When you look at the progress of Google over the last few years, most of its major advances have been in developing consumer-facing products like Android, Chrome, and Google TV that are completely free to the user and do not sell ads. Why would a company that derives close to 97% of its revenue from advertising seem to focus nearly all of its innovation on consumer products that do not directly generate advertising revenue?
- To follow the consumer: Google realizes that today’s consumer isn’t just consuming information on products via one advertising channel, but many, including online search, television, Internet video, billboards, print media, and more. Consumers are increasingly switching between different forms of media, even at the same decision point. Products like Google TV and Android OS offer the opportunity for Google to be involved with consumers even while their attention isn’t being spent online, but on the TV or mobile phone.
- To limit risk: As consumers increasingly switch between media, Google’s ability to serve consumers relevant ads where and when consumers want them becomes susceptible to outside forces Google cannot control. The policies of the owners of the media, regulatory agencies, and competitive factors can limit Google’s ability to succeed. By owning an ISP, or a mobile phone platform, Google is effectively limiting this risk by controlling it themselves. True, they won’t make much money off of Android or Google Fiber, but they limit being blocked from making money through advertising online and on the mobile devices.
- To create loyalty: People love free things, especially when they are of a high quality. The more great products Google can offer, the more people will spend time on Google’s services, and the more likely they will try out other Google products they have not yet explored. Someone loyal to Google’s free services is that much more likely to trust its ads and click on them.
- To integrate experiences: One major problem that prevents marketers from controlling the consumer's experience with its ads is that each form of media utilizes different technologies that are completely independent. If Google can create one common platform across devices with Android OS, Google TV, Chrome Browser, and Chrome OS, all of a sudden devices can communicate with each other and a consumer can be moved from one to the other effortlessly. Imagine something like a beefed-up version of Chrome to Phone, where you can watch an ad on TV and click a button to bookmark the webpage for later, sign up for a newsletter, or send the ad to go on the phone.
By positioning itself as a leader in the next marketing revolution, where the lines between the online and offline and the various forms of media blur into one integrated consumer experience, Google is both protecting its future as well as enabling its advertisers to take part in the revolution on its platform.
About the Author:
David Penz is a Marketing Analyst with SIGMA Marketing Group.