Citi analyst Mark Mahaney canvassed search engine marketing firms and other digital marketers at last week’s SES conference and came away with the same conclusion he drew in February and earlier this month: The SEM guys are happy about Q1 search spending. and think it will remain strong even if the economy keeps retracting. Good for Google (GOOG). But:
When pushed a little, we were able to get some of the vendors to recognise that much of the budgets they were currently working with had been secured at the end of 2007 and/or earmarked for 1H08, and that visibility into 2H08 was less clear. We also believe that the increasing attention by larger brands on organic Search Engine optimization is an indicator that return on investment for all online spending is being very closely monitored, and that there could be some risk to 2H08 budgets if the macro-economic slowdown is deeper and more protracted than expected.
We continue to think that Google (as well as the second-tier search engines) are still exposed to more potential pain, and that the search business is not magically immune from maco-economic problems.
That said, if you’re a Google bull there’s more in Mark’s report to cheer you — the assertion, for instance, that Google’s dominant market share is even greater than comScore, et al, have shown, since “for larger advertisers, Google share was even higher, and share gains [are] coming at the expense of Microsoft (MSFT) and Yahoo! (YHOO).”
See Also: Google: SEMs Say Search Spending Strong
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