Same week, opposite directions

On 29 October Alphabet had one of the worst days in its history. The shares fell 12.6%, taking close to $500 billion off its value. The same week, Stagwell, the agency group, went up about 6%.

You'd expect it the other way round. Agencies are meant to be the ones under threat from AI, and Google the one doing the threatening.

Look closer and it makes more sense. Google's revenue was still up 25%. The worry was underneath. Search grew 12%, down from 19% at the start of the year. Cloud doubled. Google spent $51 billion in one quarter, mostly on building for AI, and more money went out than came in. One analyst used the word "cannibalisation". People are asking AI the questions they used to type into a search box, and those answers don't come with ads in the same way.

Stagwell's growth came almost entirely from America. The US is 80% of the business and grew 11%. The UK was flat. The rest of the world went backwards, with the Middle East down by a third because of the conflict there. A midterm election year helped. The fastest-growing parts were technology and consulting, not traditional agency work.

A few things I'm taking from it.

Agency growth is a US story right now. Having spent years running offices across EMEA and APAC, that's the part I'd be watching. The UK was flat this quarter, after growing 13% the quarter before. So it's bumpy rather than broken. What's clear is the US, which has sped up every quarter this year.

The agencies doing well are selling technology and change. Stagwell's marketing software arm more than doubled. That's a different business from the one most of us grew up in.

Slower search is the other side of what I'm looking at with L.E.N. If fewer questions go through a search box, fewer answers arrive with an ad next to them. Brands still need to show up in the answer. They just can't buy the spot.

One quarter isn't a trend. But it's rare to see Google and an agency group move this clearly in opposite directions in the same week. I'll keep an eye on it.