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Google Buys Nest -- What Does It Mean?

  |  January 23, 2014   |  Comments

After CES, the tech world is buzzing with opinions about what the $3.2 billion acquisition means for Google's future -- but is it safe to speculate?

In case you were living under three electric blankets last week due to the Polar Vortex, you know CES took place. You know because everyone has published their opinion on what was important from their point of view. Depending on whom you ask, there were five to 12 trends you just have to understand, but only in paragraph consumable bites or in pretty slideshows designed for easy sharing.

And then, just when the dust is settling and people are getting back to what they really know how to do, Google goes and buys Nest for $3.2 billion. And suddenly all of the "experts" who told you the "Internet of Things" and the connected home were going to be big now have numbers to quantify and validate their expertise.

There's nothing especially bad about this behavior, except when the parlor games begin with trying to dissect why the deal happened and what it means. And the games have begun with Google and Nest.

Upon announcing the acquisition, Twitter was buzzing with the news. People were projecting how this move was about data and joking about ad serving based on your household temperature. One perspective I read suggested it was akin to Google investing $250 million in Uber to get traffic data, completely ignoring the work Google has been doing with autonomous cars and the more likely long-term play into that space, with delivery as the core.

The challenge with having an opinion is what I wrote about last month. Most opinions are inevitably formed by personal experience and bias. Those in the media industry want to explain away the Nest acquisition as an advertising-motivated purchase. They confuse an infrastructure purchase that will inherently come with data as one that will enable advertising to be easily overlaid.

It's certainly possible that Google, through Nest, could someday offer free smoke detectors and thermostats to individuals who saw an ad-supported model, but I would be lying to suggest that is more viable or planned than anything else written in the 48 hours immediately following a $3 billion acquisition.

As Microsoft, News Corp, and Yahoo have shown over the last decade, billion-dollar acquisitions with obvious media opportunities are not guaranteed predictors of future success. So for Google to spend this amount with a planned move into a non-core focus of the Nest business feels like a heavily biased suggestion.

Make no mistake, through Nest, Google will become more intelligent for consumers and how they organize their home life. Not dissimilar from how Google search and Google+ have given massive insights into how consumers want information organized for discovering relevant content online. But, to project anything more or suggest a deep insight into how this will ultimately turn into an advertising play is fraught with assumptions.

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ABOUT THE AUTHOR

Chris Copeland

Chris Copeland is chief executive officer of GroupM Next, the forward-looking, media innovation unit of GroupM. Chris is responsible for curating and communicating insight-focused media solutions across established and emerging platforms. Leveraging his multi-year experience with emerging media companies, Chris is tasked with stewarding GroupM Next in partnership with agency leadership from GroupM's four media marketing and marketing service agencies (Maxus, MEC, MediaCom, and Mindshare).

Guiding the Predictive Insights, Technology, Education, Research, and Communications teams at GroupM Next, Chris is responsible for overseeing the amplification of insights into opportunities that directly benefit the business of GroupM agencies and their clients. GroupM is the world's largest media investment management group and the media holding arm of WPP.

Chris was selected to lead GroupM Next after nine years of leading the search marketing practice within GroupM. Among his accomplishments include the development and integration of the global search marketing offering for GroupM agencies, GroupM Search, which manages $1.3 billion in search billings globally and has grown to more than 1,000 search marketing strategists serving 40 countries.

Chris is an active member on advisory boards at the 4A's, Google, Yahoo, MSN, and I-COM. He is a frequent speaker in global forums discussing the digital marketplace, and contributes editorial commentary regularly to Advertising Age, ClickZ, MediaPost, and MediaBizBloggers.com.

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