homepage Welcome to WebmasterWorld Guest from 54.196.62.23
register, free tools, login, search, pro membership, help, library, announcements, recent posts, open posts,
Become a Pro Member

Home / Forums Index / Google / Google Finance, Govt, Policy and Business Issues
Forum Library, Charter, Moderators: goodroi

Google Finance, Govt, Policy and Business Issues Forum

    
Google Period of Austerity Puts The Pressure on Growth Efforts
engine

WebmasterWorld Administrator engine us a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month Best Post Of The Month



 
Msg#: 3799047 posted 12:17 pm on Dec 3, 2008 (gmt 0)

Google Period of Austerity Puts The Pressure on Growth Efforts [online.wsj.com]
But revenue growth has slowed dramatically over the past year. Products such as Google Checkout, a Web payment service, and Google TV Ads, which sells television advertising time, haven't generated significant revenue, leaving online ads still accounting for 97% of revenue. Google's share price has fallen to $275.11 in trading Tuesday on the Nasdaq Stock Market, less than half its record close of $741.79 in November 2007.

So with the U.S. economy in a recession, Google is ratcheting back spending and cutting new projects. "We have to behave as though we don't know" what's going to happen, says Google Chief Executive Eric Schmidt. The company will curtail the "dark matter," he says, projects that "haven't really caught on" and "aren't really that exciting." He says the company is "not going to give" an engineer 20 people to work with on certain experimental projects anymore. "When the cycle comes back," he says, "we will be able to fund his brilliant vision."To better manage projects in development, top executives asked engineering vice presidents to rank the 20 most promising projects within their units; those that made the lists were granted the bulk of the resources, say former Google product managers. Projects not on the lists were far less likely than before to get technical support.

Earlier discussion
Google May Lay Off up to 10,000 Workers [webmasterworld.com]

 

drall

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3799047 posted 3:41 pm on Dec 3, 2008 (gmt 0)

On the financial boards folks are saying they are going to cancel the new data center they were going to build in colorado and can 10-15% of the regular full-time workforce.

skweb

5+ Year Member



 
Msg#: 3799047 posted 4:09 pm on Dec 3, 2008 (gmt 0)

My experience is that in last 12 months that we have been in recession my business has not been hurt at all, but it has not grown either. In other words, G will still be able to perform as well as 2007 and it is simply preparing for a no-growth or slow growth phase.

JS_Harris

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3799047 posted 4:18 pm on Dec 3, 2008 (gmt 0)

Amen skweb, my plan hasn't been hurt either but has not seen growth despite my efforts to improve results. I disagree with Mr. Schmidt, it's crucial to position yourself where you will most benefit when a recession ends and to maintain that position until it does.

Saying projects won't get resources now comes off, to me, as saying they employed bad business practices to begin with.

signor_john



 
Msg#: 3799047 posted 4:32 pm on Dec 3, 2008 (gmt 0)

Saying projects won't get resources now comes off, to me, as saying they employed bad business practices to begin with.

Schmidt isn't saying that "projects won't get resources" or suggesting that Google has "employed bad business practices to begin with." He's merely saying that projects will be prioritized and expenditures will be kept under tighter control during a time of limited revenue growth. That's a common-sense strategy that most reasonable people would agree with.

wheel

WebmasterWorld Senior Member wheel us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3799047 posted 4:42 pm on Dec 3, 2008 (gmt 0)

Google's doing something everyone here knows better than to count on. They've got all of their revenue from one spot that has potential to vanish - adwords. Just like we all know better than to count on the rankings of one website in Google - the sword can fall at anytime. Google's simply not diverse enough for such a large company. I gotta believe this is a serious issue for them that they're trying unsuccesfuly to address. if they're not, they're fools.

What's worse, they have two achilles heels that they apparently have no wish to correct. The first is their privacy issues and data collection. While the possibility of a consumer uprising over this is small, it's not 0. And it has the possibility of being catastrophic in a very short period of time - weeks or months they could lose substantial portions of their traffic.

The second achilles heel is the adverserial approach they've taken with webmasters (SEO's) in the last year or two. We all know it was the tech crew that created the initial impetus for the their success. And it's this very same crew doing SEO who are responsible for a lot of adwords revenue. At the very least SEO and adwords people are very much in the same circles. They're starting to nibble on the hands that feed them.

Shaddows

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3799047 posted 5:01 pm on Dec 3, 2008 (gmt 0)

For the recors, I dont think G are inherently 'evil', are about to fail, or are doing anything wrong in allowing more projects to 'finish' than 'start' (and thus showing a net loss of contracors).

I am interested in Wheel's point. There are three ways to leave G dead in the water.

1) The obvious- a new search engine comes along. Possible, but unlikely. G emerged when the web was very young, like MS in the PC market. The market isnt seeing the growth RATE it was, so it is not enough to just capture the NEW market, you have to take over the old one. There is a lot of inertia with Google now, the move will not be easy.

2) Privacy. Imagine a UK gov style data loss, but from google. But the fact is, there have been opportunities for scares (with .cn, and handing records to US gov, not to mention the small buzz over Chrome). TBH, its scarey what G knows about me. Phorm should be so lucky!

3) A new, sensible advertising platform emerges. I see this as the most likely attack vector, and the one G does not seem to care about at all. AdSense publishers in particular seem ready to revolt if a new broker system came along. And this is in addition to the point that some SEOs are becoming a bit anti-G.

So, who is going to flag the phorm-like data-gathering to the masses, revolutionise search or build an advertising platform.

Anyone?

JS_Harris

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3799047 posted 5:03 pm on Dec 3, 2008 (gmt 0)

signor_john - It is a common sense strategy and it was a bad business practice NOT to employ it all along.

Quote: "To better manage projects in development, top executives asked engineering vice presidents to rank the 20 most promising projects within their units; those that made the lists were granted the bulk of the resources, say former Google product managers."

Be reasonable, the managers weren't prioritizing projects before?

Of course Mr Schmitt isn't saying those things, he doesn't have that luxury, I am.

[edited by: JS_Harris at 5:06 pm (utc) on Dec. 3, 2008]

signor_john



 
Msg#: 3799047 posted 5:10 pm on Dec 3, 2008 (gmt 0)

They've got all of their revenue from one spot that has potential to vanish - adwords.

Why do you think they bought DoubleClick?

The second achilles heel is the adverserial approach they've taken with webmasters (SEO's) in the last year or two.

Owners of thin affiliate sites, SEOs, and click arbitrageurs have been complaining about Google's "adversarial approach" for years. During that same period, Google's search market share and advertising revenues have continued to grow. To judge from the numbers, it would seem that Google is doing a pretty good job of serving its core constituencies.

whoisgregg

WebmasterWorld Senior Member whoisgregg us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3799047 posted 5:25 pm on Dec 3, 2008 (gmt 0)

"We have to behave as though we don't know" what's going to happen, says Google Chief Executive Eric Schmidt.

Wait... Is he suggesting they actually do know what's going to happen?

physics

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3799047 posted 5:34 pm on Dec 3, 2008 (gmt 0)

Twitter, on the other hand, seems to be taking the opposite view Twitter Turns Down Facebook [webmasterworld.com]

nomis5

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3799047 posted 5:41 pm on Dec 3, 2008 (gmt 0)

Good point whoisgreg!

And anyone who thinks they know what is going to happen in this market needs to take serious medical advice. We've all got to guess but not "know".

Comscore just got it wrong with their recent prediction of a large decline in online sales this holiday period. Their last two press releases have backtracked on that in an alarming fashion.

Shaddows

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3799047 posted 5:50 pm on Dec 3, 2008 (gmt 0)

He is merely saying
"there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns - the ones we don't know we don't know"

And we should behave accordingly!

[edited by: engine at 6:41 pm (utc) on Dec. 3, 2008]
[edit reason] tos [/edit]

mfishy

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3799047 posted 8:18 pm on Dec 3, 2008 (gmt 0)

My experience is that in last 12 months that we have been in recession my business has not been hurt at all, but it has not grown either. In other words, G will still be able to perform as well as 2007 and it is simply preparing for a no-growth or slow growth phase.

Tell that to the shareholders!

If there is no revenue growth costs must be cut or shares will tank.

Edge

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3799047 posted 10:22 pm on Dec 3, 2008 (gmt 0)


Saying projects won't get resources now comes off, to me, as saying they employed bad business practices to begin with.

Schmidt isn't saying that "projects won't get resources" or suggesting that Google has "employed bad business practices to begin with." He's merely saying that projects will be prioritized and expenditures will be kept under tighter control during a time of limited revenue growth. That's a common-sense strategy that most reasonable people would agree with.

It seems that Google is now adopting a more realistic and practical approach to running a business with share holders and success in mind. Google has been running a fantasy business for awhile on incredible revenues and growth. Iím sure the employees are feeling the shift in business practices by now.

My simple business belief is:

If you canít make money at it, donít do it.

pontifex

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3799047 posted 12:34 am on Dec 4, 2008 (gmt 0)

If you canít make money at it, donít do it.

right, but: that is not easy to recognize at all. sometimes things that seem to be worthless can be very important for your revenue. how to make it over the years sometimes takes more than a project that make profit within 6 months.

jeffgroovy

10+ Year Member



 
Msg#: 3799047 posted 4:57 am on Dec 4, 2008 (gmt 0)

From what I can tell Comscore's original assessment of online sales this Christmas is in fact correct. I know we are only 3 days into December, but so far it's shaping out like the worst January I've ever seen. In addition I'm seeing click costs slide at Google, and others as other advertisers run for cover. I'll lower my bids and get no clicks for a couple of days until other advertisers check their roi and lower their bids and then suddenly I'm getting clicks again, a few days later I notice that I'm still not getting a positive roi, and lower again, and this has been happening since early November. While I can't speak for the industry as a whole, I can read the writing on the wall, and whether or not you read it, America is still economically heading for the crapper going on 2 years now. Right now, many of us should be calling our family members to find out who we can move in with before we loose our homes. I'm no one and who cares about me besides me, but watch Google's shares half again when click prices continue to fall.

davidof

10+ Year Member



 
Msg#: 3799047 posted 9:30 am on Dec 4, 2008 (gmt 0)

Google's doing something everyone here knows better than to count on. They've got all of their revenue from one spot that has potential to vanish - adwords.

You can say that for a lot of big companies - tobacco, car builders, plane builders etc.

Their search business seems invulnerable in the short term. MSN has busted a gut at it and failed. I agree with the poster above, a fairer, better adwords platform would kill them. Again the alternatives don't seem to be better.

Shaddows

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3799047 posted 9:51 am on Dec 4, 2008 (gmt 0)

You can say that for a lot of big companies- ... car builders...

Ye and its all working out nicely for them :/

Tobaco is addictive, and is not particularly susceptible to ecomomic down turn. Their revenue is dropping in 'mature' markets (read US and western Europe), but mushrooming in developing markets- Eastern Europe and Africa.

Plane builders can sell to various airlines, and are quite well supported by their parent countries (or econimic blocs for EU examples). It will be interesting who has is right for the future- Airbus with its huge planes, or Boeing with the smaller, less fuel hugry ones.

Google on the other hand only has the single source of revenue, and there are virtually no barriers to entry into its market. Compare that to the manufacturing industries you mention above, where factories have to be built before you can compete

Web_speed



 
Msg#: 3799047 posted 11:16 am on Dec 4, 2008 (gmt 0)

Google on the other hand only has the single source of revenue

Single source of revenue?

They can virtually overnight turn into the number one most profitable, largest corporation on the face of this planet (if they so wish). And no i am not talking about AdSense, AdWords or even double click.

Read my lips, "affiliate programs". Thousands if not millions of different affiliate programs.

And if they choose to go down that path...forget the rest.

"You searched for hotels in Paris...would you like to see related products and services". [which each pay us up to 25% per booking]

"You searched for Stock Market software...would you like to see related products and services". [which each pay us 15%-75% per sale]

"You searched for lawyer in hollywood...would you like to see related products and services". [which each pay us $20-$50 per lead] :)

The list goes on and on...a humongous list.

Adwords/adsense are just the tip of the iceberg...a little data collecting execersize. Nothing more nothing less....wait for the real thing to show. It will knock everyone's socks off.

But enough giving them ideas already, i dislike this octopus enough as is.

[edited by: Web_speed at 11:45 am (utc) on Dec. 4, 2008]

James_WV

5+ Year Member



 
Msg#: 3799047 posted 4:07 pm on Dec 4, 2008 (gmt 0)

If they did affiliate programmes like web speed says then they'd loose loads of customers who genuinely believe that google offers impartial advice - or directly compete with their main product adwords (who would pay per click when they could just pay per sale - adwords is a far better way for them to make money, especially in a market with fewer sales)

They don't have just one source of business - if only one company advertised on google then this would be true. The fact of the matter is that as long as google keeps on increasing its search market share, or at least stays where it is, then it will always have a pretty inexhaustible source of advertisers - because it has more potential customers than any other medium...

I think Google shares look like a pretty good buy right now - they might drop a bit more, but when the 'recession' is over (and recessions are always over at some point) Google will be in a really strong position to cash in on new found consumer (and therefore advertiser) confidence...

signor_john



 
Msg#: 3799047 posted 4:27 pm on Dec 4, 2008 (gmt 0)

Google on the other hand only has the single source of revenue

Just wait. Think of Google's opportunities for selling corporate intelligence and consulting services.

Let's say you're Air Widgetonia, and you're planning for the summer 2009 vacation season. You won't know what demand by leisure travelers will be on the Chicago-Widget City route until people start searching for fares. Google, on the other hand, has data on Widget City destination searches that may occur several months before travelers reach the point of booking airline tickets and hotel rooms. Google can tell you the number of people in the Chicago airline market who made destination searches on a "market basket" of undisclosed keywords related to Widget City and Widgetonia from home in January, and how that number compares with the same period last year.

The same data might be of interest to other companies, such as investment firms that watch airline stocks.

This could be a real opportunity for Google--either through a business unit within the company or via partnership arrangements with the big international corporate consulting firms.

Web_speed



 
Msg#: 3799047 posted 5:17 pm on Dec 4, 2008 (gmt 0)

If they did affiliate programmes like web speed says then they'd loose loads of customers who genuinely believe that google offers impartial advice

Not too sure. How would Google own affiliate links on the right hand side along-with some adwords ads will make any difference to web users...as far as Joe surfer is concerned these are ads and these are ads. I don't see a problem there. If Joe surfer is happy clicking AdWords ads...he will do just the same on affiliate ads/links. Same old thing.

They will loose loads of customers who genuinely believe that google offers impartial advice

Are these the same customers Google lost when they first introduced adwords/adsense and cluttered the web with "Buy dead dog on ebay". Or maybe you are talking about them customers that have to shift through pages upon pages of MFA spam pages every day. Or maybe we are talking about them customers that are having to increase their browser font to maximum just so they can find that little bit of information they were looking for under them 3 or 4 AdSense panels which are plastered all over the page they are currently reading.

Bookmark this thread...you may want to refer back to it in the very near future.

[edited by: Web_speed at 5:29 pm (utc) on Dec. 4, 2008]

Shaddows

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3799047 posted 5:33 pm on Dec 4, 2008 (gmt 0)

@signor_john

Wow, good point. But, would this effective selling of info be the king of thing that could stir up those privacy/data collectin concerns?

@Web_speed
Mmmm. So rather cost-per-click, you could use the adwords model to determine whether YOUR the company that gets a link, rather than G selecting partners? Using variables similar to adwords, but including percentage cut, gross cost etc? That would make more sense, and is somehow more Googlish than the alternative.

wheel

WebmasterWorld Senior Member wheel us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3799047 posted 6:28 pm on Dec 4, 2008 (gmt 0)

No matter how you slice it, Google's sole source of revenue is still adwords. And that's predicated on traffic. And that traffic is not guaranteed. We can discuss whether it will go away or not, and if so how, and the probability of that happening, but the simple fact is there is a possibility that Google can mostly vanish overnight. They have one weak link.

There's been some excellent alternative income streams noted here, but every suggestion made is fraught with dangers and implementing any of them has the potential of killing their entire business model.

It's a great business - pretty much straight cash like many internet business models. And it's working like crazy. But also just like all the other straight cash internet business models it can go south fast and hard.Big on the internet doesn't mean big permanently.

jeffgroovy

10+ Year Member



 
Msg#: 3799047 posted 8:14 am on Dec 5, 2008 (gmt 0)

Does anyone besides Wheel hear what I'm saying? As the global recession gets worse, Google is going to find it harder and harder to make large profits. Of course Google can continue to profit with AdWords, but as the bids go down on many formerly highly profitable search terms to match scanty sales, that hurts. Of course there are going to be businesses that do extremely well through depressionary periods, however they are the minority and will not make up for the difference in a lost majority.

trillianjedi

WebmasterWorld Senior Member trillianjedi us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3799047 posted 10:27 am on Dec 5, 2008 (gmt 0)

They've got all of their revenue from one spot that has potential to vanish - adwords.

You have to counterbalance that with the fact that they've become the homepage of the internet for a large proportion of the internets users.

Google is now a habit which any potential competitor will find very very hard to break. Not impossible, but in my opinion unlikely.

They're going to feel the pinch no doubt but I don't see them going out of business any time soon. As long as there is the internet there will be advertising.

jeffgroovy

10+ Year Member



 
Msg#: 3799047 posted 12:46 pm on Dec 5, 2008 (gmt 0)

I agree that Google isn't going out of business, but the days of massive or any growth for that matter are all but gone, and aren't coming back for at least a few years. The financial advisers saying we'll be recovered by 2009 are the same people that were saying we were going to be recovering in mid 2007...no wait um...late 2007...that wasn't right, how about early 2008...okay missed that one by a mile, how about late 2008...good grief. These were the same people telling us to snap up the bargain financial stocks in early 2008, wow, sure glad I didn't listen them. and I'll say the same about Google's stock, sure looks like a bargain, but since a real depression looks to be coming, they'll half again.

signor_john



 
Msg#: 3799047 posted 3:42 pm on Dec 5, 2008 (gmt 0)

This morning, MediaPost's Online Media Daily is reporting that Google's "active advertiser count" is 54.9 percent higher than it was in the fourth quarter of 2007. The OMD article [mediapost.com] has some other interesting numbers and predictions, including the suggestion that "the fourth quarter of this year may be the strongest quarter on record for both Google and Microsoft."

Shaddows

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3799047 posted 4:07 pm on Dec 5, 2008 (gmt 0)

Ye, they're both evil monopolies intent on taking over the world.

Alternatively, they're both about to collapse under the weight of their own arrogance.

How is anybody supposed to make flippant comments about the state of the world when its so uncertain. I think its very unfair of google (and MS) to send out such confusing signals about their own future.

Seriously though, kudos to both for doing well in what is definately a tough climate.

Concentrating on your core business (and cutting down the speculative 'extras') is common business practice in difficult times, just as speculating and diversifying is common in an expanding market. That G has started being more selective in the projects it persues merely indicates underlying economic realities, and does NOT indicate that its previous scatter-gun approach was wrong (even if it was a bit too scatter for my liking). Continuing with it now would be wrong IMHO.

Global Options:
 top home search open messages active posts  
 

Home / Forums Index / Google / Google Finance, Govt, Policy and Business Issues
rss feed

All trademarks and copyrights held by respective owners. Member comments are owned by the poster.
Home ¦ Free Tools ¦ Terms of Service ¦ Privacy Policy ¦ Report Problem ¦ About ¦ Library ¦ Newsletter
WebmasterWorld is a Developer Shed Community owned by Jim Boykin.
© Webmaster World 1996-2014 all rights reserved