Peter Kafka

Recent Posts by Peter Kafka

Search Ads: Lousy This Quarter, Better for the Rest of the Year?

Google doesn’t see its growth ending anytime soon–hence its plan to spend $50 million on a Finnish paper mill it wants to turn into a data center. And Citigroup’s (C) Mark Mahaney thinks the search giant will have a pretty good 2009–after a lousy first quarter.

Fresh off the heels of two search industry conventions (ugh), Mahaney synthesizes a couple different industry reports with his own interviews. Key takeaway: Search advertising spending will be flat at best in the first quarter of 2009, but will rebound for the rest of the year:

As one very experienced Search agency executive put it to us, ‘Flat is the new Up.’ Not surprisingly, specific verticals that were singled out as weak were Retail & Travel. And surprisingly, one vertical that was singled out as stabilizing was Financials. We also picked up signs that February Search spend may be picking back up from depressed January levels. Two leading Search marketing firms separately told us that while January saw client spend cutbacks, indications are firming for a January and March recovery.”

Translation for Google: Mahaney thinks net revenue will decline seven percent for the search leader in this quarter compared to net revenue three months earlier. That will be mind-blowing for the go-go growth company but in line with the seven percent and 10 percent decreases that Yahoo (YHOO) and IAC’s (IACI) Ask have suggested. But Mahaney, a Google bull, thinks the company will end the year up four percent.

Perhaps that should be our definition of a recession going forward–a year when Google (GOOG) posts low single-digit growth–and that’s seen as a good thing.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work