Despite the slumping economy, new figures indicate that at least one industry has actually increased its profitability this year. Google recently released information on a surprisingly strong first-quarter performance. Profits increased 30% from last year to $1.31 billion; sales increased 42% to $5.19 billion.
The search engine’s buoyancy is triumphant news in the face of an adverse year. Many experts predicted decreased revenue, especially for companies like Google, who rely on click-throughs. Market research has demonstrated that consumers click through for paid advertisements at a dramatically reduced rate from last year. Shares are also down from the November 2007 all-time high of $741.80 per share.
This week, however, Google proved that the industry has the ability to transcend the economic downturn. Besides the record sales and profit information, the Google stock increased an astonishing 20% on Friday, April 18 alone, taking it back up to $539.81 per share. To combat the loss of ad clicks, the company re-configured their system to generate more revenue per click, rather than relying only on the quantity of clicks. Google also focused more attention on international sales, earning more than half of revenue from foreign countries.
Now that Google has demonstrated its resilience in recession, industry insiders are buzzing about the possibilities for other tech companies. Rumors of a Yahoo-Google partnership are now rampant in the face of Microsoft’s increasingly demanding offers to buy Yahoo. Even if a Yahoo-Google merger is not in the works, the pressure is on Microsoft to raise its $44 billion offer to purchase Yahoo. All of this is good news for the industry, along with other signs of prosperity – this year, 7% of the entire international advertising budget, or in other words, over $40 billion, will be spent on the Internet.