WHY GOOGLE REALLY IS RECESSION-PROOF; Chief economist Hal Varian: Marketers may cut back on brand advertising, but search is 'a staple'.(News)(dialogue with Hal Varian)(Interview)

Advertising Age, April, 2008 by Klaassen, Abbey

Byline: ABBEY KLAASSEN

Google has long been posited as recession-resistant because its biggest business, search, is highly targeted and trackable. Search is, as an accountant would say, cost of goods sold-not just an administrative expense. Hal Varian, a Berkeley-economist-turned-full-time-Googler and co-author of "Information Rules,'' explains why he's not worried.

How do you see an economic downturn affecting online advertising and, in particular, Google?

It's very apparent brand advertising tends to be pro-cyclical. When the economy goes up, it goes up. When the economy goes down, it goes down. On the other hand, direct marketing is definitely not pro-cyclical. ... And we feel that Google is more like direct marketing than brand...

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