Google shrugs off ad sales fear

See BBC Business for full report

For the first time, the California-based firm earned more revenue abroad - 51% of total sales - compared to its home market. This was partly due to a slump in the weak dollar which increases the value of non-US earnings.

Shares in Google, the darling of the technology sector in 2007, saw its shares reach a peak of $741.80 in November last year, making it the fifth biggest US company by market capitalisation.

But since then, its shares have been hammered on worries that it faced an advertising slump amid mounting evidence that the US is slipping into a recession.

Clicks on Google's sponsored links in the US slowed from a growth rate of 25% in the fourth quarter of 2007 to 1.8% in the first quarter of this year, according to comScore.

Google's Change of Adverstising Tactics

But its upbeat results suggest the reason for this reflects a deliberate reduction in the number of ads on each search results page to deliver to advertisers better matched visitors who are more likely to buy their products.

What's Happening to Google's Competition?

Yahoo is desparately looking at ways to escape being bought by Microsoft.  As a result it has even even teamed up with arch-rival Google in a two-week experiment whichwill see search-driven Google adverts alongside the search results of Yahoo's website.

Source: comScore March figure

From these figures which summarise the search engine market in early 2008 it is clear that the Microsoft bid for Yahoo is a very sensible one. Yahoo is gradually losing market share to Google. It desperately needs to get this market back but Microsoft which started trying to take-over Yahoo nearly 2 years ago should be confident that it is doing the right thing. Certainly there is no clear evidence that Yahoo has the capability to win back users from Google.  

Google and the British Advertising Market Place  

Extract below from Rory Cephlan-Jones the BBC Technology Correspondent:

And what are most of the eager young Googlers doing? Selling advertising or talking to Britain's biggest brands about how they can move more of their marketing budget online. Because it's easy to forget that as well as being an extraordinarily innovative firm, Google is also rapidly becoming Britain's biggest advertising business. The latest figures - released on Thursday evening - show how rapidly it is growing in the UK, earning $803 million( about £407m) in the first three months of 2008, about 40% up on a year ago.

Let's put that into context. Last year, ITV's net advertising revenue was £1.5 billion. So, even if you just multiply Google's earnings by four and assume no further growth this year, Britain's biggest commercial television business - the original "licence to print money" - is about to be overtaken by an American upstart which only arrived in the UK in 2001. You could not ask for a starker example of the threat to traditional media from the online world. (Emphasis added)