Google ’safe’ from economic slump
Google is well placed to ride out the falls currently affecting the worldwide economy, according to their CEO.
Speaking to reporters in Sydney, Eric Schmidt explained that despite the gloomy economic outlook, the wide distribution of industries advertising on Google means the company is not particularly susceptible to recession.
“We believe that if there were [a global recession], we would be well positioned. We’re not particularly dependent on any particular one market.” said Schmidt, adding “There’s not a lot of advertising for any one market over another,”
“It’s too early to say if there’s been any specific impact but if there were I don’t think it would be much,” he said.
Schmidt also explained that direct and online marketing had traditionally performed well during previous periods of economic slowdown.
“There tends to be a flight in a global slowdown to higher quality advertising and higher quality advertising is determined by what sells,” explained Schmidt.
Google, whose revenue neared $5 billion last quarter - 98 percent of which was accounted for by its contextual text advertising business. The company also has a $900 million deal with social networking site MySpace to sell advertising to its users for the next three years.
Although Schmidt acknowledges that the world financial situation is a “very serious issue” he remains confident Google’s broad advertising base makes the Mountain View company better prepared to weather the storm than most.
While Schmidt’s assessment paints an optimistic picture for the future, the company has not been entirely insulated from the downward movement of the financial markets. Google’s share price fell over 4 percent this week to $419.87, down from a November 2007 trading level of $750.
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