Google's fatal flaw
Google has succeeded mightily in capitalizing off of another company’s innovation; Online pay-per-click ads pioneered by Overture. Google is well aware, however, that its AdWords enhanced PPC formula is not sufficient for indefinite Wall Street rewards.
Google’s future growth and market performance are dependent upon offline diversification, or, bringing "targeted, measurable advertising" to “old-school” radio, print, TV…in the U.S. and beyond.
Just as Google seeks to sell ads against all the “world’s information,” it seeks to sell its ads to all the world.
To date, Google’s diversification accomplishments do not match its grandiose ambitions, as I discuss in: “Google to Madison Ave: Buy from us too”:
"Madison Avenue” will not be displaced by Google any time soon. “Madison Avenue” knows it and Google knows it.
Nevertheless, Google persists in public cheerleading campaigns about how it is on the cusp of revolutionizing the decades old worlds of print, radio and television advertising…
I put forth that Google’s principal sales pitch to Madison Avenue is currently an AdWords presentation:
Google’s unwavering mission to continually increase monetization of Google.com includes convincing marketers that a Google AdWords spend is essential for enhancing the effectiveness of a brand campaign's entire advertising and marketing spend, both online and offline.
Google’s bottom-line message? No marketing campaign works without a (big) Google AdWords component.
Advertise in print? Readers search for you at Google.com.
Advertise on radio? Listeners search for you at Google.com.
Advertise on TV? Viewers search for you at Google.com.Dare not buy Google AdWords? Readers, listeners and viewers will search for you at Google.com, but click on your competitors' Google AdWords!
Madison Avenue may be willing, at present, to earmark Google an interactive portion of integrated marketing campaign spends, but it will not readily concede its core offline advertising agency business.
Newcomer Google has exploited a first-mover advantage in the still relatively small online advertising market, but it is floundering in its attempts to crash the decades old party of print, radio, television…advertising.
Google is on a fourth stab at the print advertising pie and it has significantly lowered its objectives: The small scale brokering of remnant, unsold newspaper ad inventory (see “Google’s $48 billion Print Ads test: Fourth time’s the charm?”).
Google’s radio play also targets not-so-lucrative “remnant avails” (see “Google $20 billion radio chatter”). Google can’t afford multiple, unsuccessful stabs at radio advertising, however, it acquired dMarc Broadcasting earlier in the year for $100+ million.
Google in the television advertising market (see "Google CEO wants $74 billion TV ad market")? Some are portraying its impending $1.65 billion, in Google stock, acquisition of YouTube as a nod to TV. Google has not made a satisfactory go of its own Google Video, hence the acquisition; A large (but fickle) user base was the main attraction of YouTube.
While Google may eventually come up with compelling products for offline advertising markets, Google may end up being its own worst enemy.
Although Google derives all of its $144 billion market cap from the sale of advertising to others, it does not want to advertise with others, as I point out in “Google trumps Microsoft” and “Google: “The Anti-Microsoft”:
Is it not hypocritical for a company which derives all of its $144 billion market cap valuation by selling advertising to other companies to proudly proclaim that it does not believe in advertising for itself?
Google, in fact, aims to sell its advertising to every single company in the world and wants every single company in the world to buy all of its advertising through Google: video, radio, print, television…SO, why does Google dismiss advertising itself?
The entire Google $144 billion riddle is a study in hypocrisies.
Beyond hypocritical, Google’s anti-advertising stance looms as a fatal flaw in its growth and diversification plans.
For example, how will Google ever be able to sell TV ads with a straight face when it proudly declares “Our (anti-television advertising) Philosophy”:
Google has built the most loyal audience on the web. And that growth has come not through TV ad campaigns, but through word of mouth from one satisfied user to another.
Google users may be satisfied, but prospective Google clients will undoubtedly be hard pressed to heed a Google pitch for ad products Google doesn't want to invest in for itself.