Saturday, May 26, 2007

How Google Makes More Money on Your Content

Recently, Google announced universal search where it would be integrating video, news, image and other results into Google search results. In and of itself it's a good user-centric idea because very few people actually click the tabs to other sections. Something like 95+% of all Google traffic is still Google Web Search.

However, now Google has found a way to make more money on its ads while retaining you on its site. Try the search for "zelda spoof" produced by our friends at EffinFunny. There, you will see on result 3 the EffinFunny clip.

Now click on "Watch Video"... That's right on the same Google results page, you will see the video through the YouTube player.

That's triple advantage Google:

1. Google's search ads are still displayed on the right side, click there and more cash flows to Google.
2. YouTube gets promoted - not bad for a Google property
3. Google gets to increase it's stats for "time on site" a metric that influences how much advertisers play.

Now when Google integrates DoubleClick, they can also display branded banner ads as most ads for video content is less context-driven and more brand driven. They will also be pressured to prioritize content on their site over others. Google is already engaging in cross-selling by showing the Google Checkout icon next to users of their Checkout service drawing your eye to the result.

Most importantly, even if the originators of the content - in this case EffinFunny - would have less of an opportunity to monetize their content. They can look more like a portal disrupting their implied partnership with site, "You make money when they click. We make money on ads next to your listing."

Hopefully, Google is smart about this and finds ways of sharing revenues and not prioritizing YouTube over others. But as you get bigger and more MBA driven, that does not necessarily happen. It's not a medica concentration monopoly case yet, but 5 years from now, it may be...

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