Google, the multi-armed Shiva of modern technology companies, has experienced only moderate success in its endeavors outside of its core competency: search. Forays into and acquisitions of businesses with alternate business models such as social media (Orkut), micro-blogging (Jaiku), and wiki-format encyclopedias (Knol) have been met with mixed success. Even those Google ventures that maintain a good market share, such as YouTube and Blogger, have had revenue-generation models that were closely tied to search and paid-per-click advertising, Google’s bread and butter. Additionally, these services have not generated even a small fraction of what Google’s core business has.
It is easy to look at some of these acquisitions and endeavors and scoff at the quirkiness of feel-goodery web companies, especially one famous for its playfulness, relaxed work environment, and corporate policy that allows employees 20% of their at-work time for personal side projects. However, when a lot of these decisions are looked at in retrospect, the cleverness and interconnectedness of Google’s strategy is sometimes stunningly, sometimes almost scarily efficient.
A couple of examples, to reinforce my point that Google’s real strategy is not always that clear:
– Blogger: the free-to-use blog-publishing platform has absolutely no revenue stream in and of itself. However, the blog explosion of the early and mid-2000’s help to fuel Google’s AdSense program, which increased their “search partners”, “content network” and off-site (google.com) revenue stream.
– GOOG-411: Many questioned the wisdom of a “new media” company getting involved with the 411/directory business, especially as search seemed to be replacing the usefulness of such services. However, GOOG-411 was not an end-game business but rather a means to an end. Specifically, Google used the voice recognition data they received from GOOG-411 to develop their search-by-voice apps which are now available on nearly every major mobile operating system. This development process, which seemed a little counter-intuitive when it first began, has given Google a foot-up in the mobile realm that takes advantage of the medium’s on-the-go nature and multiple hardware devices (with or without full keyboards).
– YouTube: Monetization of this social video site has been slow and Google has been losing millions every quarter supporting the massive infrastructure and bandwidth needed for the site. Very few would disagree with the idea that online video consumption will continue to increase exponentially, but in-video ads (which Google has been testing) do not seem to generate the volume of revenue that could push the site into the black. The real problem is that Google’s core competency, search, is hard to apply to videos where content is not easily indexable and so Google has had to rely on user descriptions which are very limited in their accuracy and usefulness. What Google needs/needed was an accurate way to index their massive video library so that video search could stand on it own, without inexact descriptions, reviews and comments propping it up, and so that the successful AdWords revenue model could be applied to the video site. With GOOG-411 and their newly enhanced voice recognition software, Google now has the technology to begin serious indexing of YouTube, or at least its audio. Wondering if they want to index the images of YouTube in the same, automated manner? Keep an eye on Google Image Search and the Android operating system for image-recognition technology and apps… that’ll be your first clue.
With the idea that Google pursues these side projects out of whimsy disproved, how do we perceive the search giant’s recent product announcements and strategy shifts? The increasing inclusion of Google Talk (chat and video messaging) across all their web properties, the emphasis of Google Profiles (a simplified Facebook parallel) within search and other services, and the introduction of Google Wave (a real-time collaboration and communication platform), seem to represent parts of a comprehensive social networking strategy. Pair these with Google Friend Connect and Google’s involvement with open social network standards, such as OpenID and OpenSocial, and it becomes relatively apparent that Google wants to become the driving force or the at least the connecting glue for a new, decentralized social media landscape.
So, what does Google’s push into social networking mean for advertisers? Well, if Google becomes more involved in this industry, advertisers may see the sort of increased effectiveness, ROI, and trustworthiness that they’ve come to expect from Google translated into the sometimes risky arena of advertising on social networks. This development, if successful, will be good news for advertisers, good news for Google, and if their platform is truly open and as flexible Wave and their other solutions seem, then it will also be good news for users who are already losing valuable time managing multiple social network accounts with different logins, components, and quirks.
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