Sep 19, 2007

The World Changer's Back & Musing About Google.........

So, I'm back in Seattle - actually, have been back for over a week. The Marketing Conference in the UK went well - Lot's of interesting insights. Google's dominance remains a hot topic on both sides of the Atlantic.
I'll admit that I've found myself using Google more frequently - primarily for directions and maps. Most Googlers however, now use at least 3 or 4 Google features and I see that trend growing. Blogger and You Tube were already popular products - now that Google has an even more impressive line up of engaging tools & features, it has become an essential part of their lives.

I visited the Google Campus recently - and I'll echo the sentiments of Xooglers who claim that Googlers are Cynical and Arrogant. That's probably understandable given the Global Strength of the Google Brand and the very impressive performance of it's stock.

There is no immediate threat to Google's dominance in Search - or it's lucrative revenue model. The small text ads in the sponsored links section are still delivering huge pesos - the company is on track to hit revenues of $16 billion and profits of $4.3 billion this year.

In a recent analysis by Alan Rimm-Kaufman, a marketing consultant, it took a whopping 73% of the budgets of companies that advertise on search engines (versus 21% and 6%, respectively, for Yahoo! and Microsoft). It charged more for each click, thanks to its bigger network of advertisers and more competitive online auctions. And it had far higher “click-through rates”, because it made these ads more relevant and useful, so that web users click on them more often. Perhaps most tellingly, advertisers do better with Google. Mr Rimm-Kaufman found that Google's ads “converted” more often into actual sales, which tended to be larger than those originating from Yahoo! or Microsoft.

This is discouraging for Yahoo, given all the work it put into Panama. Microsoft adCentre has also launched a number of innovative features in an effort to drive the volume required to grow Search Revenue. Recently, Google has also started to experiment with Radio, TV and Newspapers. It is trying (pending an antitrust inquiry) to buy DoubleClick, a firm that specialises in the other big online-advertising market, so-called “branded” display or banner ads (for which each view, rather than each click, is charged for). Sceptics point out that with each such expansion, Google reduces its profit margins, because it must share more of the revenues with others. Yet Google does not look at it that way. Its costs are mostly fixed, so any incremental revenue is profit.

It's worth noting that Google now offers a complete alternative to Microsoft's entrenched Office suite of programs, all accessible through any web browser. A new technology, called Google Gears, will make these applications usable even when there is no Internet connection. And Google is hawking these applications not only to consumers but also to companies.

Beyond its attempts to expand into new markets, the big question is how Google will respond if its stunning success is interrupted. “It's axiomatic that companies eventually have crises,” says Mr Schmidt. And history suggests that “tech companies that are dominant have trouble from within, not from competitors.” In Google's case, he says, “I worry about the scaling of the company.” Google has been hiring “Nooglers” (new Googlers) at a breathtaking rate. In June 2004 it had 2,292 staff; this June the number had reached 13,786. Its ability to get all these people has been a competitive weapon, since Google can afford to hire talent pre-emptively, making it unavailable to Microsoft and Yahoo!.

Google tends to win talent wars because its brand is sexier and its perks are fantastically lavish. Googlers commute on discreet shuttle buses (equipped with wireless broadband and running on biodiesel, naturally) to and from the head office, or “Googleplex”, which is a photogenic playground of lava lamps, volleyball courts, swimming pools, free and good restaurants, massage rooms and so forth.

So, Google continues to dominate the Global Search Landscape, but it's not the big dog in every Market. It faces formidable opposition in China, South Korea,Russia and Japan. In fact, Tokyo, alarmed by the global dominance of Google and other foreign internet services, is spearheading a project to try to seize the lead in new search technologies for electronic devices. The push has been sparked by concerns in Japan that the country’s pre-eminence in consumer electronics has faded and value in the technology industry is moving away from hardware. France and Germany launched a plan of their own to seed development of a “next generation” European search engine nearly two years ago, though Germany pulled out of the plan. It remains to be seen whether any of these initiatives can slow the Google Juggernaut........

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