A piece by Ben Thompson that makes some points some of us believe. Of course the future is too murky for this to be considered a crystal ball, but I do wonder why so many are so bullish on companies that live on advertising revenue - let alone relatively fixed and ineffective subsets?
The problem for Google is that there is no obvious reason why they should win this category. Yes, they’re an ad company, but the key to native advertising on the Internet is the capability of producing immersive content within which to place the ad, such as Facebook’s newsfeed, Twitter’s stream, a Pinterest board, or even your typical news site’s home page. Sites like Buzzfeed have taken this idea to its logical conclusion: their content is basically a marketing tool meant to show advertisers how skilled they are at going viral. Google has nothing in this regard (with the notable exception of YouTube). Moreover, all of the things that make Google great at search and search advertising – the algorithm, the auction system, and machine learning – are skills that don’t really translate to the more touchy-feely qualities that make a social service or content site compelling.
And so we have our parallel to IBM and Microsoft. IBM didn’t capitalize on PCs because their skills lay on the hardware side, not software. Microsoft didn’t capitalize on mobile because they emphasized compatibility, not the user experience. And now Google is dominant when it comes to the algorithm, but lacks the human touch needed for social or viral content. And so, when all of that brand advertising finally begins to move from TV to the Internet – and that migration is a lot closer than it was even a year ago – I suspect that Google is not going to capture nearly as much of it as many observers might expect.
This is the primary basis of my thesis that Google may very well be in a similar situation to early-eighties IBM or early-oughts Microsoft: a hugely profitable company bestride the tech industry that at the moment seems infallible, but that history will show to have peaked in dominance and relevancy.
Ben is going to get a fair amount of feedback on this one:-)