Interesting news about Google today. Here's the quote from Clint Boulton of Google Watch...
Numerous media outlets are covering comScore's Monday report that clicks on Google's paid search links fell 7.5 percent from December 2007 to January. Reporters did the same when IDC two weeks ago reported Google's ad share dipped 0.5 percent.
Is it time to cry recession?
Google made $16.6 billion from online advertising in 2007, so I would agree that Google losing 7.5 percent of its primary financial cash cow would be a big hit to the company coffers if the figure averaged out or grew over 12 months.
It is not a sign that something is wrong with Google or its advertising business per se, not anymore than the search vendor's absurd soar to a $700+ stock share price this summer meant the company had found the fountain of youth. Finance is a fickle fancy.
I agree in that I don't think this says anything about Google. I expect Google will have a few more flat-to-down quarters but I doubt it will matter. Google will survive this bubble just as Microsoft, Yahoo and others survived the last. They have a solid business model that will carry them through.
The same is not true of a lot of "Web 2.0" companies out there who are counting on ads to get by.
It baffles me how people didn't see this "Web 2.0 bubble" following the same pattern as the "Web 1.0 bubble". People start advertising on the web, a bunch of web startups popup funded by those ads, the bottom falls out of the ad market and those companies go out of business. It isn't that difficult.
Yet I still see almost no acknowledgement of this in the blogs. Worse yet, people are actually treating ad-based models as if they were the only business model. Just one example was Steve Karp essentially claiming that in relation to the Wall Street Journal's decision to retain their paid content (I wrote a post on it)
Baffles me...
I'm not sure there's any saving the doomed Web 2.0 companies at this point. If I have any advice it would be start cobbling together a secondary revenue source before things get bad. Either that or combine with other like minded companies in order to create a compelling ad-network, ad-based revenue models are appropriate in some places.
My real hope here is that, when Web 3.0 rolls around, people will learn to put ad-based revenue into perspective. Its certainly appropriate in some places but it is not and never has been the be-all-end-all. Its just one tool in what should be an arsenal of ways to make money.