Bill Tancer of Hitwise responds to the debate, prompted by comScore and then a UBS report, speculating that Google and search are being directly affected by the recession:
If a recession is in fact affecting search, we should see a drop in the amount of traffic going from Google to retail sites (our Shopping & Classifieds category). The following chart shows the percentage of traffic over the last three years actually increasing.
This where I leave the “is Google going down debate” and go off on my own tangent.
Ecommerce is less than 4% of US retail but the Internet is growing dramatically as an influence over offline purchases in local stores, dealerships, etc. (almost $500 billion today). When considered in the context of real-world consumer behavior — there are lots of studies that validate this proposition — it must be inferred that the majority of that shopping/classifieds search referral traffic that Bill is talking about is ultimately local.
Even though it’s hypothetically possible to fulfill these queries online via e-commerce that’s not really happening. (E-commerce growth has slowed to roughly 19%.)
Source: US Census Bureau
The local intent here is totally hidden because the queries are about products or brands and have no geo-modifiers. But the transaction ultimately takes place in a physical place in the real world in the overwhelming majority of the cases. And if the linkage between the brands/products and where to buy them locally were more pervasive and obvious we would see much more clearly that product search is part of the story of local.
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Related: Patagonia selects Where2GetIt to power a real-time inventory/product locator function:
Where 2 Get It manages multiple daily inventory management updates from Patagonia’s online retailers, providing automated inventory level reporting to ensure that search results are in line with actual product availability.
This kind of thing is going to be increasingly common. Between Shopatron, Where2GetIt and NearbyNow, much of the popular retail product database is probably already online.
Screenwerk 
February 26, 2008 at 10:22 pm
Nice chart. Don’t see too many like those – anywhere.
February 27, 2008 at 4:15 pm
In a downturn, people will buy less so they will do less research then at other times and G will potentially not be able to grow as fast as they had. It is natural for G queries to be affected by large changes in buying patterns the same way it is affected by seasonality. This has nothing to do with whether people are preferring to “shop” locally online first. Of course they are and adoption numbers will continue to trend upwards despite economic conditions. It is precisely these local consumer behavior changes that will lessen the affect of an economic downturn on G or others as they, unlike other types of companies, will be in position to acquire new local shoppers that are adopting search as their preferred method of “shopping” locally. We will have that wave to ride for many more years and certainly beyond this so-called recession.
February 28, 2008 at 5:24 pm
But Hitwise and comScore show that there hasn’t been a decline in the volume of shopping queries. That, as you suggest, would be the leading indicator of a decline in paid clicks.
February 28, 2008 at 9:42 pm
Could a recession instead increase search traffic?
February 28, 2008 at 11:27 pm
Could under the following scenario:
People become more careful and price sensitive so their search activity increases to gain more data/information about products and sales.
February 28, 2008 at 11:40 pm
Said another way – I was thinking because they have less money and more time.
February 29, 2008 at 3:43 am
Or possibly little time and even less money.