Predicting Google’s Next 3 Moves

Between the potential of Facebook Ads and the launch of Apple’s iAds, many are wondering what’s next for Google. Despite the rumors around Google Me and the potential of Google Android, it looks like the company’s very next move might not be into social or mobile advertising. Rather, the company might be looking at additional ways to middle-man more of the ad-purchases across the net.

Some recent moves by Google and its properties indicate that the company is moving to address the concerns from investors that it has limited short-term growth potentials. Specifically, the company seems to be pursuing three distinct sets of short-term strategies for monetizing more of the third-party content on the web.

Three Short-Term Revenue Solutions

Although Google posted a 25 percent gain in Q2 2010 over the same quarter the previous year, Google stock has dipped 21 percent since January, suggesting that investors are beginning to lose faith in the company’s ability to move beyond click revenue. Google seems to be reacting to these trends by aggressively pursuing three additional ways of capturing online ad dollars and monetizing third-party content:

  1. New ad sales partnerships for Adwords
  2. New ad software acquisitions
  3. Added ad product development

On the sales partnership side, Google has struck a deal with Omnicon to bolster its display ad business. As the WSJ reported, Google will get guaranteed sales from Omnicon, and Omnicon will receive added technology and analytics support:

Under the deal, Omnicom […] is expected to spend hundreds of millions of dollars to buy display ads for its clients through Google over the next two years […] In return, Google will work with Omnicom to build a global “trading desk” that allows the company to buy display ads more easily on Google’s ad exchange, an auction-like system that matches ad buyers and sellers to advertising space across large groups of websites.

Omnicom says it was already buying ads on Google’s exchange using its own technology system.

As part of the deal, Google […] will provide analytics services to Omnicom to help it understand how its display ads are performing […]

As for new software acquisitions, it looks like a recent acquisition by Google may be integral to providing Omnicon with the aforementioned “trading desk.” Specifically, Google recently acquired technology that would allow them to middle-man ad buys on content and ad network beyond their own. As Adage reported:

Google recently acquired Invite Media, a company that specializes in software allowing advertisers to buy across multiple advertising networks, or what is known as a “demand-side platform.” Though he did not mention that acquisition, (President of Global Sales Operations for Google Nikesh Arora) suggested a trading desk-type system would be required to streamline the process for advertisers, which accurately describes how Invite Media’s software operates. “It allows very effective buying across the network,” he said of Google’s latest display efforts, “and every player in that ecosystem can get their fair share.”

Finally, some added product development seems to be coming to Google Ventures-backed Pixazza. The start-up has been on the campaign trail again, recently raising an addition $12 million for their crowdsourced “Adsense for images” platform. This new round of funding brings it closer to leaving private-beta, meaning that Google can soon be generating commissions from the third-party images that generate third-party sales. As TechCrunch reported:

Pixazza’s tagging technology is […] compelling; the startup crowdsources workers to list products and tag them with the appropriate link to a retailer. Additionally, Pixazza shares advertising and affiliate revenues with publishers.
[…]
The company has also announced that it reaches more than 25 million unique visitors per month through its 75-plus publishers, which include US Weekly and Access Hollywood. Of these visitors, more than 70% are based in the U.S. Additionally, Pixazza says that the startup delivers commerce-enabled photos at a rate of 8 billion image views per year, a 60% increase in the last three months.

Pixazza plans to use its new fund fuel product growth and expand to international markets.

Although this last pursuit is admittedly longer-term than the previous two, it still rests on a product that has an established market presence, revenue model, and client/partner base (unlike Google Me or any potential Android ad platform). Of course, the service will have to come out of private-beta before any final call could be made.

Short-Term Survival

It seems that Google has no shortage of options for bolstering its short-term revenue growth. Two of the three options, moreover, rest on expanding the potential of the already proven Adwords platform. These two should be sufficient to sustain investor confidence until the next big product roll-out.

That being said, the looming question is what that next big product roll-out will be. Facebook has such a lead on “social graph” data that it might be reckless of Google to invest too heavily competing with Facebook Ads. However, iAds also has the advantage of tapping into the data of 150 million iTunes users, 4-5 million iPhone users, and 225,000 iPhone apps.

So, yes, while Google has to still expand its revenue sources in the very immediate short-term, its market predominance will still depend on the development of some new longer-term product. In addition to developing the potential of existing products to their full potential, the company must still seek to innovate new technologies if it hopes to retain its prestige and dominance.

About CT Moore

A former Staff Editor here at Revenews.com, CT Moore is a recovering agency hack with over a decade experience leveraging search, social media, and content marketing to help brands meet their business goals online. He currently provides digital strategy consulting to start-ups, SMBs, enterprise level companies through his consultancy Socialed Inc.. CT is also an accomplished blogger and speaker who educates groups and companies on how they can better leverage different online channels.

4 Responses to Predicting Google’s Next 3 Moves

  1. Pat Grady says:

    "its market predominance will still depend on the development of some new longer-term product."

    i think this is that:
    http://www.mercurynews.com/ci_15106772

  2. CT Moore says:

    @Pat, I couldn't agree more. Such a TV deal would be fricking HUGE.

    What I wanted to focus on in this piece, though, is stuff that might considerably enhance their ad revenues in the next 6-12 months.

    If the TV deal goes through (and I hope it does in some form), it might take a couple years before it hits critical mass. You know what I mean?

  3. Pat Grady says:

    Yep, I know exactly what you mean!

    I am guessing that the transition will go something like this…

    first, a set top box (apple tv did it already, but didn't have a grip on ads yet, but iAds is coming)…

    then TVs integrated with specific partners like G (the news story i linked to)…

    that followed by others who compete with G…

    then an open source method emerges to encourage competition and remove the hardware limitations of having TVs built to interface with one specific ad and content delivery provider…

    then TVs will be built to allow consumers the choice of who their ad and content provider are, even switching on the fly. these TVs will be more like internet browsers than what we think of as TV today. and the internetification of TV will be complete…

    the concept of a TV broadcast network will have been obliterated and TV content will move towards being as diverse and granular as websites are today.

    youtube and other personal video upload sites are the manifestation of content itself yearning to be freed from the restrictions of conventional networks.

    movie studios and even movie theaters will continue to exist, premium content / experience will always be in demand.

    and G will be drowning in both data and dollars.

  4. CT Moore says:

    Yep, I'd put money on things unfolding along those lines.

    I also think you just gave me an idea for a blog post 😉