Financial Downturn Hits Internet Advertising

Google’s dominance in internet advertising is set to grow predicts Forbes magazine as the current downturn in the economy sees all providers of internet advertising and search suffer.And while Google is suffering too, it is suffering less than its competitors. This comes as a result of earnings announcements from Google and Yahoo! in the past week.Forbes notes “even though Google’s revenue fell a bit short of analysts’ expectations, the search engine giant reported an earnings gain of 26%, to $1.4 billion for the quarter.” This compares to Yahoo! who said this week “third-quarter earnings fell 64%, to $54 million, on revenues of $1.79 billion, and that the wounded company would lay off 1,500 employees.”And the article says:
“In fact, Google’s good news in bad times may be based in a bigger trend. Overall, online advertising spending numbers are looking sickly. According to numbers released earlier this month from the Internet Advertising Bureau, spending fell in both the first and second quarters of the year. That marks the first time that either first or second quarter spending has dropped with respect to the previous quarter since 2003.”But search advertising–the small text ads placed beside search results–show signs of relative health. Those pay-per-click ads accounted for 44% of online ad spending in the first half of 2008, up 3% from the first half of last year, while spending on banner ads stayed flat at around 21% of the total.”To read this article in Forbes, see www.forbes.com/technology/2008/10/21/google-downturn-monopolist-tech-enter-cx_ag_1022google.html.

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