While several companies have played a pivotal role in shaping online advertising, none, perhaps, looms larger than Google. The search engine created an entirely new form of search advertising (pay-per-click) -- but now the tectonic plates are shifting again. A new online advertising epoch has dawned: the socially networked era. Is Google ready?
To continue its torrid growth, and support its lofty market valuation, Google must create new platforms and services that help advertisers reach consumers where they are gravitating: social networks. According to eMarketer, by 2010 advertisers will spend $1.8 billion on social network advertising, up from $280 million this year.
To its credit, Google has an impressive portfolio of social media products and services. Google Video, for example, has quietly matched many of YouTube's best features and Blogger is the granddaddy of weblog publishing. There are two problems, however. One, none of these products is a bona fide hit. Worse, they offer few if any ways for advertisers to buy in.
Analysts have noticed that the ground is shifting beneath Google. After all, that's what they're paid to do. According to a swath of recent reports, they are concerned that Google is getting trounced by upstarts in three ad-supported sectors -- blogging, video sharing and social networking. They want to see Google diversify beyond search advertising, and soon.
If this all sounds familiar, it should. Back in 2001 Yahoo missed a similar paradigm shift. The company was largely dependent on banner advertising from dot-coms. Meanwhile, Google began to creep up on them. Then, the bottom dropped out and then incoming CEO Terry Semel had to diversify Yahoo revenue beyond banners through subscriptions and, later, contextual search by acquiring Overture.
History is repeating itself and Google would be wise to learn from Yahoo. The cacophony over search click fraud has never been louder. At the same time, marketers are beginning to pony up huge sums to reach audiences as they get pulled into social networks. The center of gravity in online marketing is beginning its slow shift to an entirely new format that Google is currently not monetizing. It has some great assets here, but it better figure out how to help advertisers capitalize on them. For now, Google seems to be asleep at the wheel.
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Steve Rubel is a marketing strategist and blogger. He is senior VP in Edelman's Me2Revolution practice.