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Investors Start to Ask About "Other Revenue Sources" From Google

 2:16 pm on Aug 31, 2009 (gmt 0)

Investors Start to Ask About "Other Revenue Sources" From Google [news.yahoo.com]
Though Google's making more than $5 a share and dominating the lucrative search-ad field, some investors are starting to get anxious to see more success in other fields.

The recession is slowing online ad -- and thus Google's (NasdaqGS:GOOG - News) -- revenue growth, making investors impatient to see the company diversify into online video, the mobile Web and other avenues. The company plans a series of open Webcasts to explain its plans, starting Sept. 9.

Chris Baggini, senior investment manager on the U.S. equity team for Google shareholder Aberdeen Asset Management, wants to start seeing some other revenue sources.

"Google continues to gain share (in search), but I'd be very disappointed if four years from now they were not getting (significant) revenue from other sources," he said.



 2:26 pm on Aug 31, 2009 (gmt 0)

More more more... American greed... ;-)


 2:55 pm on Aug 31, 2009 (gmt 0)

Given G is upto now basically a one trick pony ( ad/sense/words) if they push for "significant revenue from other sources" ( G's excursions into "other areas not exactly shining in their profitability ) I think that they may find that they will be "flogging" in both senses a dead horse..

Unless the plex wins the rights to all the books that dont "opt out" ..

Or goes into "legit" movies or music distribution ( which will make the ISP's scream ) as opposed to what it does now ..shows you where the "shares" and the torrents are ..even caches them ..and then washes it's hands as to the consequences ..

Why didn't that defense ( "not on our servers guv we was only pointing the way and running ads on the page" ) work for pirate bay ? Could it be that some companies who profit from ignoring copyrights and slapping ads on their pages have bigger pockets than others ..but only the same ethos ..

Mr Baggini's kids must be telling daddy that they each want their own yacht ..and an island to moor each one on ..investment managers for asset management companies ..uruk hai


 3:22 pm on Aug 31, 2009 (gmt 0)

Google has an opportunity in enterprise areas with the Google search mini, Google Apps, Google voice, mobile sync, etc. They can power the majority of start-up or small business tech infrastructure with ease if they could get everything combined and make adoption simple.

The issue for Google product launches has always been in the execution of their go-to-market strategies, cross-promotions to current users, and ease of adoption. While they have the products, they haven't bundled it in neat easy-to-comprehend and execute packages.

Much of their adoption issues stem around Google accounts. You can't easily migrate all your data, or combine G products with apps (if you use Google apps and Google voice, you have two different Google accounts).

Google has the opportunity, and the individual products. With search ads it was easy; advertiser's follow eyeballs. With enterprise applications, it's a different marketing and positioning strategy to increase adoption.


 3:41 pm on Aug 31, 2009 (gmt 0)

Google Apps, Apps Engine, and even Enterprise Search are both growing and definitely could be significant sources of $.


 3:44 pm on Aug 31, 2009 (gmt 0)

I would have to agreee with him on this one (I don't see this a greed) as suggested by many of us here "Don't put all your eggs in one basket" Meaning don't depend one SE for all your traffic as one day poof you from #1 to #100.

Take an example WalMart they have ventured into Food, Banking, Wholesale, etc. to open up more revenue avenues. I have added new types of products to my ecommerce site to create more revenue streams.

This just makes good sense and advice that is well founded for any business to open more revenue streams.


 3:50 pm on Aug 31, 2009 (gmt 0)

>>More more more... American greed... ;-)

i agree with your sentiments, although i must point out that Aberdeen Asset is a british company.


 4:38 pm on Aug 31, 2009 (gmt 0)

which will make the ISP's scream[

Let them scream. NO sympathy from here. Problem is that they would turn around and hammer their customers worse than ever; which is coming anyway. To get 'quality' high speed service, I have one 'choice' - and they wield the power of that club unchecked as fat as I can see. In the end, it isn't the ISPs that will scream, it will be their customers. It's coming, regardless of where the bandwidth is drawn from.


 5:35 pm on Aug 31, 2009 (gmt 0)

"And the rich get richer"


 6:39 pm on Aug 31, 2009 (gmt 0)

>> Meaning don't depend one SE for all your traffic
>> as one day poof you from #1 to #100.

Google fears they can go sandbox/penalty itself..


 6:53 pm on Aug 31, 2009 (gmt 0)

More more more... American greed... ;-)

So this doesn't turn into a nationality flame war... I prefer "investor greed" ;)


 6:59 pm on Aug 31, 2009 (gmt 0)

Actually, Google has already diversified quite a bit. It started out by selling search appliances and search ads. It then started a contextual text-ad network comprised of mom-and-pop publishers, corporate megasites, and nearly everyone in between. Later, it added display-ad serving with DoubleClick. Now it's acting as a middleman between third-party advertising networks and AdSense publishers. Anyone who thinks those diverse businesses fit under the heading of "one-trick pony" doesn't understand how different those businesses are.


 7:07 pm on Aug 31, 2009 (gmt 0)

While an early stage investor in some Internet firms, Altucher says MySpace's recent acquisition of iLike -- $13.5 million for a site with 55 million users - is further evidence the days of crazy valuations are over. "There's no more smoke and mirrors," he says. "You have to deliver to get value."

So while usage will expand as the Internet becomes even more integral to our daily lives, Altucher says investors are much better off looking for opportunities elsewhere -- maybe even for the next bubble.



 7:08 pm on Aug 31, 2009 (gmt 0)

Never enough for those blood sucking asset management groups now that the mortgages are gone...

Its good to see they have a clue about how Google or any other online business makes money. I think I will call them up and order anything they offer.


 7:12 pm on Aug 31, 2009 (gmt 0)

I started in advertising ( internationally ) about the same time or maybe even before your self SJ :)..understand it perfectly :)..placing or selling ads for others is just variations on the trick ..dress up the pony different each time you parade it around the ring doesnt make it a different pony ..which if many here weren't so beholden to G and so terrified that G knows who they are on this forum ;) and that they could get dumped from adsense at some time for "speaking out" ~:o..many more would say .."seen this pony before";)


 10:03 pm on Aug 31, 2009 (gmt 0)

Google should now be valued as a utility company (except they don't pay any dividends) or like Visa or Mastercard. They've got a good thing going but there is only so much inventory they can monetize. The better they organize it, the more advertisers know what works and what doesn't and will adjust budgets accordingly which in this climate is likely to be downward for the forseeable future.

If you have cash and a good biz model, (a site that attracts people with purchase or transaction intent) it is a great time to go after marketshare if you don't need a quick return and have management or the beloved "investors" breathing down your back.


 11:35 pm on Aug 31, 2009 (gmt 0)

Google should now be valued as a utility company

Contrary to utilities, Google still has greater potential for growth and developing some new revolutionary product. Just look at Apple. They were considered something of a stalwart in the tech industry, then came the iPod, the iPhone... It's the nature of the vibrant technology and internet industry. A lot more expectations are factored in the stock price than some old, low growth business, and Google always come up with something new or reinventing and improving something old (like Gmail).


 11:55 pm on Aug 31, 2009 (gmt 0)

The net profit revenue from gmail( which is just ads slapped on mail ) is what ?

Google always come up with something new or reinventing and improving something old

examples ?..monetized ( in profit ) only ..STP

if they havent been able to put ads on "it" ..it hasnt made them any money ..in fact usually the opposite ..and then they drop "it" quietly ..

shotgun approach ..sometimes works ..but when all you have is ads on other peoples content ( adwords on serps included in that )..everything tends to look like a bill board ..on a "one trick pony"

"what ever it is slap ads on it" is hardly a diversified business ..

and street view , books etc is getting them into trouble to the point where they are advertising openly for paid liars ( spin masters /PR staff ) ..the smoke has dispersed ..the mirrors are self tarnished ..the cred is gone ..they are seen to be doing evil ..

so ..we live with them ..( and mitigate ) and diversify what we depend upon for revenue streams and wait for the next "start up"

I think Mr Baggini was basically saying to the plex ..show us a new trick within 4 years ..or we are gone ..and our money goes with us ..


 1:43 am on Sep 1, 2009 (gmt 0)

I think Mr Baggini was basically saying to the plex ..show us a new trick within 4 years ..or we are gone ..and our money goes with us ..

From the way the quote was worded, I'd say that Mr. Baggini expects Google to have additional types of revenue in four years. (Note that he said "I'd be disappointed...", not "I'll be disappointed.") Of course, it's always possible that English isn't his first language or that he spent too much time studying finance at the expense of grammar. :-)


 5:05 am on Sep 1, 2009 (gmt 0)

What amazes me, is how difficult would it be for Google to diversify with the current set of assets? Yet Google still can't figure it out or unable to play. Google is in its own bubble.

And Apple is still one hit wonder. They have the ipod but they don't have a dent in CPU market (except in the in the mind of mac fanboys). And Steve won't be always there to perform magic trick.


 5:20 am on Sep 1, 2009 (gmt 0)

Google is currently the champ at it's core business, I hope G ignores the investors and continues to improve further.

Investors don't want a stable stock market anyway.


 11:43 am on Sep 1, 2009 (gmt 0)

Google should try radio and magazine advertising. Oops - they already tried that!

I think if they are able to launch a true alternative for Windows OS and the Chrome browser gets 40% percent of the market, they will find more ways to dominate advertising.

I don't know why investors want them to diversify so badly. Most things Google has done outside of PPC has not fared very well. Enterprise search has been in place for several years and still accounts for <1% of revenues.


 12:01 pm on Sep 1, 2009 (gmt 0)

They aren't a "one trick pony", they have plenty of products. They have chosen for various reasons to monetize these with their advertising technology, rather than other ways, such as subscription.

e.g, they could flip the switch with WMT to paid subscription overnight. That might or might not be a good business move (and I have no opinion either way on that), but it shows the fallacy that they're a "one trick pony." Like most of their products, they choose to make it free. That doesn't mean it has no value.


 12:08 pm on Sep 1, 2009 (gmt 0)

I am sure that Google will have some additional revenue streams soon. I believe that they are looking at trying to produce a records database for the NHS (UK free health service). The NHS would gladly pay for such a system, seeing as they have spent a vast amount of money trying to create one...


 1:03 pm on Sep 1, 2009 (gmt 0)

they could

But they don't and they have'nt and they didnt ..
it's all ads based ..
I've worked with a lot of circus people in my time ..they and I ( and most rational people know ) that if all the pony ever does is run around the ring with an ad stuck on it ..it's a one trick pony ..even if you braid it's mane differently or change the saddle and the blanket before each appearance ..

Circus people have a name for those who cannot see this ..it's "marks" ..

Fooling the marks is how they and Google make their money ..

Some circuses even let you watch the pony perform for free ..and then sell you a box of pony food to feed it at the end of the show ..circuses like people who buy the boxes of food best of all ..they are the best marks ..they have been entertained ..they are contented ..they got this for free ..and they dont count the 50ct box of oats that they bought to feed the pony..a box of oats in a circus works out about 2000 times more per ton ..than the oats that are delivered to the circus via the back flap of the tent ..:))

The marks will of course argue that they have not been "had" ..indeed they have not ..they are happy :)..but it was still a one trick pony that entertained them ..

Plus another mark paid to put the ad on the pony's back ..and maybe the first mark saw it and bought some of whatever it was advertising ..:)

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