Google is the 800 pound marketing gorilla

February 3, 2010...... at 6:57 pm | Posted in Uncategorized | Leave a comment

I don’t think people have any idea of just how profitable Google is going to be for the next decade. The internet has very few barriers to entry other than inertia. Google’s absolute domination in search means that its going to be the start page of internet for a while yet. It is my contention that this century will be the century during which the prevailing corporate organisational paradigm designed to support the industrial revolution finally comes tumbling down. I see it already in IT: small teams, decentralised leadership, relationship based work environments, agile approaches to risk mitigation. I believe the next 100 years belong to the startup and historically the price of marketing has been prohibitive for startups – Google and adwords is changing that.

Google must have realised that personalised search was the way to go, around about the time Digg launched. They may also have realised that if they have only one set of search results for the term “jobs” they could only sell 13 front page ad slots, but what if they turned their most valuable product – page one of a search result – into a long tail product. With personalised search results that equation changes to 13 front page ad slots X no of personalised clusters for jobs. Ka-ching

What really blows me away is just how many clusters there are going to be, once you inject real-time search into the mix. The web is already starting to wake up to what this means in terms of SEO effectiveness but I don’t think Wall Street has yet factored it into the GOOG share price. To get an idea of how many more selling opportunites Google will have going forward, take the number of search terms currently in use and multiply that by (number of distinct social networks). My best guess is that Google will probably increase its ad space by about an order of magnitude, somewhere between 7 and 16 fold. Because of the long tail the effect won’t be linear but I would estimate a 3-5 times increase in top line revenue over the next 5 years, excluding organic growth related to increasing world-wide internet penetration. Google for me is a buy.

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