Is mobile really a sure thing for Google?
news analysis Google sees mobile as its future, but the company's success in the mobile realm may not be a slam dunk. — With half the world's population soon owning a cell phone, the opportunity to reach more people on the Web via a mobile device is huge.
Context & Ripple Effects
This CNET analysis lands at the end of a six-month push in which Google has laid out an unusually public mobile agenda: AdSense for Mobile launched in September 2007 to open up mobile advertising, and by November the Wall Street Journal was reporting even bigger plans for mobile phones beyond search. By late December, reports circulated that Google-powered handsets could debut as soon as February.
The skepticism is grounded in Google's own recent experience: executives have complained about how hard it is to monetize social-networking traffic like MySpace's, even though the August 2006 search-and-ad deal generates 27 percent of Fox Interactive's revenue. The question the piece poses is whether sheer audience scale — half the world soon holding a cell phone — translates into revenue, or repeats the social-networking gap between reach and monetization.
First-order effects
- Google's mobile ad business now has to prove itself against the company's own track record: AdSense for Mobile exists, but the analysis argues success is not assured, putting pressure on the products rolling out this year.
- If the reported February arrival of Google-powered handsets holds, carriers and handset makers face an immediate choice about whether to carry Google's software and ads on their devices.
Second-order effects
- Rivals in mobile search and advertising — Yahoo and Microsoft among them — are pushed to match Google's mobile distribution moves just as Microsoft's takeover offer for Yahoo forces Google and Yahoo leadership into direct contact over a joint response.
- Operators gain leverage: whoever controls the handset and the network decides how much of Google's advertising stack reaches the subscriber, echoing the gatekeeper dynamics Google faces on the desktop web.
Third-order effects
- If the pattern from social networking holds, the structural lesson for the industry is that audience growth alone does not equal ad revenue — platform owners who control access to the user, not those with the largest audience, capture the economics.
- A credible Google hardware-and-software play would shift mobile from a carrier-controlled market toward one where search and ad platforms compete to be the default layer on third-party devices.
The trend: Search and advertising platforms are racing to extend desktop dominance onto mobile handsets, with carriers and device makers — not audience size — deciding who gets paid.