3rd January 2006: A strange name, GOOGLE, an innovative search engine, a simple interface, here is an interesting initiative. www.google.com is in beta and reserved to a limited number of users for the moment.
The business model hasn’t been defined yet, but there is a strong likelihood that Google will sub-contract the advertising on its search engine to Giant, the largest sponsored links company which displays on the most important portals and editors in the world including Yahoo, MSN, etc…
If it’s successful, Google will be able to count on substantial revenue…etc…etc…
This statement is, of course, inexact, BUT IS EXTEMELY INTERESTING FROM A HISTORICAL POINT OF VIEW.
Indeed, if Google had sub-contracted (with a "multi year" contract) sponsored link display on its website in 2001 for strategic reasons to GOTO (which became Overture), it would be OVERTURE which would be worth MUCH MORE than Google. That wasn’t the case!
"Google's 2001 revenues were on pace to hit nearly $85 million. But Overture was growing faster – its 2001 revenues stood at the whopping $228 million" — Google executives certainly took note of Overture's success, and it was not hard to figure out why the business worked: it's auction-based pay-per-click advertising network had ten's of thousands clients.
Extract from: The Search by John Battelle
Google’s intelligent tactical move was to develop AdWords very early on, its own technological solution to manage sponsored links display in PPC and thereby control its revenue sources, and increase their value.
Today, this strategy must inspire the web’s main actors, but making a pact with Google or Yahoo in an advertising partnership, MEANS INCREASING THESE TWO SPONSORED LINKS SUPPLIERS’ VALUE, NOT YOURS.
Where are the dollars? What is there beyond Adsense — is everybody mortgaging their future to Google? by Scott Karp
Despite this, Myspace, Youtube and all the others still sub-contract the control of their advertising spaces.
What I am explaining, is that revenues controlled by a proprietary solution are what makes the value of a Web 2.0 company, and not sub-contracting, or their media status.
