Thursday, January 19, 2006

WWGD?

Yes, the time has come for me to answer that age old question that every aspiring entrepreneur doing anything even remotely close to technology must answer. WWGD? What Will Google Do (to you)? The thing is, everyone seems to ask this question as if it will come as a major shock to your system (come on, we’ve all done it). So let's get this over with. Google is a big bad (though certainly not evil) monster, and they are going to eat us all for lunch. Or maybe not...

The first thing to consider is simply that despite their general scariness, they simply cannot do everything. Plenty of companies will go on in their happy existence despite the fact that Google is around. Also, the fact of the matter is that the further they get away from their core competencies (Google video, anyone?), the less frightening they seem.

Now that may be all well and good, you say, but YOU are in Google's core business, not some far off remote space where they will not find you. YOU are in the one business Google derives 99% of their revenues from. YOU are in the business that has driven their 128 BILLION (with a B) dollar market cap (as of this writing). Perhaps you are right, perhaps they can not do everything and the rest of us are not in trouble. But you my friend, YOU are in deep trouble.

Now, I would be in a bit of a bad position at this point, because the fact of the matter is, you are pretty much right. Just because AdMob has taken online advertising mobile doesn't mean it’s far away enough to be hidden from the great eye (sorry for the LOTR reference, but I couldn't resist). In any case, let's be realistic. I'm fully aware that Google will enter the mobile advertising arena. I'm just not so sure that will be a bad thing for AdMob.

I think anyone who summarily dismisses the idea of AdMob simply because of Google’s impending entry is taking an overly simplistic view of the market. They would certainly have a very difficult time explaining the success (not Google-size success, but success nonetheless) of companies like AdBrite, well after both Google and Yahoo! had established their dominance in the mobile advertising space.

Let us pause for a moment and consider how, exactly, Google might enter the space. The logical thing for them to do would be to roll out their mobile advertising in the same way they did it on the web, first directly through their search engine results, then through partnering with other sites (i.e AdSense mobile).

The first step will be in developing a highly trafficked mobile search page. That step is currently underway. Next, when they decide the market will support it, they will begin to have sponsored results on their mobile search pages. This will be a watershed moment for AdMob. Suddenly thousands of advertisers will open their eyes to the possibility of advertising on the mobile web, and they will move to take advantage of it. They will build out mobile sites which can be promoted on Google (and they will finally have mobile sites to promote on AdMob as well.)

Next, Google will move to integrate their mobile ads with other sites. However, mobile integration is a bit more complex than cutting and pasting some javascript, so rather than try to work with just any mobile site, they will cut deals with very large content providers, such as news outlets and carriers. Notice, that despite the fact that they have greatly strengthened the mobile web, they have still not destroyed AdMob. In fact, they have only grown the market in which AdMob is playing. I do realize that when they enter the market, Google will begin to dictate the way the game is played. Their prices will represent the upper limit, when their click through rates get too high, advertisers will search for other options.

While all this is happening, AdMob will be plugging away, partnering with more publishers and making more advertisers happy. AdMob is in the same space as Google, but that space simply has room for more than a few players, especially if they are positioning themselves to serve different areas of the market. There is no doubt that Google will affect AdMob greatly, but it will be more as a price leader rather than the great Mongol hordes coming to kill our babies. So, there you have it. My two cents... and if I’m wrong, well, then, God help us all.

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