The entire world is facing financial slump and the effects of the slump is felt in multitude ways globally. It is hampering growth at various levels and no one is spared by the financial crunch. It has made even the world’s Internet Search leader to become cautious with their moves. According to the statement of Eric Schmidt, Google’s Chief Executive Officer, Google will slow down a bit on acquisitions and on hiring. Google wants to tread carefully like everyone else and they are going to slowdown on their advertising budgets. This was shared during a television interview given for Bloomberg Television, New York.
Many major advertisers have reduced their advertising budgets to face the financial to manage the financial slump. One of the major revenue generating industries is home and auto lenders. Since they are the most affected entities, they had to cut down drastically on their promotional budgets. This shows how vulnerable even the global players are to the financial crisis.
Google has seemingly spent over $3.38 billion in the last 12 months in acquiring new businesses and major companies like DoubleClick Inc. But now Google will have to control its acquisition spree a bit, as it is estimated that the credit crunch is likely to cost over $6.7 billion for the online ad industry. Over 15 banks have collapsed in 2008 because of the mortgage industry that fell drastically.
However, Google said that their profit increased by 26 percentage. In dollars, it rose to $1.35 billion. Google share went up by $4.24 per share in the second last quarter. Google has on the overall done extremely well given the current scenario global financial scenario.
Though Google is likely to slowdown its hiring, it is in no way going to cut down the current perks given to their employees. The will continue to enjoy gourmet cafeterias. Also, there will be no cut down on their spending on data centers that are preparing for cloud computing products. Cloud computing is one of the ways of storing user information online and retrieving it from any part of the world from any computer.
According to the statement of the Schmidt, Google is growing in leaps and bounds when it comes to mobile search queries. This has show an unprecedented growth at a pace that is much higher than Google’s over all growth. Google Android powered phone G1 that is going to hit the market on 22 Oct is likely to bring in more revenue for Google further stabilizing it in the market.
In general, there will be a 20% reduction on the internet ad spending in the US in the next year. This is something that was not experienced in the past 6 years. Newspaper websites that sell their ad space too have noticed that it is not going to fetch them great revenues as expected because when it is a hard copy on an average people spend 22 minutes but when it comes to online newspapers, they hardly spend 4 minutes.