How GOOG is beating the recession

March 09, 2009 – Comments (2) | RELATED TICKERS: GOOG , YHOO , TWX

So how does Google (GOOG) survive the sharp decline in advertising dollars while most media companies are hurting? The answer is to allow questionable content and allow webmasters to serve up Google ads on useless web sites. What happened to do no evil? http://www.google.com/corporate/tenthings.html (#6)

Recently Google announced that it would now allow parked domains to serve up Google ads.  We have all seen a parked domain.  You normally come across one when you enter a website directly into your browser bar and a page shows up that only serves ads and isn't the true site your looking for.  In the past, Google did not allow these sites to be a part of their ad sense program (a revenue sharing platform for webmasters). Google did have a program called Domain Park but that was reserved only for sites with a lot of traffic (1m+ page views).

Also, if you have been using Google finance or Google image search lately, GOOG has started serving up ads in these sections.  In the UK, gaming ads are now allowed and beer/liquor ads are now allowed on Goolge.com.  So when will the adult and pharma ads start to appear?

So what's the big deal?

In my opinion, GOOG is using up their growth bullets that investors still pay high multiples for.  Do they gain additional revenue or at least balance the advertising decline now?  Sure, but it may backfire. As both an ad sense member and an ad word advertiser, the problem here is that ad word customers are now getting lower quality traffic for their advertising dollars (clicks).  Based on my own sites, the conversion rates of users coming from these parked sites into sales are terrible. I have opted my ads out on these sites, but I question the business fundamentals....growth is good, but at what cost? Now that GOOG dominates about 80%+ of search, where are investors in GOOG going to find future growth?  After expanding the "top" paid positions to 5, it looks like pharma and adults sites may be their next option. Let's hope it doesn't become the next YHOO.

http://searchengineland.com/google-expands-adsense-for-domains-enough-already-15812