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Circling the wagons around Google

ComScore comes out with its second take in a week--this time to counter the impression it believes Google's in trouble. Now all it needs to do is convince the rest of the world.

Earlier in the week, ComScore reported that Google's paid clicks dropped 7 percent between December and January. That was enough to panic already nervous shareholders who proceeded to dump Google's stock in one of Wall Street's (increasingly common) panics.

But Friday morning the Internet ratings agency issued a brief statementmeant to contradict the impression that it believes Google has sprung a leak.

"...the evidence suggests that the softness in Google's paid click metrics is primarily a result of Google's own quality initiatives that result in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur. In addition, the reduction in the incidence of paid listings existed progressively throughout 2007 and was successfully offset by improved revenue per click.

"It is entirely possible, if not likely, that the improved revenue yield will continue to deliver strong revenue growth in the first quarter. Separately, there is no evidence of a slowdown in consumers clicking on paid search ads for rest of the U.S. search market, which comprises 40 percent of all searches."

That's one heck of a circumlocution: Maybe it's me but it recalled that signature line from the Wizard of Oz: "Don't pay attention to the man behind the curtain." For the record, ComScore's PR department told me that it decided to publish the statement because journalists were drawing incorrect conclusions from the data. The spokesman also said Google had not pressured the ratings agency to act.

ComScore's "statement of analysis" was good enough to convince CNBC's Silicon Valley reporter Jim Goldman, whose reliably chirpy optimism about tech stocks seems to gain in the face of each massive sell-off. On his blog, he wrote:

"Yet even ComScore itself is re-evaluating its own data; not saying it got it wrong, but saying instead that the big January drop might come from improvements in Google's click programs and not because of some big drop off in business. ComScore says that since it's not tracking the same kind of drop off in business at other search engines, the issues might be from Google click improvements alone, and not some macro-economic factors instead."

That settles it then. Happy days are back? Well, not exactly. Goldman is part of the perma-bull crowd which predominates on CNBC. This bunch rarely gets out ahead of an economic trend--especially when the indicators start pointing south. I'm not arguing that Google's franchise is in deep trouble. At least, not yet. But who still believes that the company's search-based advertising business will remain intact in the face of a recession? Henry Blodget over at Silicon Alley Insider sure isn't buying it:

"This week, as analysts have rushed to check in with search engine marketers, we have heard reports of weakness in financial services, real-estate, and other categories. Athough Google's click improvement programs are almost certainly contributing to the paid-click fall-off, it seems unlikely that they account for all of it. We therefore continue to view the ComScore report as supporting the theory that Google is exposed to economic weakness."

Since the company went public in 2004, Google has become a Zelig-like metaphor, for bulls and bears. Both sides project what they want. The optimists justified a $700-plus stock price because they expected the good times to continue. The pessimists questioned why you would value a stock that highly with the housing and financial sectors of the economy blowing up and no end in sight. Where the bulls saw clear skies, the bears saw clouds. And so far, there's little argument about who is being proved right as of now.

For most of his tenure, Google CEO Eric Schmidt has had an easy time of it. If he's as good a manager as his press clips claim, now he'll have a chance to earn that reputation. History may not repeat itself exactly but if the economy slips further, a lot of companies will suffer more pain before the selling comes to an end.

Including Google.