Google's Alphabet Will Force Advertisers To Rethink Local Business Models

Google's plan to restructure under the holding company Alphabet shows businesses how to compete on local terms without running afoul of local government and data protection regulations, according to analysis in a recent report.

Alphabet creates opportunities to build local markets, per Forrester Research. The analyst firm released analysis on Google's restructuring plans and predictions on its ability to compete in local markets during the next 18 months. The report also suggests ways for marketing professionals to prepare for the changes.

Google's restructuring gives marketers a regional approach to advertisers, but with that approach comes change such as expanding in Europe and re-entering China.

Forrester analysts predict that within 18 months, Google will launch Google Europe with a new search algorithm and fully localized servers. Incoming Google CEO Sundar Pichai will split Google Europe's operations into a separate Alphabet subsidiary, with products designed specifically for that market.

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The changes will force marketers to restructure their search engine optimization campaigns. "If Google materially changes its search algorithms in regions like China and Europe to better meet those consumers' needs, marketers will need to take regionally specific approaches to their SEO programs," per the report. "Marketers should beef up nascent localization efforts in non-US regions, particularly in content and paid search."

For Google, the changes bring greater control of data processing for European residents and reduce its risk of running afoul of the General Data Protection Regulation (GDPR). "Should Google Europe be found guilty of any infractions, it could argue that the sanctions should be limited to 5% of only Google Europe’s annual revenues," per Forrester's research.

Alphabet creates an opportunity to revisit Google's role in China. Google is missing out on billions in revenue from the Chinese market, Forrester analysts say.

An independent Google China, free from social pressures to protect privacy and free speech, would operate with full oversight of the Chinese government. Abiding by the requirements for censored content gives Google a shot at growing its "minuscule 1.9% share of the Chinese search market." It would also give Google the ability to create a Chinese Android app market.

Separating companies like Nest and Google Fiber from Google’s core Internet business sends a signal that it's also taking a more conservative approach to protecting data. With that Google will build local cloud service offerings under the jurisdiction of each local country.

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