It was a small but notable part of Google's Q1 lackluster earnings report yesterday afternoon: Revenue from the AdSense program slid 3 percent from the prior year's period and 3 percent compared to Q408. While most analysts skipped over AdSense in their morning reports, three analysts I spoke to said they didn't find much cause for concern there. AdSense's declines were "not an issue. The AdSense business is being impacted by quality clean-upi.e. removing some partners, weak partner performance (i.e. AOL (NYSE: TWX) & Ask.com). The macro [problems are ] hitting partners more than Google (NSDQ: GOOG), and hitting display (AdSense for content) more than search."
The analyst also pointed out that Google is still gaining the share of overall search, so some of it is coming from AdSense for search partners. Analysts expect AdSense to return to growth as display ramps up with DoubleClick integration and the new Google ad exchange product.
By David Kaplan