The past week was again dominated by big topics driven by the economic landscape.
From Microsoft’s attempted buyout of a struggling Yahoo to Cisco’s disappointing financial outlook, it’s clear that the Fun Train has left the station and the Reality Train is on its way.
1. Google works to torpedo Microsoft bid for Yahoo
Google is taking action on multiple fronts to derail Microsoft’s attempted buyout of Yahoo. The impetus of Google’s efforts is clear - fear.
The company’s disappointing fourth-quarter results have shown that Google is vulnerable and it’s not surprising that Google sees a Microsoft marriage with Yahoo as a real threat to its business.
While I am a Google user, most of my readers know that I’ve never been a Google fanboy and have argued that the company is overvalued.
It’s ironic that Google, now a massive company whose acquisition of Doubleclick has raised antitrust concerns, is still trying to ‘play Monopoly’ with Microsoft by complaining that Microsoft, which it claims has a “legacy of serious legal and regulatory offenses,” is threatening the “principles of the internet - openness and innovation”.
As Michael Arrington at TechCrunch points out, Google really isn’t in a position to claim that it’s the David to Microsoft’s Goliath. As he observes:
“The truth is that Google has become the new Microsoft, and if we want to avoid a repeat of history, we need to allow the formation of a real competitor to keep them honest. Otherwise, all the ills perpetrated on the world by Microsoft in the nineties will likely be repeated again, this time by Google.”
Amen. If Google wants to play ball in the major leagues, it has to learn to play with the big boys. After all, Google isn’t a child anymore.
2. MySpace users build up ad immunity
As I’ve discussed in detail before, social networks just aren’t delivering. This reality has come to the forefront recently with Google’s revelation that it’s losing money on its MySpace ad deal.
Now that the obvious is obvious to even the most uninspired publications, BusinessWeek’s Catherine Holahan observes:
“[A marketer’s] experience reflects growing frustration at a lot of companies hoping for a boost from advertising on social networks like MySpace. Across the Web, companies large and small, from Spreadshirt to Google (GOOG), are throwing money at social-network advertising but not getting the hoped-for returns.”
BusinessWeek also notes that 26% of all of Fox Interactive Media’s revenue comes from its $900m deal with Google. Catherine sees the blatant problem with this:
“Trouble is, Google pays News Corp. for that right even when the ads don’t generate much, if any, revenue.”
Obviously, this isn’t sustainable, just as I pointed out when addressing the same issue in the context of Microsoft’s deal with Facebook, which also guarantees certain payments.
3. Cisco wakes up to tough times
Cisco has joined Google as the latest major technology company to learn that the world of high-tech is not separate from the world financial markets.
The company’s stock was hammered on news of a “nasty downturn in orders” and expectations of slower-than-expected growth.
Perhaps most interestingly, Cisco has expanded its business over the past several years (it’s even increasingly present in consumer markets such as online conferencing and social networking) yet its “diversification” does not seem to have provided any hedge for its core business.
This serves as a demonstration that such moves may not have been of any real value to the company and its shareholders.
4. If online marketing is the future, why are some CMOs stuck in the past?
An interesting article by Knowledge Wharton addresses a complex topic - Americans spend the same amount of time watching TV as they do surfing the internet yet only 6% of advertising dollars go to the internet while 22% go to television.
While I think that some of the points made in the article are valid and highlight the fact that some forms of internet advertising do deserve a bigger chunk of ad budgets, I think the challenges and complexities that are hinted at the article demonstrate just why internet advertising isn’t getting as big a piece of the pie as some might argue it should.