Steve Rubel posted about a
recent story on Marketwatch that questions Google's future due to its lackluster performance in a few hot sectors, including blogging, social networking, and video sites.
From MarketWatch:
The No. 1 Internet search provider wants to succeed in three key growth areas: blogging, video sharing and social networking.
Yet in all three cases, Google Inc. is getting trounced by upstarts even as it enjoys a phenomenal lead in its core business.
At a time when Google can do little wrong in the market for text-based Internet search ads, the upstarts like YouTube, Technorati and MySpace are proving that the online search leader can be beaten in fast-growing and potentially-lucrative areas of the Web."
Wow, that sounds pretty grim. But does that jive with this:
Are those Google AdWords ads on YouTube? They sure are.
In fact, Google probably makes more money off of YouTube than YouTube makes off of YouTube. Google surely profits from the ads served on YouTube while YouTube is nowhere near profitable.
Then there's MySpace, where Google recently landed a
massive advertising deal with MySpace:
Google on Monday agreed to pay at least $900 million to become the exclusive provider of search technology and text-based advertising services on News Corp.?¢‚Ǩ‚Ñ¢s popular social networking site MySpace.com.
Under terms of Google?¢‚Ǩ‚Ñ¢s multiyear agreement, the Silicon Valley giant also will power search functions on a majority of Fox Interactive Media properties, which include video game site IGN.com and Rotten Tomatoes, a movie review publisher. Google will also provide text-based advertising and keyword targeted ads through its AdSense program.
To be fair to MarketWatch, their article was written before the Google/MySpace deal was announced.
While Google's blog search engine is marginal at best today, look no further than this site to see how Google is profiting from blogging today. Google AdSense is by far the market leader in blog monetization. While Technorati is the market leader in blog search, it doesn't look like they've figured out how to turn that into a profitable business yet.
Rubel reflects back on how Yahoo had to shake things up when the banner advertising market corrected:
"If this all sounds familiar, it should. Back in 2000 and 2001 Yahoo CEO Tim Koogle took heat on a similar topic - Yahoo's dependency on banner advertising. He waited too long to diversify the portal's revenue stream. Then, the bottom dropped out of Internet advertising and he
lost his job. In 2002, incoming CEO Terry Semel
set a course to add new revenue streams beyond display ads, which
Yahoo did through subscriptions, partnerships and acquisitions. Most notably, Semel was able to turn Yahoo quickly so that it capitalized on a brand new form of advertising - contextual search."
Yahoo turned things around by diversifying their revenue stream partly by including new forms of online advertising, including pay per click advertising through an Overture partnership and later acquisition. Yahoo didn't turn things around by getting into new markets. They turned to ad formats that were proving popular and profitable, dropped out of markets that weren't delivering a positive ROI, and ramped up in proven markets like jobs and personals.
Does Yahoo's turnaround story apply to Google's situation? I say, no. What do you think?
1. Posted by: Jos?ɬ© Joseph on August 12, 2006 3:08 AM:
Google will continue to have trouble in the blog sector as long as they censor and filter their results. Moreover, Google is actively promoting left-wing rubbish with unpleasant results.
Google is creepy to use when cruising blogs. I really don't like using it especially when they're promoting blogs that are friendly to terrorism.