Google sees Web search less exposed to mortgage woes

By Michele Gershberg

NEW YORK (Reuters) - U.S. mortgage lenders are cutting advertising budgets due to a global credit squeeze, but they are not likely to reduce Internet search marketing anytime soon, executives at search leader Google Inc said on Thursday.

A meltdown in subprime mortgage debt -- made to borrowers with weak credit histories -- triggered a global scare over banks' exposure to a wide range of high-risk debt and stoked recession fears.

The advertising and media industries are just beginning to feel the pressure, but some outlets may be more vulnerable than others if a wider swathe of financial services advertisers cut spending.

"We have heard anecdotally from several advertisers that they are cutting their spending," Jon Kaplan, director of financial services advertising at Google, told Reuters. "People are cutting their budgets but (Web) search is not the first thing, it's the last thing."

Advertising based on Web search allows marketers to tout their services to people when they look for information and track the response to such commercial messages. As a result, it remains a key outlet for mortgage lenders to cultivate new business leads, Kaplan said.

Google's biggest mortgage industry advertisers spent on average $3.5 million apiece on search ads in the first quarter, compared with $1.9 million in the year earlier period.

At a meeting with reporters in New York, Google ad executives portrayed its services for placing ads on its search page and across Internet sites as more finely attuned to economic changes, yet less likely to be hurt than other outlets when growth slows.

"Every single day that somebody is looking for a mortgage ... these campaigns from these financial customers are on 24-7, 365 days a year," said Tim Armstrong, president of Google's advertising division in North America. "So our ecosystem actually mimics what the GDP looks like."