Google sees Web search less exposed to mortgage woes

Google sees Web search less exposed to mortgage woes


New York: US mortgage lenders are cutting advertising budgets due to a global credit squeeze, but they are not likely to reduce Internet search marketing anytime soon, executives at search leader Google Inc said on 20September.

A meltdown in subprime mortgage debt made to borrowers with weak credit histories triggered a global scare over banks’ exposure to a wide range of high-risk debt and stoked recession fears.

The advertising and media industries are just beginning to feel the pressure, but some outlets may be more vulnerable than others if a wider swathe of financial services advertisers cut spending.

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

Advertising based on Web search allows marketers to tout their services to people when they look for information and track the response to such commercial messages. As a result, it remains a key outlet for mortgage lenders to cultivate new business leads, Kaplan said.

Google’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.

At a meeting with reporters in New York, Google ad executives portrayed its services for placing ads on its search page and across Internet sites as more finely attuned to economic changes, yet less likely to be hurt than other outlets when growth slows.

“Every single day that somebody is looking for a mortgage ... these campaigns from these financial customers are on 24-7, 365 days a year," said Tim Armstrong, president of Google’s advertising division in North America. “So our ecosystem actually mimics what the GDP looks like."

Not an advertising agency

Google has sought to extend its auction-based technology for efficiently selling advertising space online to more traditional media, from television to radio and print.

Media and advertising companies fear that Google, already profiting from fast-growing Internet advertising, might strike even deeper into their income sources by offering a wider range of advertising services, including creating campaigns.

Meanwhile, Google has hired Andy Berndt, a top executive at advertising agency Ogilvy & Mather, to market Google’s services to advertisers.

“Google is not getting into the ad agency business," he clarified, saying it would be mathematically impossible to do so.

He estimated that, to achieve enough scale in an industry that employees as many as 200,000 people, Google would need to hire up to 10% of its top creative and business talent.

Yet he described Google’s growing presence at the table with advertisers, and their agencies, adding another layer of insight into what consumers are interested in based on their Web behavior. That information that has begun to guide how advertisers plan their marketing offline as well.