After a brief hiatus to spend time with my new baby girl, Eliara, I'm officially back in Insider action.
I've been thinking about not-so-natural-born Google killers -- not fancy new whiz-bang search engines or other "direct" Google competitors, but companies, individuals, and institutions that stand in the way of Google capturing the lion's share of the world's ad dollars. I think there are at least four potential Google killers that can't sidetrack Google from its goal of becoming the dominant player in the $500 billion global advertising market.
And there are other contenders:
1. Wall Street. To date, Google has operated with little regard for the Street -- from its unconventional auction IPO to its refusal to provide earnings guidance. Nonetheless, there's no doubt Google's meteoric rise has been due in large part to the support of investors. With its stock soaring from $80 to $730 in just over three years, Google built up a huge market cap to bolster its strong cash position, using it to make strategic acquisitions like YouTube and DoubleClick. In the past six months, though, the Street has cooled on Google, sending the stock plummeting to the mid-$400's.
Advantage: Google. Google's continued focus on users and not the Street (i.e. continuing to roll out universal SERPs despite its impact on paid clicks) will ensure people keep "Googling." And what's good for users is good for advertisers, which is good for Google. As long as the revenue's there, the Street will continue to support it. Just about every analyst report I've read still shows Google as the top pick in the sector. And, by all counts, Google and search marketing in general are expected to weather the storm of a recession. And, even if the Street sours on Google and the stock falls further, it has plenty of cash in its coffers to expand and innovate.
2. Facebook. If any property/platform poses a serious threat to Google in terms of share of mind and time, it's Facebook. Since opening itself up to the public less than two years ago, Facebook has quickly emerged as the leading social network, surpassing MySpace in average daily visitors worldwide with over 25 million spending 160+ minutes per visit. Facebook is more than just a destination site or social network, though. It is literally becoming the OS of interpersonal communication. When it comes to connections between people, there is very little that can't be accomplished within the walls of Facebook.
Advantage: Tie. At the end of the day, the information that Facebook gathers about individuals through the social graph offers richer applications for personalization than anything Google can hope to do through Web and search history. As we move closer and closer to Tim Berners-Lee's vision of the semantic Web -- in which Internet applications do more than search and retrieve, they act -- Facebook is best positioned to capitalize. The true promise of Facebook for advertisers is harnessing word of mouth, which is proven to be the most effective at influencing consumer's shopping habits. That said, Facebook first needs to get out of its own way and figure out how to make some money without pissing people off (remember the brutal Beacon rollout?) It can't continue to demand a $15 billion valuation without a viable revenue stream. And it's going to need every last dollar to build out the infrastructure to deliver on its potential (Hey Google, can we borrow your cloud?) Its best bet may be to follow YouTube's lead and sell to Google, which could take its time to develop the proper monetization engine while continuing to enhance the product.
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3. The Government. Dr. Courtney Bosworth of Radford University responded to my last column and offered up the U.S. government as a potential Google Killer. A New York assemblyman recently proposed a bill that would require explicit opt-in for collecting non-personally identifiable information such as Web and search history. I'd expand the threat here to include government bodies across the world. Remember, we're talking about the $500 billion global market here, which means laws in all countries Google operates in could impact its ability to rule the ad roost.
Advantage: The Government. Google has built up a successful lobby in Washington and has won key victories over the years in varioustrademarklawsuits, opening up the recently auctioned wireless spectrum, and pushing through its DoubleClick acquisition. However, it has run into roadblocks when it comes to privacy and censorship matters. The EU made Google anonymized user-data after 18 months and the Chinese government forced Google to remove sensitive sites from its index. Google's ability to serve the right ad to the right person at the right time is predicated on personalization. If the New Y bill passes, making it difficult for Google to collect and use data from past Web and search histories, it won't be able to advance beyond basic keyword targeting.
Once again, I've run out of time, er... word count, so I'll adjourn here. In my next column or two, I'll cover even more potential Google-killers like telecoms, Madison Avenue, eBay, Amazon, News Corp., and NBC Universal. If there are others you think should be considered, let me know in the Search Insider blog.
Until then, enjoy your recess and, to all the folks in Mountain View trying to fend off would-be killers, remember to look on Mr. Brightside, even if comScore comes out with another "disastrous" report, you're still the #1 brand in the world.