Mon, Aug 27, 2007 - Page 12 News List

Google not threatened by slowdown

BLOOMBERG

Google Inc's chief economist said the company's US$10 billion annual online advertising business is flourishing even as turmoil in the credit markets curbs corporate and consumer spending.

While advertisers may cut television, print and radio budgets during economic slowdowns, Google is less vulnerable because companies will spend more on ads that can be targeted at specific consumers, said Hal Varian, who was hired two months ago to lead Google's economics group.

"It's measurable, it's quantifiable and that's the very last piece of advertising a company wants to cut," Varian said in an interview on Friday.

"We're looking pretty good from the viewpoint of macroeconomic sensitivity," he said.

That contrasts with the housing, credit and private-equity markets, which have been pummeled by the subprime mortgage crisis.

The fallout has spilled over into the consumer market, prompting retailers such as Wal-Mart Stores Inc and Home Depot Inc to cut their profit forecasts for the year.

Google, owner of the most popular search engine, gets 99 percent of its revenue from sponsored links on its own pages and ads on partner sites. Revenue at the Mountain View, California-based company rose 73 percent to US$10.6 billion last year.

Varian said ad revenue from the housing industry has gained because lenders and brokers are facing stiffer competition.

"I can certainly say they haven't cut back on the Internet side," Varian said.

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