Google in the eye of a slowdownApril 16, 2008: 10:21 AM ET
By Scott Moritz
ComScore numbers once again confirmed that people are searching less and clicking on advertisements at a much slower rate as the economy tanks and consumer spending pulls back. In March, Google's paid clicks grew 2.7% over year-ago levels putting first-quarter paid click growth at 1.8%, a big slowdown from the 25% rate in the previous quarter and well below the 48% pace in the third quarter.
When your revenue engine is almost entirely fueled by Internet searches and ads clicks, it's probably wise to watch your gauges. Analysts' estimates for Google's first quarter have been cut sharply ever since this trend was first spotted in January. But Google fans say the company has been honing its search efficiency and raising prices to offset the slump.
Additionally, some analyst point to Google's ability to increase its U.S. market share to 55% in March from 53% at the beginning of the year.
Google reports earnings after the market closes Thursday. Analysts are looking for adjusted earnings of $4.52 a share on sales of $3.61 billion in the first quarter ended last month. That calls for a top line growth rate of 42% over last year's revenue level.
If the company made adjustments, the chances of disappointing Wall Street will be limited. But if ComScore's numbers are any indication, writes Henry Blodget of Silicon Alley Insider, Google "will miss by a mile."