Sunday, December 11, 2005

Google - A Network Effect on Ads

There have been rumblings through the valley about how Google is arrogant, going to fail, not partner friendly, etc. At ActiveGrid, for example, we are bummed that our Googlezon demo is exceeding Google's maximum allowable web service calls.

Matt Asay recently wrote a post about how Google's properties beyond search are all relative failures. I frankly don't think Google's search is all that hot either, I use MSN Search when I do complex queries.

What Google has, and the reason it will be around for a long long time, is a network effect on advertising. Just like EBay cornered auctions, PayPal cornered point to point transactions, and Flickr cornered photo sharing, there is a huge community of people and companies who advertise hundreds of thousands if not millions of terms of Google. Users are accustomed to searching for very nichy (I dare say long tail) things on Google and finding relevant ads.

While search has clearly become commoditized and matched by Yahoo! and MSN, the chances of anyone successfully competeting against the advertising juugernaut that Google has created is not likely. It is as challenging as convincing a critical mass of EBay buyers and sellers to move to something new.

Google is definitely helping a lot of folks make money by advertising their products to new customers. I just hope that Google starts to enable software companies to create new services that use their platform without a bunch of hassle - this is one thing that Microsoft actually has always done very well.

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