Google is Blind to Shifts in 2006 Like Yahoo Was in 2001

In a wide-ranging piece on MarketWatch, Ben Charny talks to a number of researchers and financial analysts who are worried that Google is getting trounced by upstarts in three of the hottest sectors of the web - blogging, video sharing and social networking. In particular, the analysts interviewed are concerned that once Google's search revenues cool off, there will be nothing to fall back on. The article also notes that Google has had no home runs outside of its core search offerings, a common meme in the media these days.

If this all sounds familiar, it should. Back in 2000 and 2001 Yahoo CEO Tim Koogle took heat on a similar topic - Yahoo's dependency on banner advertising. He waited too long to diversify the portal's revenue stream. Then, the bottom dropped out of Internet advertising and he lost his job. In 2002, incoming CEO Terry Semel set a course to add new revenue streams beyond display ads, which Yahoo did through subscriptions, partnerships and acquisitions. Most notably, Semel was able to turn Yahoo quickly so that it capitalized on a brand new form of advertising - contextual search.

History is repeating itself and Google would be wise to learn from Yahoo's experience. The cacophony over click fraud has never been louder. At the same time, marketers are beginning to pony up huge sums to reach audiences that are gravitating towards social networks. The center of gravity in online marketing is beginning its slow shift to an entirely new format that Google is currently not monetizing. It has some great assets here, but it better figure out how to start making money from them. For now, Google seems to be asleep at the wheel much like Yahoo was back in 2001.

Technorati Tags: Google, Yahoo

Comments

[Mike Abundo]

They can start by removing the invite requirement on Orkut. That's just bad SEM -- ironic, coming from Google.

[makethelogobigger]

But Google isn’t totally without a foothold in the social end of things. They could tap into the collective community of Blogger since they run it and pool it as one, especially considering how much better blogs do than websites when it comes to SEO.

[Dimitar Vesselinov]

Inside Orkut
http://insideorkut.blogspot.com/

[Peter]

What he doesn't mention is that when Yahoo realized they had a problem, it was not such a huge deal for the Internet economy. If Google crashes, it will take everyine down with it, including the stock market. Let's hope that all those PhDs that they hired are working on some good solutions to ad additional revenue streams.

http://www.TheDollarFactory.com