Nick Carr makes some good points about Google’s strengths, and their weaknesses.
“To competitors like Microsoft and Yahoo, Google must seem like a greased pig. You can see the damned thing running amok in your garden, but you can’t figure out a good way to get hold of it“
The beauty of Adwords, in terms of defensibility, is that Adwords uses an auction model. It can’t be underpriced.
“Schmidt: Another example of Sergey [Brin]â€™s observations is that our advertising network is very powerful because it’s quite resistant to certain competitive attacks.
Vogelstein: Such as?
Schmidt: Because itâ€™s an auction market you cannot under-price it. This point is lost on many, many people.“
However, Carr identifies an area where Google might be vulnerable: Adsense payouts.
Â ”Introduce a free version of AdSense. By free, I mean that you tell publishers that if they run your ads on their sites, they get to keep all the advertising revenues. 100 percent. You won’t take any cut. Immediately, you put a lot of pricing pressure on an important source of revenues and profits for Google.“
This is certainly an initiative many publishers could get on board with. Google would be forced to compete on payouts.
However, Yahoo and MSN would also need the volume of advertisers. And they’d need to get off their behinds and actually provide an international distributed ad network . Adsense was rolled out internationally – when? 2003?
It’s now 2007.
Where is MSN? Where are Yahoo (internationally)?