Google Is Swallowing the Advertising Market

Google (GOOG) reported a good quarter last week. Main number: year-over-year revenue and earnings growth. Reaction of the financial press: advertising is coming back, it's the end of recession.

Not so fast, guys. First of all, Google is the only advertising company so far showing improvement. Yahoo! (YHOO) reported a revenue drop. I'm not sure traditional media is going to report any improvement either.

I think the main driver for Google is the shift of advertising from traditional media to the internet. Yahoo! missed this move, the company is too busy with reorganization. We'll see traditional media reports soon, but I don't see any pin action. Google is swallowing the advertising market, that's the real picture.

Full Disclosure: At the time of publication author had a long position in GOOG and no positions in YHOO. Positions can change any time.

Comments

[invst2009:]

Alex,
your posting does not help. first, it's incorrect, second, everyone and their mother knows Google is taking market share. You should focus on telling us something we don't know, something that has a reasonable chance to happen in the future. For example, is it possible Google has seen the best of its growth years, the speculation that Bing is actually as good now.. just food for thought

Oct 22 10:47 AM

[Gregman2:]

Is the future of search about Google's online advertising paradigm shift? Or is it about search itself, such as Yebol, Yandex, Baidu? Some of these other engines, like Bing and Yebol, actually offer better search.

Oct 23 01:31 PM

[Road Runner:]

"I think the main driver for Google is the shift of advertising from traditional media to the internet. Yahoo! missed this move"

Bingo. Alex. These 2 reasons, the shift of advertising to the Internet and Google's superior competence in capturing this shift, are the reasons I own Google. I will sell Google if I see either of these ending or leveling out.

There's an old saying from the perspective of a business owner, "Half of my advertising dollars are wasted. Now if I only knew which half". Businesses are frustrated with traditional advertising in that they don't know how effective their advertising is. This, I believe, is a huge part of why advertisers are switching to the Internet, and why they will continue to shift to the Internet.

I'm also watching to see if the next advertising shift happens. Will the biggest chunk of advertising dollars, local advertising (think obnoxious car dealer commercials), comes to the Internet? This requires knowing the location of the user doing the search. Maybe the mobile Internet wave (thanks Apple) along with built-in GPS locators will bring this about. Though, there may be personal privacy and security issues that will prevent this. I’m staying tuned.

Oct 23 06:28 PM

[Road Runner:]

In what way does Bing and Yebol offer a better search? I've tried Bing and I don't see any difference.


On Oct 23 01:31 PM Gregman2 wrote:

> Is the future of search about Google's online advertising paradigm
> shift? Or is it about search itself, such as Yebol, Yandex, Baidu?
> Some of these other engines, like Bing and Yebol, actually offer
> better search.

Oct 24 07:03 PM

[granger:]

Great stuff. I beleive that the economic struggles are just getting started (sadly, but my opinion), we have a mufti-year time frame of hardship coming.

Economic strife, accelerates trends that are all ready in place. GOOG was all ready the leader and eating old line advertisers lunch. The continues slowdown will just help GOOG even more.

Long and strong GOOG since the beginning. Have a trimmed so everything I still own is pure profit. These share will be in the vault for many years (hopefully) decades to come.

Oct 25 01:56 PM