Competition and Economic Risks a Positive for Google

According to CEO Eric Schmidt, budget dollars won’t be pulled away from Google when competition improves monetization. Here’s why:

there’s a net positive effect of the increasing competition. That will be true until the targetability model that we are all pioneering here hits some natural limit. We’re not anywhere near that limit. I’m sure there is such a limit. But we are nowhere near it. There’s evidence that keyword prices could rise significantly. Budgets are typically under-spent, that people would spend a great deal more money in our advertising model if we had the products and services that could capture and exploit that with the appropriate measures.

He also answered the question of how the economic slowdown may affect Google.

We do have some experience with this, which was after 9/11 in the United States. Again, the Company was much, much smaller, so I don’t know if this is analogous. But a number of us were very concerned that everybody would just stop spending. And during that period, instead of stopping spending, people accelerated their transition to Google, which was, obviously, very positive, but also quite a surprise.

The reason was that when organizations are under stress, they focus on the best economics, because they don’t have as many opportunities, they have to be much more careful. We continue to believe that the Google advertising system is literally the best place to put your sales dollars. In a theoretical global recession such as what you were asking about, I’m sure that we would benefit by the fact that our performance is simply better than the other alternatives.

This entry was posted on Thursday, August 3rd, 2006 at 9:44 pm and is filed under Google. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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