Quote from Red_Ink_inc:
GOOG Google isn't immune - WSJ (312.08 )
WSJ reports the Achilles heel in Google's business model is showing itself. GOOG's big perceived advantage over traditional media has long been its consumer-driven business model. Whereas traditional media has more of a marketer-driven approach -- advertisers buy ads on TV or in newspapers and hope to persuade people to buy their products -- search ads only cost money if consumers click on them. And the price advertisers pay for search ads should reflect how often the clicks translate into purchases. This approach ensures Google is directly exposed to consumer behavior. And that's an issue now. Consumers are cutting back spending so much they're showing "a reduced desire to even search for new products, much less purchase them," according to Majestic Research, which tracks consumer behavior and keyword pricing. IAC, whose Ask.com search engine's ad sales are handled by Google, noted on a conference call last week that the search trends "have not been good over the last 30 to 60 days ... particularly on commercial-oriented queries." What's more, those consumers still in buying mode are browsing around for bargains more, thereby reducing the returns on individual clicks. And that is reducing the price that marketers are willing to pay for keywords, a point also noted by IAC. The result is likely to be a sharp slowing in Google's growth rate. Analysts have already begun cutting estimates: Jefferies, for instance, is now projecting 2009 revenue growth of 11% compared with its 19.7% forecast less than a month ago. More estimate cuts are inevitable, keeping pressure on Google stock. Growth of 11% is nothing to sneeze at - particularly when revenue is falling at many traditional media outlets. But it's proof, for anyone who needed it, that not even Google is immune to the economy.