Soaring online ad growth has made Google
In a recession, spending slows most everywhere, analysts say.
Investors haven't had to be reminded. Google shares have fallen nearly 20% this year and are down nearly 25% since hitting their all-time high in November.
Investors are nervous because Google, Yahoo
"Google has been one of the worst performers over the last week because people are concerned," he said. "They don't know how Google is going to fare amid this economic downturn."
Investors will get a better handle on things when Google and Yahoo release fourth-quarter results on Thursday and Tuesday, respectively. Paid search has been a boon for Google. Analysts expect the company to report fourth-quarter revenue of $3.44 billion, minus the traffic acquisition costs it pays partner sites that carry its ads. That would be up 54% from the year-earlier quarter.
Google gets 98% of its revenue from ads tied to its online search service. Paid search is the fastest-growing segment of the multibillion-dollar online ad market. Yahoo also gets most of its revenue from online ads. Yahoo and Microsoft's (NASDAQ:MSFT)
Paid search ads have become especially popular among smaller businesses because advertisers pay only when a consumer clicks on an ad. In a recession, ads from smaller businesses could become an Achilles' heal for Google, says Barry Parr, an analyst for Jupiter Research. full story