Online Ad Slump?

With a headline like "Google ad slump spreads abroad", this article is certainly a little deceiving. Yes, it's true that the ad sales of Google, Yahoo! and Microsoft have all been falling, but that's relative to staggering growth rates that they've all enjoyed in this segment over the past few years. Google, of particular note, has seen growth rates approaching triple-digits, so a fall to only double-digit rates is certainly newsworthy, but let's not kid ourselves; there are many businesses that would love to see these sorts of growth rates!

I do appreciate what this slowdown means for the markets and I certainly don't question that the earnings misses reported by both Google and Microsoft last week needed to be followed by consequential declines in their stock prices and I'm sure that Yahoo! will see the same result from its report tomorrow. That said, with the majority of the economy slowing to a crawl or beginning to move backwards, the growth rates of almost 50% at Google and even double-digit rates persisting at both Microsoft and Yahoo!, this is the last segment with which investors should concern themselves.

I can't help but be reminded of a 'Lying with Statistics' lecture in undergrad. Headlines like this one only confuse the markets and inject further volatility. Similarly, seeing a headline that oil prices have "plunged" following several days of record-setting increases is just ridiculous. Newspapers and TV networks do need to sell ads and these headlines do grab your attention, but I would hope that readers and viewers would just wise-up a little - enough to send a message to these news directors and editors that we're not that easily manipulated. ...at least my hope is that we're not that easily manipulated.