Tuesday, August 8, 2006

Sticking to Its Knitting with Big Needles: Google and Fox Focus on their Strengths

While a great deal of attention is being lavished on the details of the USD 900 million deal that will give Google a win over Yahoo for search services on MySpace and other Fox Interactive Media properties, the bigger picture is that Google continues to invest in relationships that strengthen its core assets rather than chasing markets that are not in its strong zone - a move that FIM seems to have echoed. Ross Levinsohn, president of FIM, notes in a paidContent.org interview that "At the end of day you realize what you're really good at is a couple of things. You're really good at creating content, you're really good at enabling content, you're really good at selling big Fortune 1,000 companies on branded advertising and sponsorships. that you're not really good at is competing with giants like Google and Microsoft and Yahoo in search. And so you take advantage of what you're good at." And at the end of the day, was it cheaper for Google to try to build and develop its own unique community of online publishers to generate inventory for ad pages or to put a deal in place that leveraged the top online community? Easy "do what you're good at" choice at this point.

Google also seems to have played the "do what we do well" card in other venues lately. It's sidestepping music downloads for now where Apple has a solid footprint and where music companies are far from having their act together on cross-platform digital rights. On the other hand it's reaching out to the XM satellite network to sell its ads via the dMarc radio ad management system it purchased earlier this year, so it's not as if Google is not finding ways to monetize music. At the same time Google's video efforts are getting a big boost via a deal with Viacom to distribute MTV video clips and clips from other Viacom properties with ads. While it has left brand advertising largely to others, Google has consolidated its position as the dominant search engine and ad network through these recent deals and has not had to contend with some of the identity crises faced by portals such as Yahoo! and AOL. When the inevitable ad crunch comes, it won't hurt to be the one on top of the pile with the top search engine to power it through leaner times.
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