Sun stops shining – world ends

Valueclick, Google and Microsoft announced results that disappointed investors and as a result their stock fell which disappointed investors and indicated tougher times ahead that disappointed investors. As a result investors are disappointed. That is indeed disappointing for investors yet and yet….

Google’s year on year revenue growth for the quarter was 39% over last year and their earnings were up 35% over last year which does not sound like a tragedy but any perceived deceleration spooks a market in which the collective hemorrhoids are inflamed anyway.

Maybe though the plot is thicker than it appears. The analysts worry about a slowing increase in search advertising at Google and their slowness to monetize display and video assets but are they missing the more disturbing notion that advertiser demand for ‘sell it now’ bottom of the purchase funnel advertising is far far smaller in total than ‘know me, think about me, like me’ top of the funnel advertising.

Of course it’s the latter of these that the web has not cracked yet the flow of venture money and sentiment continues to scream ‘PERFORMANCE’ in a world where ‘PREFERENCE’ is every bit as important.

Resolving this issue will lead to a new gold rush in the digital advertising space and if it’s a rush of ad dollars rather than just VC money investors will have opportunities to benefit from profit driven growth in equities that reflect real cashflows and, in that event, they may not find 30% YOY improvements quite so disappointing.

1 Comment

Filed under The world we work in

One response to “Sun stops shining – world ends

  1. Bravo!
    Sadly, short-term vision driven by earning-per-share missed by a shiny penny has a greater impact on investment speculators than solid cash-flows driven by equity in the long term.
    And …. as GM announced today, shifting half of its $3 billion ad budget to the Internet, may well be the snowflake that sets the digital avalanche in motion.

    Paul Benjou

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