Google’s Q4: Advertisers Keep Spending, Consumers Keep Clicking

Revenue and query growth buoyed Google in Q4 as the national economic crisis worsened into a global recession.

CEO Eric Schmidt said during an earnings call that Q4 was “in some ways…the easy part” as Google benefited from retailers’ puffed holiday budgets and users’ increased comparison-shopping search activity.

“Now we’re in…uncharted territory,” he said. But he insisted media and advertising trends are on the company’s side. “We’re certainly prepared to get through this no problem.”

Google reported fourth quarter revenues of $5.7 billion, 18 percent higher than the year-ago period. However net income was hurt by charges related to its AOL and Clearwire investments.

The quarter was perhaps most notable for Google’s aggressive cost trimming. In Q4 and in the weeks since it ended, the company conducted its first layoffs (of 100 recruiters) and discontinued products such as Google Print Ads, Google Catalog Search, mobile social network Dodgeball, micro-blogging service Jaiku, and Google Catalog Search. From the perspective of advertisers, Print Ads was the most striking to see go, as it was an early and heavily-promoted example of Google’s ambitions to broker offline ads.

During the period, Google also limited hiring to an unprecedented degree, bringing on only about 100 new employees.

While the impact of the economic crisis on Google’s bottom line is still unclear, the fate of large advertisers is ultimately less important than the shopping behavior of consumers, according to Jonathan Rosenberg, SVP Product Management.

“If a recession caused less commerce to take place, that would adversely impact us and you’d see CPCs go down,” he said. “The CPC question as we see it is really driven by users, and it’s not quite as much the number of advertisers coming in and out at any given time.”

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