A little more than a decade ago, Larry Page and Sergey Brin set out to
“organize” all the information online, making it more easily accessible
than the hunt-and-peck Internet of the late 1990s. To support their
grand Internet index, the Stanford grads developed an advertising
business that had disrupted all of the traditional media models and
turned Google into a cash-generating juggernaut.
While Google has dabbled in other businesses and launched a series
of tangential business initiatives, Page and Brin—along with their
high-flying Chief Executive Eric Schmidt—have maintained that Google is
a search-centric business. The other businesses and products—such as
Google Apps, Gears, Chrome and Earth—have been, if you would believe, a
byproduct of their largesse.
Now Google is entering the channel with a program around Google
Apps, its Web-based suite of productivity applications—word processing,
spreadsheet, e-mail, instant messaging, etc. It’s thought that Google
is trying to get a head start on Microsoft in the battle for Web-based
productivity applications by leveraging the power and reach of the
channel.
This certainly isn’t Google’s first entry into the channel, nor is
it the last it will make. In fact, some could argue, as I will, that
this is the foundation for a much broader channel initiative that will,
in fact, disrupt more sectors of the traditional economy. Google’s next
stop: local advertising.
Google’s cash machine is dependent upon the contextual presentation
of paid advertisements to Web users. Google’s algorithms and AdSense
program have placed global advertising in the hands of everyone from
the largest corporations to the smallest mom-and-pop shop. The Internet
may have made the world flat, but it didn’t make it accessible. The
reason small concerns that once did business exclusively on Main Street
could never break out of their geographic boundaries was simply
visibility. Google—through its affordable and moderately effective
AdSense keyword and contextual search advertising—opened global
e-commerce to everyone.
While Google does a really good job of serving up ads for the likes
of Hewlett-Packard and General Motors, it’s not so effective at helping
you find a local drycleaner, dentist or auto repair shop. The vaunted
Yellow Pages was once the means for finding local services and
resellers, but even the online adaptation of the phone book is only
good for those willing to pony up hefty display advertising rates. More
times than not, the results presented by online phone books are not
local enough and obviously incomplete.
Inside Google, plans are being shaped to bring Google professional
services to the local level. Rather than having local businesses
completely self-serve their AdSense campaigns, Google wants to engage
technology resellers and solution providers, local advertising agencies
and marketing companies, and local newspapers to provide AdSense
architecting and optimization services. Google has disrupted
traditional marketing and advertising models by charge pennies for ads
and premiums for click-through rates. It all works great if you’re
marketing to the world, but the model falls apart when you bring it
down to Main Street. Google knows that the small businesses of Main
Street trust their local peers to provide expert advice and service, so
tapping that virgin field of potential agents would ensure Google’s
revenue engine remains primed.
Local marketing and media companies are a natural fit for this
strategy, but why solution providers? That’s simple: small businesses
equate the Internet to complex technology, so getting AdSense services
from a solution provider would be just as natural as buying gas from a
gas station.
Selling solution providers on the idea that they can make money by
picking the right words for customers to buy against to promote their
businesses is fraught with complexity and nuance. The model simply
doesn’t exist today and, as many have told Google, an AdSense channel
needs to be couched or complemented with something that solution
providers understand. Hence, the Google Apps channel.
But don’t start counting your pennies just yet. AdSense truly is a
value-add service, but it won’t scale the same for solution providers
as it does for Google. Google makes money on advertising by collecting
billions of pennies; solution providers can only hope for a fraction of
that stream. And, should the program fail for the local business, it’s
now the local agent’s fault—insulating Google and tarnishing the
solution provider’s reputation.
Just as Microsoft, IBM and other vendors of the previous generation
learned, Google is now discovering that it needs a channel army to
maintain its momentum, achieve market dominance and solidify its future
security. While Google’s “Don’t Be Evil” motto doesn’t apply to its
competitors, solution providers need to ensure that it does apply to
them. On the outset, Google’s grand channel designs appear entirely
tilted in its favor and not those of its potential partners.
Lawrence M. Walsh is vice president and group publisher of Channel Insider.
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