Google Search Ads Revenue Falls First

Published on July 18, 2008

Google Search Ads Revenue Falls First

    Today, Google published financial results in the second quarter. 2008 year . An instant drop in Google’s shares by 10% makes us look more closely at the numbers: what’s wrong with them?



    At first glance, everything is fine: revenue of $ 5.37 billion (three times less than that of Microsoft, but also not bad), an increase of 39% compared to the same period last year and an increase of 3% compared to the previous quarter. Quarterly profit grew by 35% compared to last year and amounted to $ 1.25 billion.

    However, all these achievements diverged sharply from investors' expectations.. According to preliminary forecasts, Google should have worked much better. Investors hoped that the Internet business would not be affected by a general stagnation in the American economy, and Google, due to its foreign divisions and the transition of all advertising from offline to online, could develop at the same pace. But this did not happen. Google's revenue growth has also slowed, and is very noticeable. Revenues from search advertising and AdSense fell by 1% compared to Q1. 2008 year. This is the first such event in the history of the company. If you look only at the revenues of google.com, they fell by 4%. This also happened for the first time in history.

    Of course, the pressure on Google’s stock price is also exerted by the fact that Yahoo and Microsoft are closer than ever to a merger agreement, and Google recently signed a 10-year contract with Yahoo to deliver contextual advertising to them on the portal. If Yahoo goes to Microsoft, then this will be a sensitive blow. But with the diversification of business, Google is still tight: neither YouTube nor DoubleClick have yet recouped multi-billion dollar investments. Search brings the company 94% of the revenue.