On December 22 I predicted that Google would have a record fourth quarter and yesterday they confirmed it. $5.7 billion in sales, growth is still a respectable 18% per year.
As recession victims go, they’re standing proud and tall.
Related news articles further explain that Google’s profit margins have narrowed, they’re dumping loser products, and they’re cutting the fat wherever they reasonably can.
I think this is more evidence that the Internet is feeling the hit less than other corners of the world.
Being privy to the account activity of hundreds of customers, I also observe that Google has also tweaked the controls of their AdWords machine considerably to keep their revenue up. Most notably Google has opened their kimono very wide on the definition of a “match” for broad-match keywords.
For example if you’re bidding on RED WAGON, Google may show your ad for a person who searches for just WAGON. Especially if you allow Google’s “Automatic Matching” feature, which is generally a bad idea.
Now, for the first time, I am advising AdWords advertisers to regard broad match keywords with a jaundiced eye, much as I have always said about the Content Network.
If you’re not bidding on
broad match
“phrase match”
[exact match]
separately – if you only are bidding on broad match like most advertisers – you’re probably taking a bath and don’t even know it.
As John Carlton says, “The old poker rule is in effect: If you sit down at the table… and you don’t who the sucker is…
…then YOU’RE the sucker.”
If you’re not tracking sales conversions then you’re not prepared to do business in this economy. Might as well fold ’em and go home right now.
This is also the time to be implementing the things you’ve always known you needed to implement, but didn’t have time. It’s official: You have time now. It’s crucial to surviving and prospering in the current climate.
(And let met assure you, there are some businesses that are prospering right this very minute. I just had four such businesses at My 4-man Intensive yesterday. An online music store, a kitchen appliance site, a non profit & a UK public company. All gaining ground.)
If you’re ready to take this seriously, I have two options that will IMMEDIATELY generate results for you:
1) The personal AdWords coaching “Bobsled Run” which is a 12 week concentrated coaching program. We start with AdWords, then work our way all the way down your sales funnel, plugging holes all along the way. If you’re spending more than $1000 a month on AdWords and are willing to put in the effort it’s a sound investment. Starts February 3. http://www.BobsledRun.com. I especially invite you to read our many dozens of proud testimonials from folks who transformed their entire experience as a business owner in just 3 months.
2) Jet Propulsion runs parallel to the Bobsled Run, teaches and incorporates all the same concepts, but my team of experts does the heavy lifting for you. THEY re-work your AdWords accounts, THEY set up split tests and conversion tracking and autoresponders, THEY survey your market. Takes a HUGE load off your shoulders. And you get the assistance of a professional copywriter to add some MAGIC to your marketing.
Jet Propulsion is not cheap but it very much makes sense if you’re spending more than $5,000 a month on AdWords. If you’re spending more than $10,000, it’s pretty much a no-brainer. Also starts February 3. http://www.perrymarshall.com/JetPropulsion/
If you have questions about either one of these programs, you can chat with us on the chat box on the sales page and we’ll answer your questions. If we don’t think you’re a fit, we’ll tell you. (We actually decline about 1/3 of applications – we’re not afraid to turn away a customer whose needs to not match our coaching programs, so you need not be afraid to express interest.)
Wherever you are in your business, you need to be sleeping with one eye open.
One more thing:
The news media has so many people wringing their hands, many business owners are in panic mode and have completely lost focus on the BASICS that got them to where they are. This is THE time to be going back to basics, capitalizing on your core strengths, plugging holes wherever you can, and TAKING BACK GROUND.
Because if the negativity and distraction, many are blind to opportunities that are right under their nose. But the world has not stopped turning. Cash registers have not ceased to ring. If you’re calm, cool, collected and focused, you’ll grow. Even while the rest of the world flounders.
Do NOT take your eye off the ball.
Seize the day.
Perry Marshall
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About the Author
Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.
He is referenced across the Internet and by Harvard Business Review, The New York Times, INC and Forbes Magazine.
3 Comments on “Google's record-breaking 4th quarter 2008: What it means for you”
I have been corresponding with the LEX staff members at London’s Financial Times and they sent me this note:
Dear Mr Marshall,
Thank you for your email. The writer did see it before we published. Here is our short note if you have not already seen it:
“There comes a point when even the wives of oligarchs make a show of knitting their own stockings to match the spirit of the times. So Google has dutifully displayed austerity. A few experimental services have been cut and, as it is hiring fewer people, 100 recruiters got the boot.
“That reflects a moderate slowdown in Google’s business. Fourth quarter revenues grew a mere 25 per cent to $4.2bn, compared with the 50 per cent pace of a year ago. Even so, with profits of more than $6bn last year, Google still sits on the golden goose of internet search and knows it, blithely repricing staff stock options to reflect its beaten-down share price. For reliable growth in a downturn it has no peers. But everyone else knows that as well, hence a 20 times earnings multiple. Until that growth rate picks up again, there is no reason for Google’s shares to do the same.”
Kind regards,
Lex
Perfect example of how we have to watch everything that we spend because no one is going to do it for us, especially our friends at Google who will spend more of our hard earned money if we let them.
My brother and I have been tracking everything (thanks to your advice) and we are now playing the game of “How low can we get our average cost per lead”. To be honest it is a fun game and of course only helps us as we tweak everything from adwords to pages to videos to get the lead for the lowest possible cost. It is one of the games that you can never be too good at it and right now seems like the perfect time to play it.
Well said, Perry.
I think you nailed it with the expansion of broad match being a key driver for Google’s quarterly results. Like you, I also predicted it on my blog before the earnings came out. As a pretty substantial adverstiser, I wrote about the match type volume data we’d been seeing, as well as some other data that made me think that I was seeing something that Wall Street analysts might not be privy to.
Funny how you talked about “tweaking the controls,” because that’s very similar to how I see it. I refer to the phenomenon as turning the algorithmic dials, up and down as they see fit to hit their targets.
And yes, I agree that there are lots of suckers at this table, and that is why Google was able to do so well this past quarter. We’ll see how that lasts.