An idea for Microsoft (or eBay?) to collapse Google's business model.
Disclaimer: With a few shares each of Microsoft and Google, I'm invested in both camps and not interested in seeing either die. But that won't keep me from sharing an idea.
There has been a lot of discussion on how Microsoft can catch-up to Google's search business the momentum/leadership this has generated. Fortune Magazine had a good article by Fred Vogelstein chronicling the giant's catch-up activities (Fortune Magazine article "Search & Destroy" [May 2 2005]). The article goes on to mention that Microsoft's past competitive tactics of bundling (Office, IE, Windows Media Player) and/or giving away things for free (again IE vs. Netscape, WMP vs. Quicktime vs. RealPlayer) won't work against Google. End users seem to love love the Google ideals: great free and simple and web tools (search, gmail, picasa, desktop search, etc. Try the new personalized Google home page at google.com/ig).
So how can Redmond (or other great online brands like eBay or Yahoo) battle Google? Trying to outsmart geeks in one camp vs. another seems to be futile. After all, how many search engines do we as users want to keep testing to see which one is better? I really don't care to ever try A9 again, Yahoo's search and the 5-10 others that I may have spent a minute trying in the last year. Not to mention the risk and expense playing technology leap-frog can lead to, and rarely guaranteeing a long-term win.
So if you don't want to 100% rely on a technical advantage, that users may or may not even appreciate, why not try to mess with the business model. Especially if you think Google may one day build tools to compete with your business.
To do this against Google you have to realize that 90-95% of its revenues come from advertising related activities. Google's Adsense and Adwords services have created industries and viral benefits to Google giving it's search and advertising exposure to probably the largest network of websites globally. Who benefits right now: 1. Google, 2. Website owners, 3. Advertisers, 4. End users. About 50% of Google's Ad revenues right now come from its Adsense network, where website owners share their traffic and give up a small block of real-estate and Google will advertise complimentary services where click-thru revenues are shared with Google and the Website owner.
If I was Microsoft, I would try and get End-Users into this revenue stream. Imagine as an end user, getting paid each time you legitimately click on an Ad and getting a monthly cheque from Microsoft or a micropayment into Softies Paypal-type system. Google already has to scan its logs to make sure Website owners aren't Google-bombing the ads on their sites to grow revenues, this same fraud detection would be needed at the End-user level (ie. make sure the same user doesn't click on a hundred ads in a session to grow their personal bank account, or alter the Advertising system to be Cost Per Acquisition vs. Cost per Click based).
For instance if I owned a widget site and wanted to grow my online sales, I may bid $1 per Click (known as Click-thru or CPC) to have my ad appear on a popular site. Right now, Google displays this ad for the site owner and shares any CPC revenues with them in exchange for the traffic and the exposure on their popular site.
Microsoft could do the same, but bring End-users into the equation. Microsoft just wants to hurt Google, so they could give end users a share of their portion. Microsoft could also attract a higher bid by site owners if they went to a Cost Per Acquisition model. Instead of just attracting online window shoppers for a $1/bid on Google's Click-thru model, I would rather bid $2 or $5 if I was guaranteed a sale in the Microsoft CPA model proposed.
Imagine what getting End-users into the money stream would do for Microsoft's Google-busting activities. Customers would love to get into the action and get some cash coming in to subsidize their broadband costs or online purchases. Site owner's would also like to a have a real alternative to Google (for my online businesses, I have turned off FindWhat, Overture, Looksmart, etc...they just were not delivering traffic that Google was, but given that, my bidding on Google's advertising just can't keep up with the bigger players).
I really think the business model above to take-on Google by a top-tier online brand has some legs. Any feedback on why you think it may falter would be appreciated!
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