Google Deliberately Sells Fewer Ads — and May Have Gone Too Far
From NYTimes:
Listening to Google’s executives on their conference call with investors Thursday afternoon, you’d never know that the company’s second-quarter results fell short of expectations and its shares plummeted 10 percent in after-hours trading.
Since Google has chosen, as a matter of principle, not to offer any guidance in advance about what its sales and profits will be, it avoids any embarrassing questions if it misses its own marks. So Eric Schmidt, and other executives, blithely insisted that all was well.
Hal Varian, Google’s chief economist, said that while the company sees a bit of softness in ads for areas like auto lenders and real estate agents, other areas that might be economically sensitive are holding up, such as ads for home appliances. He suggested that Google is benefiting because shoppers look to the Internet for bargains.
“We have a little bit of the Wal-Mart effect going on,” he said. “As times get tough, people will watch their dollars, and in many cases, that means doing more shopping online.”
Some of the softness in Google’s advertising revenue, moreover, was self-inflicted. Jonathan Rosenberg, Google’s senior vice president for product management, said that Google had chosen to reduce its advertising coverage — the percentage of Web pages on which it displays advertising — to an all-time low.