Google: Mortgage Ads Are Down — Except For Ours

Google execs met with reporters today and confirmed our worries: The mortgage crisis is beginning to cut into ad budgets as lenders pull back. Yet Google execs also said that the ad slowdown isn’t affecting them. Their argument supports what Web optimists have been telling us for weeks — since lenders need to keep making loans to stay in business, they’re continuing to advertise. But they’re moving their money away from traditional media and into the low-cost Internet.

“We have heard anecdotally from several advertisers that they are cutting their spending,” Jon Kaplan, director of financial services advertising at Google (GOOG) told Reuters. “People are cutting their budgets but (Web) search is not the first thing, it’s the last thing.”

Google’s own anecdotal evidence: It’s “biggest mortgage industry advertisers spent on average $3.5 million apiece on search ads in the first quarter, compared with $1.9 million in the year earlier period.” Again, that’s different than saying that its aggregate mortgage business is up — and the first quarter of 2007 is also several months before the mortgage business went into a tailspin.

But for argument’s sake, let’s say the ad slowdown will miraculously miss Google entirely. Even then, it’s still going to beat up a lot of Web players with second tier search businesses (IACI, MSFT, YHOO), or who are more dependent on display advertising (YHOO again). And that will have ugly repercussions for everyone. Reuters

Related: Internet Recession Watch: Tracking The Signs