Google (GOOG) is supposed to be one of the “best” companies in the world. It makes “most admired” lists and lists of “most valuable” brands. Google had one of the largest market caps of any American company, until slowing growth brought its shares down.
Google has the world’s most talented software engineers and what it widely regarded as the most efficient way for marketers to reach consumers and businesses.
Google is as close as almost any company gets to being a proxy for the economy. Its advertising program is used by millions of firms around the world. It touches huge numbers of businesses from one-person companies to the largest corporations in the world.
Most observers said that Google’s lackluster results showed that the economy has not recovered. Google reported revenues of $5.5 billion for the second quarter, which was an increase of 3% compared to the same quarter last year. The firm’s cost-per-click, a measurement of the efficiency of its ads, was down 13% during the same period.
When average companies do poorly, they may be reasonable proxies for the broader economy. The situation is worse than that when the best firms are not doing well. Google should be outperforming the broader business world by a significant pace, if, indeed, its superiority as a marketing vehicle is substantial.
The most accurate way to look at Google’s results is that the economy, both in the US and overseas, is doing worse than the bulk of second quarter earnings are showing. Marketers are pulling back from using Google even though is is the model of efficiency in the advertising industry.
The best companies rarely falter, and when they do, they tend to falter much less than their peers and the economy as a whole. Google’s results should have been much better, if the business environment is getting better. But, they weren’t
Douglas A. McIntyre
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