01 February 2008

Adsense results disappoint and publishers worry

In an earlier post I raised the question as to whether the recent turbulence in the stock markets might be a taste of trouble ahead for Adsense publishers. I also noted in my last post that some AdSense users had been reporting drops in AdSense income in recent months. These issues now seem to be coming together with clearer signs of a slowdown in growth at Google following disappointing profit reports for its most recent quarter ending December 2007.

Google's profits were up 17% to $1.21bn (£608m) for the final quarter of 2007 but analysts had been hoping for stronger profit growth and Googles shares fell sharply in after hours trading.

Google's shares have suffered a fall of more than 18% this year due to concerns that the slowing US economy will cause advertisers to cut back spending. The latest results show that Google is not immune to a US economic slowdown.

Google has so often reported very strong profit growth that investors have become used to this and so they are disappointed with the recent results. Google in this sense is a victim of it's own past success. Google's sales for the quarter for example were $3.39bn, a 52% rise - but this failed to impress.

Given the tightening of the economy in the US and worldwide seemeingly endless rising performance can only be squeezed further as advertisers make hard decisions about advertising budgets in a climate where consumer spending is likely to tighten.

Publishers are likely to feel the effects of all this and further reports of publishers finding that their AdSense income has reduced are likely.

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