Play the Game of Life
Ryan Petersen's Blog

I purchased a Google share last week. Yes, one share. Sadly $630 is about all I can afford to put into such a risky stock right now...

And at a PE of 53, it's definitely a risky stock. If the online advertising market slows down due to a wider recession, the stock could get killed. But I don't think the online ad business will be badly hurt even in a pretty major recession.

Here's why:

The fact is, online advertising delivers the most targeted audience, with extremely measurable returns. For the first time, marketing becomes a true profit center within the firm because you can now actually match your revenues directly back to your ad dollars. The tools for measuring these returns are fairly new, but once Google Analytics and its (much better, if more expensive) competitors are well-understood by more marketers, Google AdWords becomes the best place to put your ad dollar. So the market can only grow as marketing people learn the skills. And in a recession, are you really going to cut spending on the one area of your marketing budget that you know is producing returns?

The company's mobile phone plan is genius too. They give the under-financed handset makers in china a cutting edge software platform for free. All they have to worry about is making decent hardware at a low price, and suddenly they can deliver powerful mobile computers super-cheap throughout the world. As far as Google's strategy is concerned, this is a particularly powerful model for the developing world. Suddenly you have billions of people doing Google searches who have never even used a computer before. The phone tells Google exactly where the searcher is, so they can deliver an ad that is locally relevant. Suddenly every local store on the planet--from Wal-Mart down to the tiniest tin-roofed kiosk--can deliver ads to all people within a stone's throw of their front door. Who wouldn't pay for that?

This is a business I want to own. Now I do...

Labels: business, Google