Say it isn't so: Google, Inc. (NASDAQ: GOOG) may be tightening its always-loose belt and reigning in costs as the economy tries to pick its way out of a recession. The company that prepares free gourmet lunches for employees and gives extraordinary time for employees to develop pet projects is pulling things into reality a bit.

Revenue growth at the search giant has slowed in the last year, as even internet advertising has slowed down in the face of a prolonged economic crunch that we're experiencing. Like many of us here at BloggingStocks have said for years, almost all of Google's revenue comes from online advertising. It was late to the game in trying to develop other revenue sources (yes, even a year makes a difference), and the incremental gains the company has seen in revenue still mostly revolve around some form of advertising. What happens when customers have no budget to advertise?

Google CEO Eric Schmidt told the Wall Street Journal that "We have to behave as though we don't know" (what's going to happen). Google will be cutting efforts to projects that have not caught on, aren't generating revenue and
also cutting back efforts on products that aren't exciting. Google's leader indicated that the company needs to "prioritize our resources and focus more on our core search, ads and apps business." That's great, except the "ads" part..

Google still has the model of envy when it comes to ad-based online revenue, but now it's having to stretch ads into more of its properties, like Google Finance and Google News. Can Google find more revenue engines than those small text ads that appear next to its search results? It has to -- it can't continue the same way of generating its cash flow and expect things to turn out alright in the future. Is Google a one-trick pony? Could be, although it's still too early to tell.

Google, Inc. (NASDAQ: GOOG) continues to be a high-flying stock, closing yesterday at $641.68. While some think Google will reach $1,000 per share in the near future, some aren't sure. With "growing signs that the U.S. economy may be headed for a downturn," can Google keep up its magnificent pace as a growth stock and a company known for ever-growing quarterly revenues?

Google's business model could actually be helped by an economic downturn. The company is in a position to weather conditions that would make many industries swoon, and that's by design. By being a virtual company, you can imagine the layers of insulation Google has from nastiness in the economy. No physical inventory, no product cycles, no commodities, etc. Must be nice.

But if advertisers lessen their spending during times of financial crises, Google could get hit. Its network completely relies on advertisers and little else at this time. This is where the difference between graphic and text ads show up -- those Google text ads are displayed while customers are actively engaged (at least, partially) in searching for a product or service.

Though Google's graphic ads are threatening the revenue base of television networks and other types of media, advertisers still want to value for their money. If advertisers start to think Google ads are losing their effectiveness,
the stock is not headed to $1,000 anytime soon.

According to a story in The Guardian [registration required], Google (NASDAQ: GOOG) is testing ways of incorporating ads (and bringing in ad revenues) into YouTube videos. The head of Google's European operations, Patrick Walker, said that the company was testing the concept of offering people and companies that post videos half of the ad revenues, if they agree to allow a 30-second spot to run before the video.

He said the company is looking for solutions that don't ruin the viewer's experience. IMHO, thirty seconds isn't much to tolerate for a half-hour show, but might be a major hurdle for a two-minute clip.

Howard Lindzon of Wallstrip earlier this week told Variety much the same thing, but suggested the program could be rolled out as early as next week. Apparently, Google has been testing the concept on their Google Video site.

Walker went on to say that Google expects the YouTube ad stream to start bringing in "real money" in 2008. He also expects that more professional content producers will be eager to post their product once a shared revenue stream is in place. Spanish, German, and English television networks have recently agreed to create branded YouTube promotional channels.