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Web 3.0 & Google (Part 5)

Posted on Friday, Dec 21st 2007


Google is a global technology leader focused on providing people access to information. The Company’s website is a top Internet destination and its brand name is one of the most recognized. Google generates revenues by delivering relevant online advertising to its users, mainly through sponsored search ads.

The Company is a clear leader in search and online advertising. According to comScore there is no sign of a slowdown at Google as the company continued to extend its search market share lead, adding 150 basis points in October 2007 versus September 2007. Google’s paid clicks grew 36.8% in October 2007 versus last year and 11.6% versus September 2007. Latest data by comScore confirm that Google is increasing its market share in the search category at the expense of Yahoo and MSN.

In order to improve its business performance the Company has taken a number of strategic steps like removing ads that generate low click-through rates or that send users to irrelevant or otherwise low quality sites and terminating Google Network members whose websites do not meet its quality requirements.

The Company is diversifying by moving into newer spaces like advertising on television, radio, newspapers and mobile. Google will also, most likely, consider acquisitions in the online vertical search space. Google is rumored to be in talks to acquire SimlyHired, a job search engine. Vertical Ad Networks are gaining momentum and this could be a potential danger for Google’s AdSense. Google, however, has the cash to acquire some key players to claim its own share of the vertical ad network pie. The most likely target would be Adify.

The Company is focusing on the mobile market as it sees this to be an important entry point to the web. The Company launched Grand Prix, a cellphone software that allows for fast and easy access to Google services like search, Gmail and calendars through a stripped-down mobile phone browser.

Google’s Android open source mobile platform was launched in October 2007, along with the Open Handset Alliance [OHA]. The first Android-based open source platform mobile phones are expected in mid-2008. Google has just cleared the first round in its application with the FCC for a 700MHz spectrum sale.

According to John Bruggeman, chief marketing officer of Windriver, “Android will lead to a new class of potentially free mobile internet devices (MIDs) that do everything a PC does, only smaller, cheaper and in tune with global mobile markets that favor phones over PCs for web connectivity”. Sounds like Google also to position itself for a convergence device dominated world, if it were to come about.

Going by the growth in Google’s search business in October 2007, it is poised to deliver a strong Q4. The Company’s International business is also growing at a rapid pace and this diversification could cushion Google from the anticipated weakness in the US economy. The Company is well positioned to benefit from the growth in display and brand advertising on the Internet, and overall, despite weaknesses in the economy, the momentum in online advertising will continue. Google is the biggest beneficiary of this trend.

Google has delivered phenomenal returns since its IPO. The stock, however, still has plenty of upside, in my opinion.

[Part 1] [Part 2] [Part 3] [Part 4]

This segment is part 5 in the series : Web 3.0 & Google
1 2 3 4 5

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Wow … what are great indepth post !

The dicussion of Google acquisitions … thanks.

JasonMcIntyre Friday, December 21, 2007 at 11:06 PM PT

A really good, insightful piece on Google. Google seems determined to be the biggest ad-eyeball delivery medium on earth. Would be interesting to understand how India fits into this Google’s future eyeballs’ capture strategy. Far as I can see, as a market, India has large volume potential but remains a low average revenues per user market.

S.V.Divvaakar Sunday, December 23, 2007 at 7:09 AM PT

This is over a year old article but still it was a excellent read. Google more or less continues to follow the same path. It gives a good indication of what Google might do next.

Ashish Tuesday, February 24, 2009 at 2:27 AM PT

Excellent analysis.

My big question is on the monetization strategy of the verticals- Does that have enough scale?

Prakash Gurumoorthy Sunday, June 14, 2009 at 6:20 AM PT