Google (GOOG) Is Benefiting From the Wal-Mart Effect

StreetInsider.com - Piper Jaffray
"October 17, 2008 9:14 AM EDT

Piper Jaffray analyst Gene Munster commented on Google (Nasdaq: GOOG) after better-than-expected earnings results from the seach giant after the close, saying the company is benefiting from the 'Wal-Mart' effect that consumers will be searching more for bargains in tough economy.

Munster said, "The bottom line is the "Wal-Mart" effect in combination with our research which suggests advertisers are shifting from non measurable (display) to measurable (search) advertising, leads us to believe Google is positioned to resist the economic slowdown over the next year. While the Google results showed the September quarter was intact, investors could have lingering concerns that business slowed in the month of September. However, Hal Vairan, Chief Economist at Google, speculated on the earnings call that Google could benefit from a "Wal-Mart Effect" in the tougher economy, which leads us to believe that while not immune to economic slowdown, Google's business is resistant to a slowdown. The company described the "Wal-Mart" effect as consumers searching more for bargains due to a tougher economy. We believe it is reasonable that such an effect exists and note that it supports our thesis that advertisers will continue to buy keywords on Google because the customers will continue to be there."