Google delights, but even it isn't immune to slowing online ads

As noted here in the New York Times, Google reported another bang-up quarter. No surprises there. But readers will recall that our research noted some slowing of the boom in online ad-spending. Can that be true with Google's break-through quarter?

Even though Google has the biggest ad network and the lion's share of online advertising revenues (one company recently noted that it may be earning as much as 1/4 of all online advertising revenue), the softness in online shows up in Google's revenue growth rate. If you look at the chart above, while Google continues to post growing revenue (with some seasonal variations), that revenue growth is slowing year over year. And this is while Google is building its market share of the online advertising market.

We saw the online ad softness hurt Yahoo's growth earlier this week. And while Google is feeling the effect as well, clearly they aren't being hurt as much. But when a dominant market leader shows a declining growth trend, even when it is taking market share, that's a sign the market is changing. And with our research showing advertising buyers falling back on more traditional methods as their budgets get cut, and nearly every Web 2.0 company --including new entrants like Microsoft adCenter -- flooding the net with online ad capacity, we can expect more media company disappointments to come as earnings season wears on.

Full disclosure: I have no positions in Google, Yahoo, or any other media company.

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