Google: Its Not Only Microsoft That Should Watch Out

 
 
By David Coursey  |  Posted 2005-09-01 Email Print this article Print
 
 
 
 
 
 
 

Opinion: Google and Microsoft may be competitors in technology, but advertising is Google's real game, and traditional media companies like Disney better beware.

Many people believe that Googles biggest long-term competitor is Microsoft.

They look at Google as a technology company and since Microsoft is the largest and most successful diverse technology company, it must be Microsoft thats in Googles cross hairs.
That makes a good story and is doubtlessly true at some level, but its not the real game.
While Microsoft and Google are certainly competitors in technology, their revenue models are quite different. Where Microsoft sells technology and services, Google sells advertising. Thus, where revenue is concerned Google seems to have its sight more on Disney and other media companies than Microsoft. Click here to read about Googles recent venture into print advertising.
Sure, Microsoft sells some advertising and services, but Google gets 99 percent of its revenue from ad sales. The most recent evidence of Google being a media company is the companys move, seemingly tentative right now, to resell print advertising purchased in bulk to its AdWords clients. I am not ready to comment on whether this is a good deal for the publications involved, as that remains to be seen. But, if Google is successful selling print ads, whats next? Like Disney, Google could buy into "traditional" media companies, even broadcasting. And now that I think about it, the Six Flags amusement parts are for sale. Maybe what the world needs is "GoogleLand" where happy tots and their parents use the rides to search for things. Thus, Disney would own "the happiest place on earth" while Google could own the most confusing, if it doesnt already. You might think this is nuts, but Google is already going out for another $4 billion from investors, who seem quite content to pay $280 for a single share. Eventually they will discover what a media company is really worth. But theres no accounting for investor hysteria, is there? Because it relies on advertising for 99 percent of its revenue, Googles success doesnt come so much at Microsofts expense as it does other companies that sell advertising —this one included. Google managed to do something that no other Web company has accomplished: Sell targeting advertising to anyone who wanted it on a pay-for-success basis. This is really the companys greatest invention, its ability to charge companies small sums for sending qualified customers to their sites. The more amazing thing is that competitors havent really been able to cut into this. The move into print makes Google a more full-service advertising company. It appears Google is attempting to perfect a pay-for-performance model there as well. To read more about the competition between Google and Microsoft, click here. My understanding is responses to the print ads are filtered through Googles 800-numbers, allowing it to measure response. Google is not, however, without its vulnerabilities. Competitors will doubtless start eating into its AdWords business. There is also the increasing disconnect between Google and its users. I am sure Google would say no such disconnect exists, but when revenue comes from one place (advertisers) and the ability to earn that revenue from another (users), there is always tension and the side writing the checks usually wins over time. And, of course, there is the ever-decreasing quality of the Google search results themselves. Rather than getting into instant messaging and selling print advertisements, Id much rather Google do something to clean up the results it presents and to make them dramatically more useful. Whatever Google does, Microsoft is well-positioned to counter it. Not so the media companies, for whom Google has already become a transforming force and will only increase in strength if it can do to print advertising what its already done to the online world. Contributing editor David Coursey has spent two decades writing about hardware, software and communications for business customers. He can be reached at david_coursey@ziffdavis.com. Check out eWEEK.coms for the latest news, views and analysis on enterprise search technology.
 
 
 
 
One of technology's most recognized bylines, David Coursey is Special Correspondent for eWeek.com, where he writes a daily Blog (blog.ziffdavis.com/coursey) and twice-weekly column. He is also Editor/Publisher of the Technology Insights newsletter and President of DCC, Inc., a professional services and consulting firm.

Former Executive Editor of ZDNet AnchorDesk, Coursey has also been Executive Producer of a number of industry conferences, including DEMO, Showcase, and Digital Living Room. Coursey's columns have been quoted by both Bill Gates and Steve Jobs and he has appeared on ABC News Nightline, CNN, CBS News, and other broadcasts as an expert on computing and the Internet. He has also written for InfoWorld, USA Today, PC World, Computerworld, and a number of other publications. His Web site is www.coursey.com.
 
 
 
 
 
 
 

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