Google Posts Strong Q3 Gains in Tough Economy

Google CEO Eric Schmidt: “We’re in uncharted territory.”

Search engine titan and Web economy bellwether Google beat analyst estimates with its third-quarter financial results, reported late last Thursday. But CEO Eric Schmidt warned that the Internet ad powerhouse will face unexpected challenges in the economy to come.

“It is pretty clear the economic situation today globally is worse than people were predicting a month ago,” Google CEO Eric Schmidt told analysts in a conference call announcing the quarterly results. “We’re all sort of in uncharted territory.”

For the moment, at least, Google appears to be navigating those waters with success. The company reported Q3 net income of $1.35 billion for the quarter, an increase of 26% over income in the same quarter last year. Revenue for the quarter reached $5.54 billion, up 31% from earnings of

Google’s aggregate search ad clickthrough rate—including pay-per-click ads both on its results pages and on the Web pages in its AdSense network—showed an 18% quarterly increase year over year and rose about 4% over the clickthrough rate from Q2 2008.

Schmidt said Google has been concentrating on targeting users more efficiently with relevant search ads—a fact that may help make Google’s pay-per-click ads an attractive marketing choice in a budget-strapped economy.

“Our user experience is getting much better, with greater personalization for better results globally for every user, more highly relevant ads against as many queries as possible, and more sophisticated tools for advanced bidding, measurement and optimization,” he said.

“We fundamentally believe that users will always want information and advertisers will always value relevant and very measurable advertising, which of course are Google’s core strengths.”