Nikesh Arora knows his place. Since he was promoted to president of global sales for Google, he has taken on a raft of new responsibilities.

These days, Arora’s eye is trained on Google’s revenues, which totalled $21.8 billion (£14.4 billion) last year and are now his primary responsibility. Part of that is maintaining good relations with the company’s 1m advertisers in 60 countries.

However, the Indian-born executive, who ran Google’s operations in Europe, the Middle East and Africa for more than four years, draws the line at calling the end of a recession that has even started to eat into the revenues of the internet search giant.

“I would say we are seeing stability in a majority of markets,” said Arora. “I would say it is still too early to call [a recovery] based on consumer behaviour and corporate behaviour. I will leave that job to people who do this for a living.”

Arora may be pressed further for his views tomorrow. The recession and how to tackle it will top the agenda at Google’s annual Zeitgeist event at The Grove hotel in Hertfordshire.

Originally designed as a get-together of Google’s leading advertisers, it has morphed into a gathering of business leaders and politicians who are keen to keep pace with the latest digital trends.

Speakers in previous years have included Gordon Brown and David Cameron. This time, Virgin’s Sir Richard Branson will take to the stage with Google chief executive Eric Schmidt and co-founder Larry Page.

On Tuesday, the Prince of Wales, a former technophobe who recently starred in a YouTube video alongside a digital frog to highlight the plight of the rainforests, will speak about the campaigning power of the internet.

The mood, triumphal in previous years, is expected to be more muted. Google is 11 years old but this is the first time it has been hit by a recession, showing that even rampant internet growth is not immune to a collapse in confidence. The company has even been cutting jobs.

“We have never had experience of this scale of change in the economic environment – I don’t think anybody has,” said Arora. “What is fascinating is I don’t think that overall [online] activity is going down. People are still using ample amounts of video, they are still searching. We don’t see any marked changes in how people are using technology.”

Handling 100m requests for information every day, Google is in a unique position to discern what is on consumers’ minds. Searches for “green shoots” on its website are up threefold in the past month, but economists reckon that is more a triumph of hope over experience.

The feeling of austerity shows up in searches for “clothes swap”, which are up 190% compared with the same time last year. “Stew” is up 39% as people stay at home and cook. If they do head out for dinner “restaurant vouchers”, up 14-fold, are likely to be tucked into their wallets.

There is also a lot more browsing going on. Searches on all the big search engines combined increased 15% last quarter, according to Comscore. Part of that comes from more window shopping, which it seems takes place as much on the internet as it does on the high street.

Globally, Google suffered its first sales fall last quarter, down 3% on the previous three months, though revenues were still up 6% compared with a year ago. “Consumers are shifting from high to low-priced goods. The volume of activity may be falling at the margin but there is a bigger price shift going on,” Arora added.

Ian Maude, head of internet at Enders Analysis, estimates that Google’s gross UK revenue stood at £440m in the first quarter, up 8%, compared with 37% growth in the same period last year. Local newspapers, by contrast, are facing up to falls of more than 30% while television advertising is declining at a rate of 15%.

“The internet is still at a much earlier stage of development than any other medium,” said Maude. He forecasts a mild pickup for Google UK in 2010, with growth accelerating towards the end of the year.

Steve Leach, chief executive of the search marketing firm Big Mouth Media, said: “If there is a performance-based element, as in our industry, advertisers are less likely to cut back.”

Arora said that advertisers’ responses to the recession differed. Small and medium-sized companies were largely unchanged, while many bigger advertisers had made a blanket cut before Christmas. “Some of them have taken a hatchet and cut 10% across everything,” he said. In Arora’s new job, the idea is to diversify. In selling words to advertisers so their brands can be displayed alongside users’ search results, Google has been fantastically successful. However, expanding offline into selling advertising space for newspapers and radio has been scaled back.

Arora sees “tremendous opportunity” in developing online display and video advertising, even for YouTube, the video website it owns. Making money out of things like the talent-show sensation Susan Boyle has been tough, not least because of copyright disputes.

“It becomes very important for us to be able to crack the code and see how you can bring those different forms of advertising to the same set of advertisers,” said Arora. “That is what I spend my time trying to figure out.”

At the same time as hunting for new revenues, Google is constantly experimenting with new services. For example, instead of a list of web links, Google Squared presents searchers with a spreadsheet of facts and figures pulled from other people’s websites – making them less likely to click through to a rival site.

Services like this raise the hackles of content providers. Rupert Murdoch, chairman and chief executive of News Corporation, the parent company of The Sunday Times, believes it is time to take back the initiative by charging for more content online.

Like a good politician, Arora strikes a conciliatory note. “I have always held the view that there is value for content that is created with thought and that consumers deem valuable. The strong will survive. There is no reason for people who do this right to feel concerned.”

Talks between Google and The Washington Post could lead to a news service with some kind of revenue sharing. And collaborations are gaining ground elsewhere. Yell.com became the latest reseller of Google’s Ad Words last week – essentially acting as a middleman for plumbers and florists that want to reach a wider audience.

For some, it seems that making powerful friends, not enemies, is the best way of battling through the recession.

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