Wednesday, February 01, 2006

More on GOOG earnings: God Bless Om

Discussed in this post: Silicon Valley reaction to Google, growth of revenue from ad networks

I was so happy to read Giga-Om this morning. Om reports that Google's not-meeting-of-expectations was greeted by a loud ho-hum down in The Valley. People who are steeped in the business of interactive advertising and search in particular (and start ups for that matter) recognize that the fault may lie in the expectations. I certainly don't want to give stock advice, but I imagine there is a hungry group of investors, ready to grab GOOG shares when they are done sliding.

Om also brings up an interesting point about revenues coming more and more from Google's network. This is important not only because it demonstrates the reach of Google, but the network is also a great home for innovation. The decision about which ad to place on a page and how much to charge for it has long been a focus for Google. The bigger their network, the more they can develop algorithms that determine placement and yield management.

Eric S. mentions that more money is coming from existing partners in the network, and I don't doubt it. Google gets better at placing ads, the publisher begins to see AdSense as more valuable. Of course, the network is the real competitive space right now, and we hear more about companies like Kanoodle and Yahoo. But we should see more work done here, not only in technology, but also in partern-development.

Hopefully, though, Google (and anyone else) won't be stuck paying sky-high CPMs to build the network, as they have in the past.
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