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Much admired Google has until recently been bucking the trend that media and advertising companies have found themselves in but there are now signs that they, too, may suffer from the Credit Crunch and global financial crisis !

This post explores the likelihood of Google remaining the most powerful media company in the world in dire times.

Firstly MarketWatch reports that,

Internet search, which has so far served as a dependable source of growth for online advertising, could possibly see its first-ever sequential decline in the first quarter of next year, according to a Wall Street analyst.

That in turn will be a likely drag on Google Inc.’s revenue, Citigroup analyst Mark Mahaney said in a note to clients Monday.

Mahaney said that he’s sensing “nervousness” about the first quarter of next year, which could mark “the first negative sequential growth quarter ever for search.”

Mahaney said that Google is likely “acutely aware” of global economic trends, thanks to the data devoured through its popular search service, noting that searches for the keyword “Downturn” have quintupled recently.

In anticipation of tough times ahead, Mahaney noted that Google has made “significant” cost cuts including layoffs of temporary employees.

But concludes that it may very be that Google will come out in a stronger position after the crisis than before (which says quite a lot considering how dominant they were):

Longer-term, Mahaney said Google is likely to come out of the current recession with an even firmer lead in the online search market.

Its other ventures - from Gmail and Google Apps to YouTube and Grand Central - haven’t been exactly home runs, at least in the sense of building revenue models that compliment search advertising. And now, there’s concern that the once-lucrative search advertising business model is drying up.

Just last week, Global Equities Research analyst Trip Chowdhry predicted that Google’s revenue will fall in the next two years as the economy puts pressure on Google ads and competition from Microsoft heats up. Chowdhry says that Microsoft is giving paid search credits to ad agencies and forcing Google to match. On the surface, it appears that Google is hardly recession-proof. More importantly, that same analyst said users increasingly are tuning out the ads that are placed along the right side of a search results page. Maybe our searches are getting better and we’re finding what we’re looking for easily, without the need for ads to help us. Whatever the reason, the online ad game is changing.

…..mobile web is clearly coming of age - just look at the excitement that was generated around the launches of the iPhone and the Blackberry Storm. Now, with Google’s Android mobile operating system out there for developers and manufacturers, 2009 is expected to be the year that a lineup of so-called Google phones hit the scene.

In a tough economy, with ad-spending and consumer confidence down, it will be interesting to see if a mobile strategy can help Google can maintain its mojo during the storm.

Of course only time will tell how strong Google will be during such difficult times but this author firmly believes Google to ride out the storm and come out of the crisis in a strong and more lethal shape than before - which, admittedly, says quite a lot all things considered.

We shall follow in future posts how Yahoo! and Microsoft are facing up to the challange of Google and their dominance as an alliance between the two could undermine some of Google’s strength and power.

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