GOOG - Google Stock to $600 or $700 After Hours Today
Now, why am I blogging about this? I think today's Google results will be a pretty good test of Steve Rubel's assertion that a pay per click recession is imminent. He declares:
For the last several years, search engine marketing has been on a tear. While the big advertisers sat on the sidelines in the beginning, they have lately been ramping up their spend on pay-per-click advertising, primarily on search engines but also affiliate sites like those that run Google Adsense.Wait a minute - a PR industry veteran is declaring the decline of PPC advertising? Perhaps this is simply wishful thinking. Is it arrogance or ignorance? He actually makes some pretty good points. The best response I've seen so far has been from Eric Frenchman:
However, I am calling a top to this market now. Here are five reasons why a pay-per-click advertising recession looms.
Google, Yahoo, and even MSN will survive because they will make the acquisitions that are needed to keep going. I'm not ready to forecast doom for Google or search, not when there are still more advertisers to jump into the mix (small business and local merchants).Let's suppose there is a recession in the economy at large. What will businesses (small and large) cut first - TV ads, radio ads, print ads, PR campaigns, SEO, PPC advertising, social media marketing? Somehow, I think it's going to be the most expensive and least trackable items or the newer, unproven options that will go. If anything, I think if advertising budgets shrink, the percentage of that spend that goes to search engines will actually increase.
Google's also in a unique position. They're increasing market share, expanding ad distribution efforts (mobile ads, radio ads, print ads, etc), extracting more pay per click fees from advertisers through quality score tweaks and expanded broad matching changes, extracting more revenue by increasing bids for top placement and figuring out how to monetize YouTube. I'll be curious to see if the earnings call indicates increased profitability from AdWords as well as increased revenues. I think the biggest drag on earnings could be from their hiring spree. Point is, I think Google is still at a relatively early stage in their growth cycle. They're also pretty efficient at squeezing a profit from their existing products.
At any rate, if GOOG drops below $600 today, I'll continue my subscription to Steve Rubel's Micro Persuasion blog. If GOOG does, actually, beat by a wide margin and manages to top $700 in after hours trading today, I'm calling a top to Rubel's influence and will unsubscribe.
Update (10/19/07): I think it's important to admit when you're wrong. I was wrong in predicting a large price movement in GOOG after hours yesterday. In fact, it barely moved. It actually moved more in pre-market trading this morning:
GOOG $2000 Target by Henry Blodget
Tags: goog, google stock, steve rubel, micro persuasion, pay per click, recession, ppc advertising