Over 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 â€œto organize the world’s information and make it universally accessible and useful.â€? Google has become a pure advertising network.
First, letâ€™s look at their history. Google search was extremely innovative for its time and thereâ€™s little argument that it delivered the best results. But Sergey and Larry just couldnâ€™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 â€œCPMâ€? 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 â€œcool.â€? 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 & spreadsheetsâ€¦ and donâ€™t get me started on YouTube.
But what a lot of people donâ€™t see through the plethora of product releases and purchases is that Googleâ€™s only real business is ad serving, and theyâ€™re aggressively moving to dominate (I stop short of the word â€œmonopolizeâ€? 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 theyâ€™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, â€œWhy is a search engine getting into TV, radio, and newspaper ads?â€? 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. Thereâ€™s nothing more American than trailblazing and profiting from it. But Googleâ€™s mission simply is no longer to organize the worldâ€™s information. Selling ads on TV networks, in papers, and on the radio surely has little to do with organizing information. Googleâ€™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 theyâ€™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, youâ€™d hire them, too.
Itâ€™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 doesnâ€™t matter. They arenâ€™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 donâ€™t fault Google for any of this. A company has to make money, particularly a public one. But letâ€™s just call an ad network an ad network.
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