The Google Earth economy

Recession may be taking a bite out of the U.S. economy, but so far the world's biggest search engine is doing just fine. Emphasis on "world"

By Andrew Leonard
Published April 18, 2008 1:10AM (UTC)
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As search maven John Battelle noted early Thursday, the conventional wisdom was predicting that Google would underperform analyst expectations when it reported its first quarter numbers at the end of the day. But Battelle floated a contrarian view: What if Silicon Valley's brightest star was just playing Microsoft's favorite game; skillfully lowering expectations so that it could then surprise "the street" by outperforming them.

Give Battelle a prize. Google's profit jumped 30 percent, to $1.31 billion, up from $1 billion a year ago. Analysts had predicted "only" a 27 percent rise, so Google won the expectations game. The performance is all the more impressive when you consider that historically, advertising-supported businesses are often the first to get clobbered when a recession starts to dig in. When companies start looking for ways to cut costs, the advertising budget is at the top of their to-do list, a fact that many biz magazines and advertising-supported dot-coms learned the hard way in 2001.


Which is not to say all the numbers were great. According to the Wall Street Journal, "paid clicks" for the first quarter grew only 20 percent over a year ago, down from 30 percent growth in the fourth quarter of last year.

But perhaps the most interesting number came from the geographical breakdown of Google revenue. 51 percent of Google's total first quarter revenue came from outside the United States. That's $2.65 billion dollars. Global economy -- thy name is Google advertising.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Related Topics ------------------------------------------

Advertising Globalization Google Great Recession How The World Works