Google's Next Act: Diversify and Conquer
Center stage at this year's Google I/O was a company honing its vision for a future beyond search.
Mon, August 19, 2013
Search, Google+, Android, Google Glass, self-driving cars -- the company famous for beta launches (and killing projects) appears to be evolving in almost every direction at once. But examined together, Google's innovations, acquisitions, and strategic maneuvers reveal a few clear directions driving the company forward.
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To be sure, last week's Google I/O showcased a company intent on spinning as many plates as possible, all at once, but the past two years with Larry Page in the CEO office have slowly revealed a firm focused on corralling its advertising, mobile technology, cloud services, and hardware plays into a second act beyond search.
The future of Google's ad business: More, but different
Of course, Google's No. 1 business isn't really search; it's advertising. But how long can the company depend almost entirely on revenue from ads alone? The answer depends on how successful the company can be in diversifying its approaches to extracting revenue from service-based offerings.
"Google isn't the 800-pound gorilla in the online advertising space for no reason," says Victor Pan, senior data analyst at WordStream, a company that provides pay-per-click analysis software and services.
Pan sees a solid road map ahead for Google, thanks to its existing bets on mobile technology, where search is showing the strongest growth. Google's acquisition of mobile advertising platform AdMob and its AdWords Enhanced Campaigns, which allows advertisers to target both desktop and mobile devices automatically, create a strong foundation for Google's revenue growth in the years to come, Pan says.
"As long as Google innovates its ads to a consumer's search habits and educates its advertisers to do the same, Google's advertising growth will remain sustainable," Pan adds.
Shar VanBoskirk, vice president and principal analyst of interactive marketing at Forrester, also doesn't believe Google needs to establish a major source of revenue beyond advertising. Instead, VanBoskirk says, Google is diversifying its product and services portfolio "not because it has to, but because it can and it stands to make more money by entering new markets."