail -- will start to affect the consumer more broadly and the advertiser more broadly and therefore searches in terms of what kind of commercial searches happen."

"I don’t think we have a crystal ball in that, but we are encouraged, actually, by how much offsetting strength we’ve seen in some of the other categories which has kept our overall marketing services growth rate in line in display and Search with what we saw earlier in the third quarter, or actually even a little bit better."

Transcript from Seeking Alpha

1 comment:

john bougearel said...

Yahoo's insighftful answer that the strength of the secular trends in online advertising is still overwhelming "pockets" of cyclical weakness.

The strength of the secular trend offseting cyclical weakness makes their business model relatively immune to pockets of economic weakness and recession proof - at least up to this point.

Someday perhaps shifts in cyclical trends will overwhelm the growth in the secular trend, but that appears not on the horizon for the foreseeable future.

Thank you for that post.
John Bougearel
www.successfultradingtips.com



is consistent with my own experience