Google’s three pillars of expansion
At a Google press event this week, the company unveiled ambitious plans for expansion.
People often think of Google (GOOG) as a search company. While certainly the biggest search company in the world, it’s what Google does with its search technology that makes it
the cash-belching behemoth it is.
Google’s robust display advertising pays the bills, and that is the lion’s share of what they plan on rapidly expanding in the next few years.
Neal Mohan, Google’s Vice President of Product Management, said that display advertising is a $20 billion business right now. But there is no reason that growth can’t go to $40, $60, $80 billion and more in the coming years.
Why isn’t it that big yet? Inefficiencies. Publishers can’t reach their exact target audience and have a tough time getting their creative content through the process towards potential customer’s eyes. Google, hoping to make advertising easier for publishers, recently consolidated its advertising businesses under one Google Display brand.
As ads become more effective, they become more valuable to advertisers and Google makes more money. A virtuous cycle, Google hopes.
Google sees three big areas of growth over the next few years, according to Henrique de Castro, vice president of global media and platforms:
1. Mobile – Because being online doesn’t mean that you have to be in front of a computer anymore, potential ad viewers are online just about every second of every day. That equals more ads and more opportunity. Also, Google didn’t say this specifically, but they can do much more with their ads if Google know the location of its users. For instance, if I am walking down the street with my iPhone and I’m using Google maps, Google could slip in an ad for a restaurant that is up the next block.
The goal is not only to add more advertisements, but more relevant and efficient ones.
2. Google’s next big pillar of growth is television. Obviously, the GoogleTV platform is a huge part of that, and selling ads against programming will be part of it. However, de Castro told me that much more TV content is turning to IP services (Think Verizon VCast, Sprint and AT&T ) and Google is beginning to help those who push TV make money from advertising.
Television is a monster advertising pool and Google expects to see massive growth from this field.
3. Perhaps the most interesting is the company’s third pillar: Social Advertising. De Castro didn’t get into any details on this, but, for Google, it is in the same ballpark as the above domains in terms of opportunity. It isn’t certain whether this means that Google is venturing into their own ‘Google Me’ Facebook like product, or if it means making current ads more viral, or a combination of the two strategies. Google reps declined to elaborate.
Google’s ventures into social media have been a mixed bag, with Buzz faltering while YouTube continues to be an unmitigated success.
Google derives almost all of its money from display advertising, so how well it executes its plans in these three areas will determine whether it can continue its astronomical growth.