Google Revenue: Why the One-Trick Pony View Persists
January 9, 2009
A one trick pony is a pony that does one thing. Like let kids sit on its back. The one-trick pony is highly prized among certain carnival concession owners. Kids who afraid of big animals may also cotton to the one-trick pony. Wall Street likes any type of animal as long as it makes a lot of money. Google’s viewed as a one-trick pony because the company makes money from advertising. Ignore the boundaries that separate Google’s different types of advertising. The one-trick pony at the carnival might do some more interesting things in its stall at night with another pony. For the carnival impresario and the Wall Street crowd, Google’s a one trick pony shown below:
Google Blogoscoped presented a textbook example of how the one-trick pony view of Google is perpetuated. Navigate here and scan the table that shows “how Google makes money”. The useful list of more than 80 products and services includes three ways to make money. For each product and services, Blogoscoped tallied how Google monetizes these services. The three ways for Google to make money are–you guessed it–one trick ponies. There are ads and some fees to get involved with ads; for example, to be an AdWord advertiser, Google charges. But this is a variation on the one-trick pony’s ribbons, not a change to the one-trick pony.
I think it would be useful to consider these types of revenue horses. In 2009, a couple of them will be given their heads. competitors may find these ponies harder to ride than the docile one-trick pony that sits quietly as noisy kids climb on and off; to wit:
- Payments from educational institutions for various Google services. Example: the fees paid by New South Wales to license Google services for school kids
- License fees from the oft-reviled but highly-disruptive Google Search Appliance
- Subscription fees to commercial Google products and services; for example, Google Earth or SketchUp
- Payments from partners to become one of Google’s best pals
- Fees assessed to organizations when one of their top dogs decides that paying Google for Postini email archiving is better than getting caught unprepared for a discovery process.
Do you want to be standing flat footed in front of this group of ponies. Source: http://www.summers-photo.co.uk/Feb2007/images/Stampede_jpg.jpg
My list of other revenue ponies is longer than this group of five. Looking at the GOOG too closely or from one narrow angle makes it difficult to perform these tasks:
- Assess which pricing models could be implemented with little or no warning for unmonetized products and services; for example, charging me to look at pages when running a Google Book Search
- Place Google in a competitive context where advertising will not work; for example, Google charges for certain content constructs that it creates and are not available from other online services. Think a directory of specialized vendors in a specific market like video production.
- Understand what business models Google will have to implement in order to meet its financial objectives and Wall Street’s expectations; for example, if travel advertising goes down, what monetizing options are available to Google to address that shortfall.
If one wants to understand Google, one may want to keep track of the revenue herd. Granted ads generate a whopping 95 percent of Google’s “now” revenue. But going forward I like to watch those ponies. One or two may grow up to be different revenue animals. More about these options appears in my forthcoming Google and Publishing study available this spring from Infonortics Ltd. here.
Stephen Arnold, January 9, 2009
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