Google Reflects Economic Climate

2008 has been a hard year for businesses of almost all industries. Some have been hit harder than others but it is often difficult to tell just how bad the situation is becoming and when the economy might start to pick up.  Stores such as Marks and Spencer’s and Woolworth’s (before its close) are often used as benchmarks to measure general levels of consumer spending.  These types of shops reflect consumer spending because they are well known, have stores nationwide and offer a wide range of products spanning many different industries.

Search Engines like Google make the vast majority of their money through their paid advertising programs. AdWords is used by a huge number of online businesses to promote every conceivable product and service. Google also has huge global coverage advertising in almost every country in the world. For these reasons, the success of Google can be seen as a reflection for the success of businesses around the world, and a reflection of the current global economic climate.

As businesses struggle, they cut back on their advertising. As individuals or families find that times are hard, they cut back on spending.  For the search engines, both of these lead to reduced revenue.  Of course, this is a bit of a simplification and there are other things to factor in here.  However, the fact that Yahoo is in serious trouble and Google’s shares and profits are dropping should come as no surprise.

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