Google changes its monetization strategy toward a Microsoft one?

Google changes its monetization strategy toward a Microsoft one?: “

I was just talking with Dave Winer and we both noticed one thing in the custom search engine videos I posted on the ScobleShow yesterday that could signal a change in Google’s monetization strategy.

If you use the Google search component on your Web site you’ve gotta accept Google’s advertising too.

See, when I was at Microsoft I was really impressed by Google’s strategy because it really screwed with Microsoft’s strategy.

Let me explain.

At Microsoft each group, like, is really run like a separate company underneath a venture capital firm. In fact, Microsoft’s execs look at Microsoft like a venture capital firm. They invest in ideas that get pitched to them through Bill Gates’ ThinkWeek site, then watch to see if they are coming through on their plans.

It works the exact same way on Sand Hill Road, right? If PodTech doesn’t meet its revenue projections, or if it spends too much on new servers, the VCs get nervous. If it goes on long enough they start shutting groups down. That’s why we’re all nervous about when this Web 2.0 bubble will start deflating.

So, what does that all mean? Well, if you’re a group program manager at Microsoft you’ve gotta ‘sell’ your team’s ideas to execs and one of their questions is how you’ll bring revenue into Microsoft and keep expenses under control. If you don’t have a good idea of how revenue will come in, you probably won’t get funded. There are exceptions, but they are rare and they probably don’t get to exist in product groups.

Now, how did Google mess with all that? Well, Google was funding stuff without any clear monetization strategy. Google Maps, for instance, doesn’t have ads. Did you see the ‘Classified’ button on Microsoft’s maps?

See the apparent difference in company strategy?

Now, why was Google’s strategy brilliant? Even better, why did it totally mess with Microsoft’s business model?

It got them a great brand name. Remember Maryam’s nephew in Wales? He said ‘I’ll Google that.’

Why did he say that? Because Google has — by giving away its services and not having any apparent monetization strategy — built an awesome brand name. One that’s in front of you on millions of web sites/blogs/MySpace pages, etc.

Google Maps are used on all sorts of Web sites, for instance (that list probably only has 1/100,000 of what’s really out there — I’m seeing Google Maps used on all sorts of weird little restaurant sites, and other places.

Why? Well, in part, because they work fast. In part because they were the first to use AJAX so that you could drag them around. In part, because they have an API so you can do weird stuff with them. But also, in part, because there’s no weird ‘monetization strategy’ on them. Think about if you’re a restaurant and Google lets companies start to advertise on the maps — you could potentially be displaying ads for your competitor ON YOUR OWN SITE!

Lucovsky and Seth are the first two to show us that Google’s strategy is shifting more toward a Microsoft one. That’s something that bums me out, but opens opportunities for other companies to rebuild their brand names and get Web site developers/designers and bloggers to switch to them.

Why did that mess with Microsoft’s business model? Well, they had no way to deal with troublemakers who wanted to do Web services for free without any advertising on them who wanted to spend 10s of millions of dollars of the company money. Inside Microsoft that’s called a marketing expense and you need to convince the marketing department that such an expense would be justified.

I thought the strategy of raining down hundreds of free code gadgets that do things like Lucovsky’s video bar was brilliant. Microsoft would be hard pressed to match Google if Google continued to do just that — too many people inside Microsoft who run product teams think first about monetization. Even if those people recognize the strategy that Google was using against them (they did) it slowed them down in convincing stages to make it easy for teams inside Microsoft to come up with something new without having a good monetization strategy in place first.

Is this going to retard usage of those gadgets on Web sites? You betcha! It’s one of the reasons why Toni Schneider and Matt Mullenweg won’t let users put gadgets on their blog.

And, take blogs out of the picture for a minute, if I were a big company would I put a Google search engine on my Web site? I sure will think twice about doing that.

Here’s why: you’re forced to see ads. Possibly even your competitor’s ads. Imagine going to General Motors, doing a search, and seeing ads for BMW and Toyota. If a CMO allowed that to happen I bet they’d get fired the first time a board member saw those ads showing up.

Did you realize that over on Naked Conversations, our book blog about corporate blogging, we can’t put Google ads on there?

Why not? Well when we tried Google ads we got a ton of porn advertising (we’re the #10 result for ‘naked’). Yes, we’ve out SEO’d the porn industry, but that means we can’t take Google ads cause Google ads (unlike ads, from, say, FM Media) won’t let us choose which advertising we want on our pages. So, we removed the Google ad bar from our blog.

This is what Dave Winer and I were talking about this morning. We’re looking at a lot of Google advertising on Gmail, on blogs, on Web sites, and other places and we’re unimpressed. On the main search engine it makes a lot of sense (and is why probably 98% of Google’s revenues come from advertising on But on blogs? On Gmail? On other components? It makes a lot lot less sense.

What does make sense is when you see a Google map object, or a videobar, that it keeps the Google brand in your face and makes you feel good about Google. That messes with Microsoft in a big way. It’s the new-age equivilent of doing advertising on the Super Bowl or the World Cup.

I want to put Google stuff on my blogs, but not if Google’s gonna be making money off of my content (or forcing me to make money off of my content).

One thing I’d like to work on with other community members is a list of gadgets/widgets/codebits that will guarantee that there’s no advertising that’ll be forced down.

Wanna help? We probably should open a wiki. Oh, heck, I just did that over on Wetpaint. Funny enough there’s Google ads on that Wiki. -)

UPDATE: a commenter here, OR, says that the ads were actually added in response to user requests (they share revenue with site owners). My answer? That’s a good point, but that should be a choice so that on sites that I don’t want to accept advertising I can turn that off.

(Via Scobleizer – Tech Geek Blogger.)


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