Welcome to the end of another year. The most amazing aspect of 2005 was this industry’s continuing momentum. The growth, excitement, and innovation around interactive marketing show zero signs of abating in 2006. I’m still a little gun-shy, having experienced 2000’s unbearable slump, but even we skeptics can finally feel as if we’re on the right track. It’s OK to be excited.
This year’s big topic was the rising importance of consumer-generated/social media. This thread wove itself through scores of business plans (including, it seems, Yahoo’s) and was the central theme of many events I attended. Even so, the number one question I received all year long (from clients and colleagues alike) was, “What’s up with Google?”
Google is an amazing, often inscrutable company. It frequently confounds the press, its competition, and those who do business with it. Yet by nearly all measures, it’s wildly successful. Employees are fiercely loyal and seem committed not only to their jobs but to the company itself. Secrets are rarely leaked (and there’s no shortage of secrets, from the way the algorithm works to how you contact someone in billing).
How do you do business with a company like this? What can you learn about this company that can help you understand more about your company and the world? And perhaps most important, is it beatable? I certainly don’t have any inside information (see that point above about secrets), but I’ve been watching Google and trying to get a sense of what drives it.
Google Isn’t Just a Guide; It’s the Guide
For many, the Internet remains a complex, difficult place. Browsing the Internet, buying a song on iTunes, or getting a map brings people closer to the world of technology than many care to go, especially when they encounter an error or (heaven help them) click on that orange RSS (define) button expecting to see something for a human being. As such, people will always look for a guide to the space: someone or something from the techie world but who promises to watch your back and point you in the right direction.
The Guide is the most valuable position for any Internet company to be in. AOL had it for a while, as did Wired and Yahoo When Apple launched the iMac, it appeared to have a shot at it. Now, Google’s got it. This is why the Google brand is so incredibly valuable: the position as Guide promises future traffic and revenue.
But Google has to protect this position, not necessarily from without as much as from within. A well-established brand promise can sometimes slow growth and expansion. Adding new features and tools introduces the risk of perceived complexity. Already, we’ve witnessed the death of the tabula rasa interface that made the Google home page so attractive. The company must also ensure new features aren’t seen as frivolous, that everything remains focused on generating user value. It danced on the edge of frivolity with those satellite photos of the Earth. Luckily, a plucky band of hackers picked up the API (define) and made the service far more usable.
No Short-Term Strategy
People wrack their brains trying to understand why Google makes one move or another. “What’s the point,” they ask, “of scanning all those books?” The mistake people make is trying to divine Google’s short-term strategy. There isn’t one. Rather, its short-term strategy is simply to diligently explore all possible avenues and choose the one that gets it closer to achieving its long-term strategy: to be the single fulcrum point between human beings and the information they need.
Because of this long-term focus (and AdWords, its money-printing machine), Google can experiment. It can launch a social networking service, scan books, and offer an amazing digital photo application. It can put the revenue model second, because it’s more important to see if any particular application moves the company closer to what may be a three to five year goal, at the least.
Consider the music search service it launched last week. Many observers have been patiently waiting for Google to move on music. It finally has. According to the product team, the engineers noticed a significant number of Web searches were for music-related terms. So it invited several online music stores to provide Google with inventory feeds. When there’s a match, the engine provides, atop the first page, direct links to download the song being searched.
Google doesn’t charge the music stores for the space. It doesn’t get a cut of the $0.99 the consumer pays for the song. This is truly amazing. Any other company would have noticed the number of clearly commercial searches and thought “product.” Google saw opportunity. It can’t be true that it didn’t occur to the company to charge for this; it’s highly tuned to the value of the top of a search page. Google was focused on adding the service because it recognizes music as a key piece of content people want and it believes it should be the access point to that content.
Google in the Future
When considering Google, focus on that long-term goal. It sits atop a cushion, built on trust and very comfortable revenue, that allows it to engage in long-term thinking. That’s hardly a secret. It’s precisely laid out in the founders’ letter attached to the IPO. Google will certainly make missteps (its social network service seems to have floundered, for example). But so long as it maintains its position as the Guide, there’s an enormous amount of leeway for exploration.
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