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Are Google Ad Words An Economic Indicator?

Every day Wall Street looks to a range of indicators to give a hint at where the economy and the stock market is headed. From GDP and industrial production to commodity prices and consumer confidence, even the Baltic Dry Index (worldwide shipping rates), there are dozens of factoids that investors consider when formulating their outlook and strategy. People even talk about the "underwear indicator". So why not look to Ad behemoth Google for a sign of which key words are attracting what kind of ad dollars?

Google's AdWord rates, set by an auction system, reveal what search topics are most popular to advertisers, and thus to consumers. BNY ConvergEx Group released a fascinating report that broke down what the prices say about the state of the economy. Bottom line: it's not good. The highest prices go for ads for "budget offerings and services that cater to a recessionary environment." Maybe this is a trailing indicator, but still, there no green shoots in this study.

The most expensive ad words, going for nearly $65 a click, are for businesses that cash out long-term structured settlements in a lump sum. (Translation: people are desperate for cash, fast.) This must be a profitable business, and companies J.G. Wentworth and Woodbridge Investments are paying up to reach those consumers. The second most popular type of ad word seems to be auto insurance quotes, going for about sixty bucks a click. BNY ConvergEx notes that the U.S. auto insurance business spends more on ads than beer companies do and that these companies benefit from the fact that every car-owner is required to have insurance. Advertisers are also willing to pay big for various legal services, especially those which people need to get resolved asap. (I guess marketers like the idea of a desperate audience).

And then there are the assorted indicators that the economy is still hurting. People are searching for coupons, not whole foods. The price of real estate ads has plummeted. And people are spending a lot more on ads to find cheap cars and sell their cars, than they are to buy a new car. Conference calls - "conference calling services," "business conference calls," and "corporate conference calls" - showed up three times in the top twenty most expensive AdWords. Why? For one thing, small businesses are trying to cut overhead costs and free conference calls are a good place to start.

Questions? Comments? MediaMoney@cnbc.com

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.