October 18, 2008 by Matt Thomas
Google appears to have shaken off the economic downturn by posting third-quarter profits of 1.35 billion, up 26 per cent. The news couldn’t have come at a better time, with shareholders across the sector worrying about companies cutting their advertising budgets – a traditional response to a flailing economy.
The Q3 profits exceeded by some way the vast majority of the estimates from analysts and are particularly impressive when you consider the pain being felt across the rest of the industry. Yahoo, who, however distant, are the main competitor to Google, recently saw their share price drop 30 per cent in a month to its lowest point in five years.
One reason for Google’s almost miraculous recent performance is changes to its ad platform that have allowed more ads onto its search pages. Even if these ads have nothing to do with what the searcher is actually looking for, quite simply, more ads means more revenue. All of which flies somewhat in the face of what Google co-founder Larry Page is reported to have said in private meetings only three months ago, that Google should ideally show only one ad per page ie. the ad that most perfectly satisfies the searcher’s needs.
It seems that Google is having to compromise its ideals, if not its share price.
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