Google seeks to quell fears on growth

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Google executives on Thursday sought to dispel recent doubts about their company’s growth prospects, using an annual meeting with analysts to promise further strong growth in its core search engine business and to sketch a broader role in the “offline” advertising world.

But while trying to ease some of the recent turbulence in the company’s share price by addressing analyst and investor questions more directly than in the past, they continued to stick to the company’s controversial policies of not issuing more detailed financial analysis or guidance about the future.

“We’ve taken this decision because we’re going to focus on the long term,” said Eric Schmidt, chief executive.

The analyst meeting follows the sharp drop in Google’s shares earlier this week when George Reyes, chief financial officer, appeared to signal a slowdown in the company’s growth rate. He blamed the “law of large numbers” as Google gets bigger, as well as an end to one-off monetisation improvements that have seen Google increase the amount of revenue it earns from each search.

Outlining a broader ambition for the company than in the past, Mr Schmidt said yesterday: “We define the market we are in as the entire global ad market”, worth $600bn-$800bn a year.

The company’s targeted approach to advertising, although perfected in online search, could be applied to much of the off-line media as well, Mr Schmidt added, since it could bring “an improvement over virtually all of the technology, or lack of technology, in these markets”. He said Google planned to eventually be “in every one of those segments”, either directly or through partnerships.

Google executives also dismissed fears that their core search engine business was reaching maturity. The company still has substantial “headroom” to improve its monetisation, both by refining its algorithms to deliver more relevant ads to users and by improving the user interface to increase the number of ads users click, said Jonathan Rosenberg, head of product development.

“The truth is that our ads are pretty primitive relative to what we can do to improve them,” he said.

Mr Rosenberg added, however that Google could not predict the pace of these monetisation improvements, or how much of the benefit of more effective search advertising would flow to Google and how much to advertisers.

Shares in Google closed 3.2 per cent higher at $376.45.

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