Google search close to 'recession resistant'

Bambi Francisco Roizen · January 23, 2009 · Short URL: https://vator.tv/n/672

Paid clicks rise despite weak economy

 While investors still see tough times ahead for the search Giant, Google still showed better-than-expected fourth-quarter results led by its search business. 

Google rose 4% in Friday trading, after disclosing late Thursday that net revenue (excluding what it pays to distribution partners) rose 24.5% to $4.22 billion. Lower payments to partners resulted in higher earnings per share of $5.10.

Bernstein analyst Jeff Lindsay points out, however, that the real story is in Google's search business.

Here's what Lindsay wrote in his research report:

Google's paid-search model continues to show a high degree of recession resistance. Unlike display advertising - which we think has been negatively impacted by the current economic downturn - paid search still seems to be attracting advertisers. Google reported paid clicks had grown by 18% annually, compared to total advertising growth of 16%, which would suggest that cost-per-click rates had fallen on average by approximately -2%. Adjusting for currency headwinds, total revenue actually grew by 21%, implying a rise in cost-per-clicks.

Overall, this was an impressive quarter and confirmed that paid search has become the advertising platform of last resort for many advertisers.

 
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Bambi Francisco Roizen

Founder Vator, Managing Partner - Vator Investment Club; Former Columnist/correspondent Dow Jones MarketWatch; Business anchor CBS affiliate KPIX

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