Ad Slowdown Finally Hitting Google, Too?

Online search advertising (i.e., Google) is supposed to be the media business that’s most resistant to an economic slowdown: It’s targeted, cost-effective, measurable, etc.

All true. But a lousy economy is a lousy economy, and even Google (GOOG) isn’t impervious. So says Barclay analyst Douglas Anmuth, who has just cut his estimates for the search giant. He says revenue for the last quarter of the year will be flat compared to the same period in 2007; he had previously predicted growth of 3.4 percent. Next year, revenue will grow 13.2 percent, Anmuth says, down from his early forecast of 18.5 percent.

Anmuth’s reasoning is straightforward: Advertisers do, in fact, like search ads. But consumers are spending less online, which makes their clicks worth less, which is pulling down prices at Google.

That dovetails with new data from online monitor comScore (SCOR), which says that online shopping has “fallen off a cliff” and will be lucky to grow between six percent and 10 percent this quarter. MediaPost:

Year-to-date, comScore says, online sales have grown 10% to $158 billion–compared to 17% last year, 20% in 2006, and 22% in 2005. Just this year, it has plunged from 19% in the first quarter, 13% in the second, and 9% in the third. Excluding travel, the drop is even steeper, falling to just 5% in September.”

Anmuth’s note knocked down Google shares to a three-year low of $311.75; the stock rebounded to $318.78 by the end of the day.