Google's Decline Under The Magnifying Glass

Since the US economy has gone down, everybody's been a little paranoid over the slightest fluctuations as shown by seemingly stable companies. And that is why people have their eye out for Google as well.

Just recently, click ad revenue for Google has reflected significant "non-growth" so to speak. It isn't as strong as it used to. Termed as a decline in paid ad revenue and flattening viewership. In either case, it just means there seems to be a downward trend is what I suppose they are all trying to say. The Fool reports that...

Google's sluggish performance is being attributed to several factors. The more common explanations are Google's move to crack down on both fraudulent and accidental clicks. Catching bogus clicks early and policing accordingly is good. Narrowing the clickable link window within ads to make sure mostly interested visitors go through is honorable. However, what if the problem is deeper than that? What if ad blindness is kicking in, with greater reluctance to click through on Google's paid search ads?

We saw this happen with banner ads in the mid-90s. They were all the rage at first, until Web users began to disregard them. Google's paid search ads are superior, especially with the dot-com giant's ability to target ads relevant to both the content and user, but no one said the party would last forever.

This explains why both Google and Ask.com parent IAC are now trading at just 18 and 11 times next year's profit targets, respectively. Smaller paid search players like MIVA , Local.com, and LookSmart find their shares trading for pocket change around the $3 mark.

This will make April one of the most important months in the history of online advertising, because if Google is vulnerable, one can only imagine the kind of headwinds that less relevant players are facing.

I don't think the good times are over for Google, but I think it's time for the dot-com giant to batten down the hatches, keep its payroll in check, and drum up the next great innovation in interactive marketing.

The clock is ticking, and we'd better hope it's an alarm clock instead of a time bomb.