Search Spending Down 8% in Q4; Will Google’s Earnings Report Reflect the Same?

Monday, January 19th, 2009 by Andy Beal

Search Spending Down 8% in Q4; Will Google’s Earnings Report Reflect the Same?

Google has never been one to conform to market predictions about its quarterly earnings–something to keep in mind when reading Efficient Frontier’s gloomy prediction for 2008’s fourth quarter.

U.S. search advertising spending fell 8% in the fourth quarter of 2008 from the same period in 2007, according to a new study from search advertising firm Efficient Frontier, which had been tracking mostly flat growth for 2008. The study — which covers an undisclosed portion the $750 million in annual spending the company manages globally — marks the first quarter of negative annual growth in the several years Efficient Frontier has been gathering such data, says James Beriker, president and CEO of the firm.

Wall Street analysts are still betting on a double-digit increase when Google announces its Q4 earnings on Thursday–and I tend to agree with that prediction.

I suspect that Google did see a slow down in Q4, but should manage to "massage" the numbers to show double digit–or close to it–growth. However, I’m a little more pessimistic for 2009’s outlook. With Google shutting down more non-core products, laying off employees, and closing offices, I suspect the company is already seeing a decline in business and is bracing for the impact of the recession.

What are your expectations for Google’s Q4 numbers? Increase, decrease, or remain flat?

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6 comments on “Search Spending Down 8% in Q4; Will Google’s Earnings Report Reflect the Same?”

invest money Says:

January 19th, 2009 at 11:25 am

Google will have lower revenue. Every one is saving now, and marketing is the one of the first target of saving money. If you ask blogger that uses Adsense, you can see that they are having lower revenue as well. Many of them are having a 50% decrease. So guys save your money.

invest money’s last blog post..Leverage the two headed sword
Greg Moore Says:

January 19th, 2009 at 3:24 pm

AdWords: Automatic Matching, One Click to Optimize instead of Rotate
Y!: Adding keywords to accounts without telling you

I’m going to SMX in a couple of weeks, and will be interested to see what the buzz is about devious so-called new features that seem to tip in favor of the engines.
Jayson Says:

January 19th, 2009 at 4:00 pm

I’d say their revenue dips a little but that their market share stayed the same or increased.
The Tipping Point — Sunsetting Pay Per Click « Highcliff Blog Says:

January 19th, 2009 at 10:47 pm

[...] more telling. This morning, for example, Andy Beal reports an Efficient Frontier predication that search revenues are dropping, and he asks if Google revenues will reflect the same. Now we are in a severe [...]
Kenney and Kim Says:

January 20th, 2009 at 2:44 am

We know this is going to effect Google big, but I wonder how much more will it hurt them than Yahoo,… because Yahoo makes a lot of money through other forms of advertising such as media buys (banners) and such. Although online advertising spending is down too.
Sai Says:

January 21st, 2009 at 3:49 pm

I think Google will see a slowdown like everyone else. I spend money on Google paid search for my website http://www.nuuvoo.com. The keyword bid amounts have been dropping and I am consistently seeing my ad budget hitting its daily limit which was not the case before. My guess is that many of my competitors are reducing their budgets and bid amounts causing my bid amounts to be competitive. We will know in 24 hours.

Marketing Pilgrim