There are businesses that are not affected by the crisis and Google is one of them.
Last week Google presented its third quarter 2008 results and announced a profit of 1,006 million euros, 81% more than the same period last year.
Motor revenues amounted to 4.1 million euros during the third quarter of 2008, which represents an increase of 301% over the same quarter of the previous year. Operating profit for this quarter was 1.2 million euros, 311% more than the same period of 2007.
This increase demonstrates two things:
- Google's good health (compared to Yahoo's financial problems)
- The good health of online advertising.
Google's good health is due in part to its ability to attract users beyond its search service, such as Gmail, Google Maps, Blogger, YouTube and other services offered by this search engine. As Eric Schmidt explains in the same press release to which this news item refers, the long run has played in its favor and is paying off...
“While we are realistic about the weakening global economy, we will continue to manage Google for the long term, making improvements to both search and apps while investing in growth in areas related to business and mobile.”
The good health of online advertising is due in part to two factors:
- Advertising is countercyclical (if the crisis does not last long), since companies see their sales decline and decide to look for new channels through which to sell, new audiences and, in general, decide to invest more in advertising.
- Online advertising is much more efficient than offline advertising. Let's think, for example, about everything a company can do with an advertising budget of 2,000 euros and the results it will get if it invests it online. On the other hand, this same budget invested offline is practically useless... hence the rapid increase in investment in online advertising.
To corroborate this last statement, I refer you to an interesting article published by Juan Varela, which you can read here:
http://www.soitu.es/soitu/2008/09/24/sociedadcableada/1222274960_720622.html
Additional information:
- Europa Press: The crisis and Google http://www.europapress.es/tecnologia/internet-00446/noticia-google-desafia-crisis-20081017184202.html
- Europa Press: Google results published http://www.europapress.es/economia/noticia-economia-empresas-google-eleva-beneficio-neto-tercer-trimestre-20081017141835.html
