Nicholas Black on Google Inc. (GOOG) until Jan 01, 2012

The stress that Google are putting on expanding their adwords program to the SMB market during the economic downturn is going to result in a large increase in earnings. With more than 5 million small businesses in the US according to the BLS, with an average spend of $2,000 a year on online marketing, this is basically a virgin market.

With online commerce growing at 15% year over year and expected to stay that course, search marketing (adwords is mainly a search marketing platform) will be the most targeted form of online marketing.

The adwords product keep getting more and more convoluted, which makes self management less likely. Hiring outside resources cost more every month than a yearly online marketing budget for an SMB.

The agency solution for SMBs of having a managed adwords account will be compelling for SMBs, and that is exactly where Google are focusing their AdWords expansion. Using agencies as channel partners to the AdWords platform.

Google will perform better and better with this strategy as it removes much of the complexity (working with agencies to manage SMB accounts) for SMBs when interacting with their cheif money-maker.