At the time of this writing, Google stock is up 2.80. I guess “Search Plus Your World” isn’t too big a concern to investors.

As usual, Google will offer a live webcast of the conference call, which starts at 4:30 EST. It can be accessed at investor.google.com/webcast.html. Also as usual, WebProNews will be covering it.

In addition to that, the retail sector saw an increase of nine percent in spending year over year. Despite grabbing up to 72 percent of the searching populace, that’s pretty much the end of the good news.

Small advertisers are spending less on search ads than larger brands, causing eMarketer to project a search advertising growth rate of just under 15 percent in 2009, compared to 2008’s 21 percent growth rate. Advertisers spending less than $50,000 on search ads cut spending by 23 percent last quarter, and those spending over $200,000 cut their budgets by nine percent.

Automotive, finance, travel and entertainment sectors all cut search ad spending by 15, 20, and 24 percent respectively, thanks to less consumer demand. Travel and entertainment saw an 18 percent decline in website traffic as consumers tighten their belts.

There’s still hope for Google’s bottom line. In addition to increased share on both sides of the search engine—among searchers and advertisers—analysts have been lowering their expectations while still predicting revenue growth in the double digits.

There’s also hope in the economic philosophy that a recession is the worst time to cut one’s advertising budget. Advertisers looking to gain new customers might find now is the best time to be aggressive. Not only are competitors cutting their marketing budgets and thereby decreasing their exposure to potential business, new, out-of-sector competition pops up vying for depleted discretionary spending cash.

In short, when times are bad, businesses probably should invest in grabbing more customers, not fewer. 
 

I had just had the conversation this morning that I felt bad for the folks that bought in at $747, GOOG’s high for the year, only to see it drop nearly $300 after a couple of bad reports. By “bad” I mean their 4Q report was great, just not as great as analysts had hoped, and comScore dropped a bomb earlier this week showing that CPC revenue was (gasp!) flat. Not in decline, just didn’t grow in January.

Cue Google’s stock plummeting to $467. Cue me being interested in an explanation of what is now great foresight. So I clicked.

And was immediately blocked with a free registration screen. Vestopia’s pretty slick. Luckily I was determined to get out of registering and finally found the X in the lower left corner. You almost got me Vestopia! Nice move. I cost you a referral but I’m writing about you in a widely-read publication, so we’ll call it even, okay?

Once I got to the post, sans-registration thank you, I found out that Hines makes some pretty darn good sense in an article written November 15, just after the avalanche was beginning. He cites an economic principle, known as “regression toward the mean,” for his good foresight.   This principle relays a phenomenon that occurs with people with extreme test scores: they often don’t score as high the next time, and gradually work their way back to average.

(This was news to me since I, ahem, have remained excellent throughout my schooling—Is there really a world below 99th percentile? I wouldn’t know. Please send future attaboys to jmiller at webpronews.com.)

The point is, until now Google has had “freakishly high growth rates,” which could not be sustained forever. On top of being overdue for a market correction, Hines notes his discomfort with a company that invests more and more in areas away from its core competencies. In Google’s case, that core competency is paid search advertising. 

“Google has openly demonstrated fear of flattening paid search advertising revenues via corporate strategy,” he writes. “Their VP of Business Operations wrote a book in 1998 which essentially outlines the "spaghetti against the wall" approach Google has taken to acquisition and development, and is clearly seen in the company’s most recent initiatives. Google’s OpenSocial and Open Handset Alliance initiatives have nothing to do with search and are very far from the company’s core competencies….I would rather see Google chasing opportunities closer to home.”

That “fear of flattening paid search advertising revenues” part was especially prescient, given that that very flattening sent stock spiraling this week. Of course, we may be singing a different tune once Google officially branches out and begins profiting (somehow) from its investments in fiber and wireless.

But after a solid year of record stock prices, which saw GOOG peak at $747 back in September, the Angelina Jolie of companies has seen her stock fall by $187. Imagine Angelina without those wonderful lips, or perhaps developing a Fran Drescher-type laugh.

The steady decline could all be reversed of course, when Google releases its fourth quarter results on January 31st, or it could just make the slope more slippery.

John Battelle predicted Google and Wall Street would have a rocky relationship this year and  suggests two reasons for Google’s recent plummet, aside from the possibility the honeymoon is just over, which include a Nielsen’s recent report that the company had lost a small amount of search share for the first time in recent memory, and the generally unstable nature of today’s market.

Indeed, when I looked at my 401(k), after several decent growth quarters, boom, down 4.5 percent. Seems to be a lot of that going around. But I’m sure, like Google probably is, that it’s a temporary bump. 
 

This makes Google into an even more formidable force in the advertising space, and is on track to becoming a global advertising powerhouse as the definition of "digital" expands. What might this mean for advertisers and publishers? Hopefully, better pricing in the form of a true exchange model, something DoubleClick has been working on. Google’s existing content targeting (we can only hope) will seem like a rather thin offering in comparison with a richer, more far-reaching ad network that empowers buyers and sellers.

Yahoo oneSearch gets installed on Latin American wireless carriers. 143 million wireless subscribers will be exposed to the Yahoo brand and technology. That ain’t bad.

GOOG is up nearly 1% on the news; YHOO is trading 0.5% higher today

Comments

While it may seem that Google’s lost momentum–by not partnering with Facebook–I see it more as a sign that Microsoft knew Facebook was its only hope.

Let me explain.

Social networks are hot, hot, hot, right now. It doesn’t really matter which one you prefer–MySpace, Bebo, Facebook, or Dogster–social networks are the next evolutionary step in the growth of the internet. Now that we’ve all learned to check our email, order online, research restaurants, and read news, we’re starting to use the web to connect with each other. We’ve realized that we enjoy making connections, sharing our random thoughts, and turning our friends into virtual zombies. Social networking is the second generation internet.

Unfortunately for Microsoft, social networks have to be perceived as cool, exciting, trendy places to hang out at. None of those words apply to Microsoft–sorry guys. But, just like the rich kid in school, Microsoft has enough money to buy itself some friends–or in this case, a network of friends. For Microsoft, the only choice was to buy a piece of a popular social network. No one would ever feel excited about joining a network called “Windows Live MyBeboBook.”

Then there’s Google. How cool is Google’s brand? Uber-cool. When Google launches a new product–heck if Google hints at a new product–the whole world goes nuts. Along with Apple, Google has one of the best brands in the world. A brand that can make us all drool and pander after their every announcement. When Google farts, we want to have our nose close by–that’s how much Google is loved.

If Google really wants to build a popular social network, it can. I’m not talking about the crappy science experiment they call Orkut–you don’t expect a social network to become popular when it sounds like a pest control company–but a real “Google” social network. A social network that already has all of the pieces in place: email, instant messaging, blogs, image and video sharing. If Google really wanted to own a social network, it could take the $240M it just saved and put that towards building a kick-ass one. A few rumors, closed beta invites, and denials of competing with MySpace later, and the whole world’s going crazy over Google Connect (or whatever they want to call it).

So you see, Microsoft had no hope other than to buy into an existing social network that was popular enough that even the “Windows Live blah blah blah” couldn’t slow it down. Google, on the other hand, knew it didn’t have to partner with Facebook at any cost, they could bide their time and decide whether they want to build their own social network.

Besides, give it a few more years and we’ll all have Google implants anyway–that’s when Google will tell us which social network we should join.

UPDATE: Sure, MSFT has Windows Live Spaces, but with a 0.15% share (even Orkut is higher) and a focus on blog content, it’s hardly something the company can rely on.

Comments

This service is only currently available in the United States. Even though I live less than 20 miles from the US border neither service works here. Last week it was a little clearer. Calling GOOG-411 ( 1-800-466-4411 ), I was told that the service was not available. Calling CALL-411 ( 1-800-225-5411 ), I got a busy signal. This week it is less satisfactory. The Google service gives me information on Langley, Washington when I ask for Langley, British Columbia. The Microsoft service tells me repeatedly, “I didn’t get that”. Presumably it’s only a matter of time until both services are available here.

Tom Spring of PC World was able to do a matched comparison. In his opinion, the result currently is a draw. Both services delivered the correct result, with Google taking a little longer since it repeats the request for confirmation. He has an interesting comment that the Google service is much simpler while the Microsoft service is slightly confusing in offering more choices. It’s perhaps no coincidence that this mirrors how both approach the regular keyword search. Google has that beautifully simple search page. Microsoft usually offers search within a portal page that flags the other services they have available.

It would be interesting to know whether either or both do user tests in deciding which format they will follow. Usability or the science of creating satisfactory user experiences regrettably does not receive the attention it should. Watching how typical users complete tasks as they use a particular service or website is an easy way to confirm that the best choices are being made. Given the expense of creating such services, it would seem foolhardy not to spend the limited extra dollars involved in checking whether the users think you have it right.

Related:

GOOG-411, A Harbinger Of The Mobile Web

GOOG-411 or CALL-411 – Voice-actuated Mobile Web

BTW, Live Search 411 Is Taking On GOOG 411

Comments

The slim margin doesn’t match the hype coming into the report. WebProNews writer David Utter mentioned earlier this week that some Wall Street figures projected Google would beat estimates by as much as 50 cents per share.

Google-owned sites generated $2.73 billion, or 65 percent of total revenues, a 68 percent increase over third quarter last year. Google network revenues, generated through AdSense amounted to $1.45 billion, or 34 percent of total revenues, a 40 percent increase over this time last year.

Google’s total cash is $13.1 billion.

"We are very pleased with the impressive growth we experienced across our business," said Google CEO Eric Schmidt, in a statement. "Our core search advertising business experienced continued momentum driven by growth in monetization and traffic, and we are creating a wider and deeper ads system through our focus on innovation, bringing more ad formats to our advertisers.

"Our efforts to offer more products and services in international markets as well as effectively grow our technology infrastructure and add to our deep talent base during the quarter helped to deliver growth by enabling Google to reach more users around the world."

Though EPS were largely as expected, analysts expect Google shares to soar above $700 if and when Google announces its entry into the mobile phone market.

Up over 35 percent for the year, Merrill Lynch raised the GOOG price target to $740, edging to once unlikely $800 predictions.

Just how much of a juggernaut Google will prove to be remains to be seen. Just last week a (banned) analyst, known for over-inflating before the first dotcom bust, long-term priced GOOG shares around $2,000, for a projected overall value of $750 billion.

Maybe a bit premature, but the company’s definitely making headway, up and up. 

All good things come to an end, and Google’s ride above $600 only lasted a few minutes. That’s for today. Tomorrow, who knows?

That historic mark tallied just one of the many steps in Google’s public life, which has made Google founders Larry Page and Sergey Brin worth over $17 billion each, according to Bloomberg. Only Warren Buffett’s Berkshire Hathaway, the Washington Post, and two other stocks occupy such rarefied air.

Anyone else who wants to catch Google in its business will need to put in a lot of work to stand a chance of it. Even then, it may not be enough to rope in that thoroughbred:

"It’s got a long way to go over the next few years unless someone’s going to compete like hell with them," said Jon Burnham, chief executive officer of Burnham Securities, which manages about $3 billion in New York and owns Google shares. "I don’t see that coming."

Neither does anyone else today, but once upon a time Google came along to knock AltaVista off its perch. Just because it hasn’t happened to Google doesn’t mean it can’t.

UPDATE: Google closed at $609.62. They have a bigger market cap than Wal-Mart, by about $6 billion.