Google claims it's recession-proof

 

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Posted on 18 Mar 2008 at 09:29

Google claims it is well positioned to weather any economic downturn, as the search giant attempts to allay fears over declining advertising revenues.

Google Chief Executive Eric Schmidt acknowledges sliding share values and a shortage of credit in financial markets is "a very serious issue" and that many people are expecting a global economic slowdown.

"It's too early to say if there's (already) been any specific impact but if there were I don't think it would be much," says Schmidt.

"We believe that if there were (a US recession), we'll be well positioned. We're not particularly dependent on any particular one market. There's not a lot of advertising for any one market over another," he claims.

Direct marketing has historically performed well in times of economic recession, Schmidt adds. "There tends to be a flight in a global slowdown to higher quality advertising and higher quality advertising is determined by what sells," he claims.

Google, which earned $4.827 billion in revenue in the fourth quarter, makes around 98% of its income from text ads but is exploring new formats, such as advertising on You Tube videos.

Google has a $900 million, three-year deal to sell advertising to News Corp's MySpace customers under which it must pay the social networking site whether or not it makes money selling ads on the site.

Author: Reuters