Why Google doesn’t care about Search

GoogleOver the past couple of years, it has become increasingly clear that Google is no longer in the search business. Sure, Google.com is a search engine, but the real business at Google is no longer to provide the best search engine. Its mission is no longer “to organize the world’s information and make it universally accessible and useful.â€? Google has become a pure advertising network.

First, let’s look at their history. Google search was extremely innovative for its time and there’s little argument that it delivered the best results. But Sergey and Larry just couldn’t make any money with search until they plugged in a brilliant system to display ads alongside their search results. In a world that had been dominated by “CPM� ads that gave advertisers no guarantees of a return on their advertising dollar, AdWords required that advertisers only pay for clicks, and it weighted ads based on their performance so users saw the most relevant ads. AdWords revolutionized online advertising just as Google had revolutionized online search.

So what does a company do when they have such a brilliant ad serving tool? They syndicate it. Google released AdSense to let other websites benefit from the performance-based ads that were already doing so well on Google.com, and they took a cut of every click purchased through their system. Another brilliant move.

The ads then spread to Gmail. A few paranoids complained of privacy invasion, but eventually everyone got used to ads next to their (free) email, and everything went back to normal. Google had yet another channel in which to deliver their ads, and the cash flowed in faster than their Money-Counting department could keep track of it.

So what do you do when you have more money than you know what to do with, and your founders are true tech geeks? You develop or acquire companies that do anything you consider “cool.� Have you seen the list of products that Google offers lately? If not, check it out here. Item after item, most of these make no money and have no plans of making money. Gtalk, reader, catalog search, notebook, co-op, code, calendar, docs & spreadsheets… and don’t get me started on YouTube.

But what a lot of people don’t see through the plethora of product releases and purchases is that Google’s only real business is ad serving, and they’re aggressively moving to dominate (I stop short of the word “monopolize� here) online advertising and expand their control of ad delivery into other mediums. Google is adding pay-per-action ads to AdWords which is surely devastating news to other CPA affiliate programs like Commission Junction. With their recent purchase of display advertising market leader DoubleClick, Google has gobbled up even more territory in the online advertising landscape, and now they’re moving to do the same thing by extending their AdWords architecture offline to TV ads, radio ads, and newspaper ads (so far with little success.)

One might ask, “Why is a search engine getting into TV, radio, and newspaper ads?� The answer is this: Google is no longer a search engine. They are an advertising network. Google search is simply a distribution channel for their advertising platform, just like the thousands of other sites that use AdSense. The other Google projects like Gmail, Reader, Maps, and the rest, are all either channels for Google advertising or tools to build brand loyalty.

Is this a Bad Thing? No, of course not. There’s nothing more American than trailblazing and profiting from it. But Google’s mission simply is no longer to organize the world’s information. Selling ads on TV networks, in papers, and on the radio surely has little to do with organizing information. Google’s real, updated mission is to provide the best value to advertisers and the best experience to consumers. This is a noble or at least honorable mission in itself, if not as philanthropic is their original one.

And yes, this means that all those brilliant MBAs and PhDs they’ve shipped in to Sunnyvale are pretty much just working either on new ways to deliver advertising or new venues on which to serve it. If you could figure out a way to make PhDs return 100x their salary as revenue, you’d hire them, too.

It’s a very smart move, really. Google surely realizes that their search may not always dominate. For the past few years it seems that their only updates have been to defeat Google-spammers and aggressive SEO techniques. They know someone will beat their search eventually, particularly as social search gets better. But Google knows that it doesn’t matter. They aren’t in the Search business. As long as they control the delivery of advertising, they make money. Every company they buy and every technology they develop, is either directly tied to creating ad inventory or just building loyalty to Google.

Mind you, I don’t fault Google for any of this. A company has to make money, particularly a public one. But let’s just call an ad network an ad network.

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  1. “Google search is simply a distribution channel for their advertising platform.” You nailed it. Not that it should come as a surprise to anyone. Look back at the beginning of radio or TV. Hello? Kraft Television Theatre? The Motorola Television Hour? The purpose of mass media has always been to be a distribution channel for advertising. It’s no surprise that search has joined newspapers, magazines, radio and television as part of the mass media landscape.

  2. This except from a recent Wired magazine interview with Eric Schmidt pretty much says it all:

    “Wired: How should we think about Google today?

    Schmidt: Think of it first as an advertising system. Then as an end-user system — Google Apps. A third way to think of Google is as a giant supercomputer. And a fourth way is to think of it as a social phenomenon involving the company, the people, the brand, the mission, the values — all that kind of stuff.”

  3. I think the reality is less simplistic than you’re making it out to be. “Google is no longer a search engine.” That is simply not true. Ionut Alex Chitu has an excellent article (referencing your own) contradicting that assertion. http://googlesystem.blogspot.com/2007/04/what-has-google-done-in-search-lately.html

    You’re absolutely right, Google is an ad network. That does not mean, however, that it just gave-up the quest “to organize the world’s information and make it universally accessible and useful”. It just means that the latter will take a bit more time.

  4. Perhaps they haven’t given up, but I’d argue that it conflicts with their primary business model right now. As soon as Google’s growth slows a little and they have to focus on the bottom line again, we’ll see where their “organize the world’s information” efforts get prioritized compared to their ad network projects.

  5. While you make a great point, Joel, I believe the two go hand-in-hand. The more you “organize the world’s information”, the more you can serve ads on top of it. :-)

    I’d also like to point out that Google is now rapidly moving into the software market. Just ask Microsoft. This wouldn’t fit the definition of a “pure” ad network. Like you said, Google is a business interested in the bottom line. I just don’t think that this is a contradictory goal from their nobler “mission statement”.

    It takes a lot of money to organize the world’s data. It also takes putting your eggs in a lot of baskets. Google seems to have Green Eggs, and we’re enjoying the Ham.

    So, to respond to your last comment, I would just say that there simply is no prioritization when it comes to Google’s philanthropic efforts : You gotta have the cash to do it in the first place.

  6. That argument seems to raise this question: are they organizing the world’s data to turn a profit, or are they making a profit so they can afford to organize the world’s data? I’m pretty sure I know which one of those their shareholders would be voting for. :)

  7. “The greater the profit the greater the greed.”

    Greed has finally infected a once remarkable company. Those college ‘kids’ grew up and have become infected with the corporate mentality that has just about ruined this country.