Google Adopts New Strategies During Credit Crunch
Google is planning to make less acquisitions and reduce hiring, to help to withstand the global economic downturn. Yesterday Google’s Chief Executive Officer Eric Schmidt announced that the recession means more advertising budgets are being reviewed and often pulled, and Google is having to be sensible with its expansion plans.
Google’s profit growth has slowed as some advertisers, including home and auto lenders, have reduced advertising budgets. However, shrinking ad budgets have damaged newspapers the most, Schmidt said.
“All of us are vulnerable, – tt’s a race between a contraction in advertising, which would affect everybody, and a very positive shift from offline to online.” This would be good news for both Google and all of its Adsense publishers – key word bidding will increase, Adsense income will increase, and Google profits wil increase. However, established eCommerce sites that strongly rely on Adwords may find that they become priced out of some of the more popular keywords in their niche as more larger players start to bid for the number one spot.
Google is used for approximately 66% of all U.S. Internet searches, and up to 80% of UK searches, has spent more than $3.38 billion in the last year on new projects such as the purchase of DoubleClick Inc. which has helped to increase its lead over Yahoo! Inc. and Microsoft Corp. Google’s growing dominance lead to Microsoft making an unsolicited offer for Yahoo in January, a bid that fell though in May. Yahoo may be reconsidering this deal now. Overall the global credit crunch may cost the online-ad business $6.7 billion in lost sales through to 2010, according to Collins Stewart Plc.
