What if Microsoft wins AOL? Google's secret weapon

Summary:MSFT has an ad server and Google has a giant sales force

Dan Farber writes about Dana Gardner predicting that Microsoft will outbid Google for the rights to turn AOL into an advertising partner.

But let's think this one through. What's the bidding war look like?

We'll give you...100 per cent of the ad revenues? Or, we'll give you 200 per cent of the revenues?

Or, better yet, we'll give you a ton of cash for all your inventory for the next 2 years. I might take this option, especially if MSFT is the cash buyer. Because: MSFT introduced an advertising server doesn't mean it can deliver the customers or the conversions.

Google has a massive sales force that is already established in every significant metropolitan area in the world. And that sales force has been forming key customer relationships for several years.

Should AOL take the Redmond or the 49er gold?

Is it better to take the bigger offer? Could there be any question of potential brand damage if AOL gets a reputation as place where ads convert poorly?

Where do CEO fiduciary duties to shareholders stand at Time-Warner? Maximize short-term profits at the expense of long-term?

That's the  way things work normally, and it is exactly this kind of scenario that Google has tried to avoid through its unusual corporate structure.

I say Google wins either way. AOL loses all the way: if you don't own your customer relationship you are in a very weak position--and you  weaken the magazine print side of the business too, imho.

Topics: Google


In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to become a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley. Tom arrived in San Francisco in 1984, and has covered US technology markets for leading comput... Full Bio

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