Is Google's Price Drop A Reflection Of Recent Media Coverage

The value of Google's stock has taken a bit of a beating recently from their high of $747 last year to yesterday's close at $438. After doing my weekly news review, I saw a lot of articles questioning many actions Google has been doing lately.

Is this pervasive critiquing of Google having an impact of investors' confidence?

The articles I read this week came from a wide range of sources - not just limited to the search industry specific ones we all know within the industry. (I was at a offline/online media event on Thursday where the majority had not heard of SEW, AussieWebmaster or for that matter Danny Sullivan!)

The firing of people from DoubleClick supposedly slated for April 1, according to ValleyWag, should show investors that they are lowering expenses and thus increasing profits for them. But the general public usually sees the company laying people off after an acquisition as Gordon Gekkoish. The eventual impact should be seen in the coming week as this actually happens.

I was having dinner one night during SES NYC last week, I noticed a friend there who does angel investing and asked him what Google closed at that day to determine who in my party was paying. He knew to the penny as he told me he was shorting Google (now I know where he gets his seed capital).

Then I see an article this morning from the UK Guardian stating Google's PPC numbers were slowing. Given January had shown zero growth and February's growth was low single digits compared to previous growth being as high as 30-40%, this spending and growth wall could be a major hurdle for the company's valuation.

"Google maintains that the deceleration is a consequence of its strategy of focusing on quality. The Silicon Valley firm has been trying to eliminate accidental clicks and has been working with advertisers to make sure that links relate closely to users' search queries.

But the slowdown has contributed to a 36% slump in Google's shares since the beginning of the year and analysts are divided on whether the company's confidence is justified," the Guardian stated.

This is also challenged a little by recent complaints by advertisers over some of these methods of improving the quality. The $10 Minimum Bid push has lost Google advertisers. The arbitragers squeezing a few pennies from a click have had to drop away (leaving the really good ones at it a cheaper range), but so have the companies that provide legitimate inexpensive products or services very relevant to the people searching from that perspective.

The impact Google is having on other online industries may also be impacting their brand and through that their value. The analytics industry was impacted by Google's purchase of Urchin and the development of the free services of Google Analytics - so even a popular free service gets flak, and their mistakes are made public quickly as was the case with GA information being displayed in the Google organic results..

There will be an additional backlash from the DoubleClick acquisition. It is going to be hard for the soon to be unemployed to find jobs in the industry as Google launched Ad Manager which offers ad serving for free and thus will hurt the job market in the industry as the competitors lose market share.

The words of Larry Page's recent Annual Report letter reflect the perspective the founder sees his realm of "users, customers, Googlers (our employees), and investors who help bring everything that is Google to life".

Part of Google's success has been in its ability to maintain the "church and state" separation of organic listings and paid search ads. While that is to be commended, isolating customers from the users pool is a little naive - people advertise on Google because they have used Google and want to advertise to similar users.

Google would not still be in business if they had not been able to monetize the popular search engine. When they first started the company was nearly sold to Excite.com for a million dollars, because they could not monetize what they were doing.

With revenues of more than $10 billion last year - 90% of which came from paid search advertising - you would think the customers would take top billing, but the behemoth of search still sees search through the eyes of its users.


" We continue our effort to extract more and more real meaning from the web in order to help people find the right answers. We recently improved universal search, integrating different types of relevant information, such as video, maps, news, books, images, and more, right into your search results.

Sometimes you don't get a good answer to a search because the information simply isn't available on the web. So we are working hard to encourage ecosystems that can generate more content from more authors and creators. For example, we recently announced an early version of a tool called "knol" to help people generate and organize more high-quality authored content."

Watch out Wikipedia your space is soon to be seriously invaded.

And one has to wonder if Google is getting into the conference and hotel business next. Their proposal to develop a parcel of land in the Mountain View industrial park for office space, conference center and a hotel is lodged with the local council.

Wonder if they plan on starting their own search conferences, with attendees staying at the nearby hotel? Are we to see a conference advertising tab soon in our AdWords accounts?

The issues of Google's decisions about censorship seem to contradict their "protector of users" stance. The capitulation to the Chinese government;s demands of censoring information about protest has many activists protesting, including shareholders.

The UK Times recently wrote a piece about "Google and the threat to free speech" and mentioned the company's resistance to activist shareholders "anti-censorship proposal by arguing it would do more harm than good to set the terms of use in countries notorious for their hostility to free speech. In other words, a version of the Google search engine that edits out references to the Tiananmen Square massacre or a Tibet-free YouTube is better for the Chinese people, Google brass could just as well have said. Again, the same argument is expected this year at its annual meeting on May 8."

Guess they would rather be the search engine of record for phishers. Seems more than 75% of all phishing efforts use a customized Google search to help in their efforts, according to InformationToday.

Prosecutors around the world must be awaiting their areas' inclusion in Google Maps now that it can be used to find crack dealers. Guess the police industry could be on the horizon.

Publishers and ecommerce sites see Google's action of adding a search box for more results within Google as opposed to going to the site, giving Google the chance to sell advertising for competitors.

Well that was my fill of Google for one week.... now if only my stocks would bounce back to the $700 range I would be much happier.

About the author

Frank Watson has been involved with the Web since it started. For the past five years, he headed SEM for FXCM -- at one time one of the top 25 spenders with AdWords. He has worked with most of the major analytics companies and pioneered the ability to tie online marketing with offline conversion.

He has now started his own marketing agency, Kangamurra Media. This new venture will keep him busy when he is not editing the Search Engine Watch forums, blogging at a number of authoritative sites, and developing some interesting online community sites.

He was one of the first 100 AdWords Professionals, a Yahoo and Overture Ambassador, and a member or mod of many of the industry forums. He is also on the Click Quality Council and has worked hard to diminish click fraud.