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Google Earnings Hit By UK Ad Dip

9:11 am on Jul 19, 2008 (gmt 0)

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Google Earnings [money.cnn.com] Hit By UK Ad Dip
In the clearest sign yet that online ad sales growth cannot outrun a global economic slowdown, Google reported the first-ever sequential quarterly revenue decline in its U.K. business. The dip, as reported in the company's second-quarter earnings Thursday, cut into Google's overall international growth, bringing it down to 52% from 55% in the first quarter.

That's unsettling news for Google and the search sector, since overseas growth has previously been the crucial area that has helped Google strongly offset the ongoing U.S. slump.

12:12 pm on July 19, 2008 (gmt 0)

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So that's why my income is going down. It actually makes sense if you think about it, the UK is going to hit recession any time soon (no point in arguing that one) and everyone is feeling the pinch. Of course people are going to spend less on line as they spend less on the streets.
8:02 pm on July 19, 2008 (gmt 0)

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(sorry, mispost)
3:37 am on July 20, 2008 (gmt 0)

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Do you see the trend of lower bidding price during economic slowdown?
7:53 am on July 20, 2008 (gmt 0)

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That's a very open-to-interpretation article from Fortune. I still can't work out exactly what is down to 52% from 55%.

Later on in the article it says:
"In the U.K., where mortgage woes have started to pull down the economy, revenue growth was 29%, down from the 39% pace in the first quarter and well off the 44% growth from the fourth quarter,"

So in this "woeful" situation revenue growth is only 29%, what a total disaster for the UK! If the wages of the UK population had aslo gone up 29%, I doubt the situation would be described as one of woe.

5:52 pm on July 20, 2008 (gmt 0)

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If the wages of the UK population had aslo gone up 29%, I doubt the situation would be described as one of woe.

No, it would be described as inflationary, and the bespoke-suit financial crowd would be up in arms. :-)

10:26 pm on July 20, 2008 (gmt 0)

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I'm in the UK, all I see is house prices have come down for the first time in decades and fuel prices seems to be jumping up very rapadily - which is starting to have an effect on other things, but I'm not really personally seeing an economic slowdown, other than in my adsense figures! - but thats being going on for years.
6:50 am on July 21, 2008 (gmt 0)


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It's gonna be interesting to see what happens. You have retailers managing to an ROI who will spend less (downtrend) and you have retailers who are suffering declines in in-store sales and want to pour more into online & search specifically (uptrend)

You have more advertisers just waking up to search and starting to spend (uptrend) and you have the engines & their quality scores essentially saying we don't want your money (uptrend if people increase their bids), potential big downtrend if the min CPCs go out of the profitable range on some keywords, potential bigger downtrend if companies get sick of it all and start to spend money elsewhere and cut back more than the unprofitable min bids require.

You have companies waking up to discover that their traditional agencies may be a little challenged in search when they tell them to set bids above $5.00 to buy CPG related terms like recipes(downtrend).

You have some big dashboard companies that HUGE advertiers use that can't support basic tracking functionality that generally even the $10/month tracker can do which causes them to spend more. When the measurement in those systems gets better, it may be a downtrend.

Lots of dynamics at play that could cause the financials to go either way.

8:45 am on July 21, 2008 (gmt 0)

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We are seeing people cutting speding on umprofitable keywords.

Whole sections of some campaigns are beign cut because they are of borderline profitibility at the moment.

11:04 am on July 22, 2008 (gmt 0)

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"Of course people are going to spend less on line as they spend less on the streets."

Are they? Per head most likely, but not necessarily over-all - if the number of people who advertise online increases (as it did in previous years), online ad expenditure might rise.

My point being that we cannot say it for sure yet; so far, I do see a stagnation or decreast in both, CTR and EPC. :(

9:17 pm on July 27, 2008 (gmt 0)

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Google's slight decline in growth should be seen against the right context: (these figures are rough, and vague, but they paint an accurate picture, vaguely, of the things in question)

Google is growing at around 30% even during its "decline"
the US economy is growing at around 20 to 30%, or was, maybe until very recently.
the UK economy is probably similar, although who knows - i never read any statistic about that
china's growth is 350%
japan's growth is 120%
india's growth is between china and japan

in the uk google's market may be dampening, but it's still minting it
meanwhile it is one of the few us/uk businesses which has a huge cut of markets in china, india, japan and many other boomtown areas

google is doing well, and has a bright future
a lot of western commentators in the city are seeing google as a hindrance to better performance by less globally conscious (and ethical) companies, for example, off the top of my head, microsoft, who is starting to fear a future fall if they can't secure a proper hold of the web markets

so news is going out to make google sound weak, to try and push shares down, and there was indeed a bit of a drop, but the bottom line is that google still rules the roost, and just because dirty tactics have often worked against others, doesn't mean the attempts to deny google's ineffable ascent to economic dominance in the UK and USA (and in the UK it is THE most successful brand currently) will reverse its near-monopolistic control of uk advertising.

in pure terms google benefits from property crashes and almost drives it - the value of any commercial property (business space) is driven down the stronger e-commerce activity is - the lack of need for physical selling presence rapidly drives down the number of profitable businesses who use lots of property and drives up the number of businesses whose profits are falling and who are heavily brick-and-mortar embedded.

but in real terms, google's profit are experiencing a GROWTH of something in the region of 30% a year and meanwhile many many markets are falling, eg the property market is set to fall as much as 20% in the next 12 months in the UK, just to name one of dozens. bankers - are losing money and value all over the place.

Online advertising is the shiznitz - The only business where, currently, a 35% rise in turnover in the last quarter is seen as a slight slowdown!

so google is doing well. any reduction in any earnings at any given time is more likely to be parochial and circumstantial and entirely to do with the market of the product you are selling via your content. diversification is probably the best way to counter that.

[edited by: rogerd at 9:47 pm (utc) on July 27, 2008]
[edit reason] no URLs or specifics, please [/edit]