Thursday, February 2, 2006

Google Focused on Multi-Platform Advertising Solutions

In the recent past, there has been a lot of speculation about Google's offering a platform for selling premium content. The introduction of Google Video seemed to seal the deal when they began to offer video for sale. However, in Tuesday's investor call to announce Q4 2005 and FY2005 results, one comes away with the distinct impression that Google is squarely focused on offering free access by means of ad-supported content. Video may be the temporary exception, since there are technical issues related to placing relevant ads alongside video content.

Listening to the webcast, it is clear that Google's executive management is highly focused on meeting the needs of top tier advertisers. CEO Eric Schmidt says, "So looking at 2006, lots of investment in better search tools, more personalization, much more content, a lot more focus on the advertisers". And not just any advertisers. Omid Kordestani, SVP Global Sales emphasizes that the sales force is organized to focus on the needs of the major accounts, that is the Fortune 500 companies. And, as Jonathan Rosenberg, SVP of Product Management points out, the core need of these large advertisers is "a unified platform for all media", as well as the ability to "extend the accountability of online to other media". The terms multi-platform and unified framework are repeated several times in the call.

On a call with investment analysts, it is not surprising that Google executives were so focused on describing how they plan to grow advertising revenue, since virtually all revenue is derived from advertising. But, where does that leave the professional publishing community that is wondering how and when Google will compete with them in selling premium content? In the short term, it seems that Google will stay true to its mission "to organize the world's information and make it universally accessible and useful" and furthermore to keep access free to all users whenever possible. However, the Google of 2006 is a public company that has to answer to investors when its revenue growth starts to flatten or profits don't match Wall Street's expectations. If adding content sales to its revenue mix becomes important to meeting the high growth expectations of Google in the future, don't be surprised if the definition of "universal access" expands to include access to premium content for which Google provides the payment infrastructure and gets a share of the content fees.

[Note, quotes are taken from the transcript of the investor call provided by Seeking Alpha]
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