I've nailed down my Halloween costume. I'm going to be a devil's advocate. Trick or treat, Pollyanna!
To get warmed up, I may as well go for a little target practice on Google (NASDAQ:GOOG). The dot-com bellwether reports its third-quarter results tomorrow night, and everyone seems to be banking on a winning performance.
After all, Google has been growing during the industry's downturn as lesser online advertising players Yahoo! (NASDAQ:YHOO), Microsoft (NASDAQ:MSFT), ValueClick (NASDAQ:VCLK), and Time Warner's (NYSE:TWX) AOL go the other direction.
Google doesn't provide profit guidance, so it's commendable that it stared down the recession and surpassed profit expectations in each of the four previous quarters. Why would the positive trend falter now that the economy is showing signs of life?
Well, a stumble could happen.
Analysts are expecting a record quarter out of Google -- and why not? Paid search has thrived as advertisers migrate to the platform that offers immediate accountability. However, paid search may not always be the superior marketing platform. Click fraud is a concern, as rivals or third-party publishers can milk budgets dry without delivering real leads. Sponsors can also learn to bid smarter.
If you don't think paid search is vulnerable, ask yourself why Google is beefing up its graphical ads. From YouTube to its $3.1 billion deal for DoubleClick, Big G seems to be telegraphing a broader online advertising strategy. Is this a logical extension or the first signs of desperation?
Furthermore, am I bold enough to predict that Google will disappoint investors tomorrow night? Sorry. I'm not that crazy. Google rocks. That devil's advocate costume doesn't even come in my size.
Google's actions can't be dismissed, and shareholders can't bank on the paid-search model forever. Tomorrow, though, a bullish stance on Google is a good bet.
