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Google (NSDQ: GOOG) has been battered by the recession along with everyone else, but an analyst note from Bernstein Research’s Jeff Lindsay says that could be about to change. He sees the company reversing the dismal revenue-per-click performance that have impacted all search ads by walking away from “unfavorable” AdSense for Search and AdSense for content deals. Specifically, Google is not expected to maintain the current revenue guarantees and what Lindsay said was “exceptionally high” rates it pays to partners such as AOL (NYSE: TWX) and MySpace for traffic acquisition. In turn, Microsoft (NSDQ: MSFT) will likely pick up some more business as Google casts off more and more deals. Lindsay anticipates some negative press for the search giant as a result along the lines of “Microsoft snatches XYZ deal from Google.” On the other hand, Google will also be able to avoid more news like the write-down of $726 million tied to the “strategic investment” involving the AOL AdSense for Search deal.
— YouTube revs poised to grow 81 percent (next year): Separately, Lindsay is bullish on YouTube, but acknowledges that strong growth is still a long way off and depends mostly on the recession ending. The Google-owned video site’s revenues are likely remain very small through the end of this year: around $123 million. But YouTube’s ad coverage is growing and that should make it better positioned when CPMs recover in 2010. At that point, YouTube’s revenue is expected to surge 81 percent to a $222 million — still a long way off toward making up the $1.6 billion Google paid for it.