Google Should Buy Twitter to Battle Facebook but Won't

 
 
By Clint Boulton  |  Posted 2010-10-03
 
 
 

Google Should Buy Twitter to Battle Facebook but Won't


When Google CEO Eric Schmidt was asked what he thought of Twitter Sept. 28 at TechCrunch Disrupt, he acknowledged that the microblog should be able to come up with ad products that are highly lucrative.

"We think they are going to do very, very well," Schmidt said, adding that the platform has scaled well.

While he declined to comment on whether Google would try to buy Twitter, his otherwise frank assessment triggered a new avalanche of discussion about whether Google should bid for Twitter to compete with Facebook in social media.

Facebook has garnered more than 500 million users in six-plus quick years. Google, which is twice as old as Facebook, has more than 1 billion searchers, but these folks come to its search engine for a quick information fix.

Facebook, with all of its content sharing and communications tools, is sticky. In August, the social network surpassed Google in total minutes users spent on the Website. The low barrier to entry and stickiness make Facebook a tantalizing proposition for social media advertisers.

There is talk that Facebook will soon partner with Skype for some VOIP (voice over IP) integration, which would boost its communications quotient. Worth a reported $33 billion on paper, Facebook's IPO will be the next hottest meal ticket when it finally comes in the next few years.

So forgive people when they say Google, which has fallen behind in the social media game after launching orkut, Google Social Search and other meek tools, needs to do something big to-if not steal some of Facebook's magic-temper its rise.

Dave McClure, founding partner of the 500 Start-Ups seed fund, told Reuters about Google:

"Is there a scenario where you think you don't have to buy Twitter in the near future? I don't see it. Whatever your math is, you better do it soon, because you're getting killed by Facebook."

Business Insider's Henry Blodget noted that in addition to the potential Skype integration, Facebook could build a search app "that starts siphoning some search revenue away from Google" or even replace the browser and desktop for some people, blighting Google's growth.

Buying Twitter, which has more than 160 million users, would significantly boost Google's place on the social media meter. Of course, not everyone believes Google has to buy Twitter, for what Blodget said could be $5 billion.

Forrester Research analyst Augie Ray scoffed at the idea that Google must buy Twitter to get credibility in social media. With $24 billion-plus a year in advertising, Google is doing just fine without it.

Ray added that Google is building up its social media arsenal with smaller acquisitions, such as Slide, Jambool, Angstro and SocialDeck. Leveraged appropriately for Google's 1 billion searchers, Ray believes Google still has time to prove its merit in social media.

"Google is facing no problems so pressing that it needs to leap into an acquisition merely to appease those who feel it has a social media credibility problem," Ray concluded.

Drawing on the history of Twitter's management, search engine expert John Battelle said Google won't buy Twitter because the company won't sell to Google or anyone else.

Google, Twitter Deal Leads to Ad Power


 

Noting that Twitter founders Evan Williams and Biz Stone already sold Blogger to Google and left and that COO Dick Costolo did the same with Feedburner, Battelle wrote:

"They've got a tiger by the tail, the chance to build an independent, lasting legacy that will cement each one of them forever into the immortal tablets of business history. It's really, really hard to pass that chance up, especially if you've already gotten a score or two under your belt."

For those keeping score, experts have outlined that Google should buy Twitter or risk sponging the crumbs off of Facebook's social networking table. Other experts counter that Google is doing just fine, or that Twitter won't sell.

Forget social networking firepower for a second. Google should buy Twitter because it stands to be an advertising cash cow.

Twitter is charging $100,000 for Promoted Tweets, Trends and, soon, Accounts. Starbucks and other big-name advertisers are reportedly lining up to cash in on the microblogging madness.

Google's core business is advertising off of Internet content, so now that Twitter has proved it can monetize, it should be Google's top tech target.

At what IDC claims is some 21 percent of the mobile ad market, Google has hardly cornered the mobile ad sector. Twitter, with its mobile applications and third-party developer ecosystem, portends financial potential beyond what we can even imagine now.

That's why Google should buy Twitter. But there are others out there who don't necessarily see Promoted Tweets as the promised land for Twitter.

Arnie Gullov-Singh, CEO of Ad.ly, which has completed 10,000 in-stream advertising campaigns on Twitter, believes in the Twitter platform.

However, he hardly believes Twitter's Promoted suite of ad tools is the best answer because it won't scale. Advertisers, he said, must pay $100,000 for a single link on the Trending Topic on Twitter's home page.

He said it creates new challenges because Twitter asks marketers to earn the right to advertise by tweeting out enough clever content to build up an engaged following before they can spend money. Ultimately, he believes this is untenable.

"Does Google ask marketers to master SEO [search engine optimization] before they can buy AdWords? Does NBC ask marketers to write Emmy-winning dramas before they can buy a spot? The point of paying for media is that someone else has done the creative or editorial work to attract an engaged, large-scale audience that fits your target." 

Even so, Google has enough advertising talent to find additional ways to monetize Twitter.

Considering that Schmidt publicly stated that Twitter should be able to build "highly lucrative" advertising products, you can bet his executive team has discussed what they would do if they got their mitts on Twitter. 


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