Google Facing Problems?

    January 19, 2006

Scott Kessler of Standard & Poor’s recently downgraded Google from hold to sell. In this Business Week article, he explains many of his reasons, including:

When it comes to the building competition, part of what they’re trying to do is diversify beyond Internet search advertising, but they are also trying to make their offerings more inviting and sticky to users. One of Google’s shortcoming is that even though users like its search offering, they don’t spend a lot of time on it. We’re seeing Google trying to provide more personalized services — enabling users to sign in, use e-mail, and access content that’s preselected and determined by the user.

Click fraud is a difficult situation. I don’t know what is being done to stop click fraud on Google Web sites and on its AdSense network, which is advertising technology used by third-party, or other company, Web sites. They have to invest in technology and people around the concept of click fraud to ensure that it doesn’t happen. At some point, this will become an issue that people will talk about in 2006.

I’m still not convinced that click-fraud is going to be the big deal that some analysts have portrayed it to be. Advertisers are already pricing click-fraud into their bids by virtue of measuring the return on ad-spend. Saying Google will face troubles due to click-fraud is like saying Wal-Mart will suffer due to shrinkage. Who walks around their local Wal-Mart wondering how much extra they are having to pay for products because someone else was shoplifting?

Andy Beal is an internet marketing consultant and considered one of the world’s most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian.

You can read his internet marketing blog at Marketing Pilgrim and reach him at