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eyeballs and widgets and winners

I find it quite staggering how much dotcom M&A activity going on right now.  IPOs seem to be coming through daily in a race between the big four Google, Yahoo!, News Corp and Microsoft not to lose out.    All seem to be spending over revenue growth in activity not seen since the boom/bust days of 1997-2001

Of the biggies, Google seem to me to be the main player as they continue to milk overseas markets and gain profit increases – up 11% this year mostly due to a strong 2nd half – and this despite Yahoo!’s 37% drop in profits posted last quarter due to a decline in corporate advertising online:

Google-owned Web sites generated revenue of $1.63 billion,
or an 84 percent increase from $885 million in the third
quarter of 2005. Google earned 60 percent of its total revenue
from its own sites, versus 56 percent a year earlier.

Revenue from affiliated Web sites using Google’s AdSense
programs accounted for 39 percent of revenue, or $1.04 billion,
a 54 percent rise over year-earlier revenue of $675 million.

Google’s growth rate is two to three times faster than its
Internet peers: eBay Inc. (Nasdaq:EBAYnews) at 31 percent, Yahoo Inc.
(YHOO.O) at 19 percent and major software rival Microsoft Corp.
(Nasdaq:MSFTnews), which has revenues growing at about 10 percent.

And this disparity is down to the strength of ppc ads rather than discretionary banner ads, which Yahoo! relies on to serve up to its rising number of users.  As ad spend drops discretionary spend is hit hardest. However, Yahoo! should come back next year according to The Examiner:

Wall Street has been frustrated with Yahoo for most of this year,
largely because the company hasn’t been targeting online ads as
effectively as Google Inc., the Internet search leader that runs the Web’s largest marketing network.

Yahoo’s improved ad platform, code-named "Panama," is designed to close the gap with Google.

But it’s not just that Google’s revenue growth and search platform is so strong but they genuinely seem to have a strategic roadmap that the others lack [though I suspect Murdoch has a vision].  The brand mantra to "organize the world’s information and make it universally accessible and useful" is backed up by their 10 things they know to be true of which "do one thing really well" is spot-on.  They do search whereas the others have been pulled and swayed in other directions. And search pays.  But they’re also building up an enviable swathe of GTD browser-based products [buying up writerly etc etc], providing chat, docs, spreadsheets and calendar to organise your life around them; they’re becoming indispensible.  No-one else offers such interoperable life support.  So Google  on the one hand  allow  advertisers to do ppc well and on the other they’re building  lifetime utility based value amongst users from which to serve up ppc.  Yahoo!’s  many excellent services [del.icio.us and flickr]  don’t hang together in the same way; they remain disparate stand alone utilities.

Be interesting to see how widgets [what Microsoft calls gadgets] take off next year  with their support in Microsoft Vista etc.  Google isn’t really set up for widgets in the way that Yahoo! is with it’s purchase of Konfabulator, now Yahoo! widgets.   The melding of webservices and client  app  possibilities in widgets for the development of new services is massive… and perhaps this is where Yahoo! has a chance to bite back?