Googling ‘success’

The rise and rise of web search giant Google is raising the hackles of established rival media organisations.
Googling ‘success’
By Aaron Greenwood
Tue 08 Apr 2008 04:00 AM

The rise and rise of web search giant Google is raising the hackles of established rival media organisations and prompting pundits ranging from broadsheet critics to blogosphere conspiracy theorists to take issue with the company's aggressive approach to investing in new media sectors.

Google's takeover of YouTube in 2006 opened the flood gates to a string of corporate acquisitions, culminating in its purchase of digital marketing specialist, DoubleClick, last month.

Just as the YouTube deal put Google in the box seat in terms of digital video delivery to consumers, the DoubleClick deal provides it access to the US$27 billion online display ad market.

The latter deal also goes to the core of the company's commercial strategy - developing new mechanisms supporting targeted advertising campaigns, and leveraging the capabilities of existing applications such as Adword and Adsense.

Interestingly, the company's rise to prominence closely mirrors that of its arch rival Microsoft, a company which has attracted claims of anti-competitive behaviour in the past.

Microsoft continues to play second fiddle to Google in the online search sector - a fact that has raised significant discontent within the software giant and one which prompted its $44.6 billion takeover bid for rival Yahoo!, which was subsequently rejected last month.

Microsoft has made little effort to hide its ambitions to become a major player in the digital content delivery sector and sees such acquisitions as vital to not only fulfilling this strategy but also its bid to challenge its upstart new media rival.

But what of Google intentions in this sector?

The ambiguities surrounding the company's longer-term ambitions as a content delivery provider largely relate to its contrived anti-corporate image, which follows the script of its Silicon Valley-slick marketing strategy.

Yet, every aspect of Google's operations is geared towards generating revenue from its core targeted advertising technologies, and the latest iterations of these click-through ad-based products have struggled for momentum in recent months.

Web research firm ComScore found that in January alone, Google's targeted Adword service suffered a 7.5 percent fall in the number of user hits compared to December. Meanwhile, its share price tumbled from a record $741 in November to settle at around $460 towards the end of last month.

Hence, the company's continued growth is tied to its penetration of new markets, with the wireless sector proving top of its wishlist, according to recent media reports in the US.

With many industry pundits arguing the need for traditional broadcasters to embrace new delivery platforms including mobile TV and IPTV, Google could be ideally placed to play a key role in driving this growth and acting both as a partner and facilitator of next-generation broadcast services. The implementation of this strategy could be key to the web giant's long-term success.

Aaron Greenwood is the editor of Digital Broadcast.

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