Google Kills a Sacred Cow

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Google (Nasdaq: GOOG  ) bets the (server) farm on innovation. In the eternal (and perhaps impossible) quest for the perfect user experience that will keep everyone using its money-making search services, there are no sacred cows.

The latest example comes from improvements to the Google Suggest feature. You know how you get suggestions on how to flesh out the query you're typing into a Googlish search box? That suggestion list just became context-sensitive, more personalized, and more likely to send you to your destination without ever seeing a page of search results.

Oh, and you'll see advertising in that box, too. If you never see a results page, you might still send revenue Big G's way.

That traditional list of search results has been a staple of the Internet experience since, the forefathers of today's Hewlett-Packard (NYSE: HPQ  ) ran AltaVista, and Yahoo! (Nasdaq: YHOO  ) was more a directory of links than a content portal and search service. But tradition counts for nothing in Mountain View. Navigating away from Google's properties before you even hit "enter" on your search query shortens the wait for fulfillment for the user, so Google built in some cash generation measures and rolled it out. The ad-laden results page just became less important, and the advertising game just changed significantly.

I wouldn't be surprised to see businesses designing their websites in a way that pushes them into the "navigational suggestions" category for important keywords. Likewise, I imagine bidding wars erupting over the prime virtual real estate that is an advertising spot in suggestion lists for popular search terms such as "Viagra," "Britney Spears," or "swine flu."

Both of those developments would be cash cows for Google -- especially the possible bidding war. Screen space is scant in that drop-down box, and getting there will probably be expensive. But as long as that investment drives traffic, which I'm sure it will, it'll be worth it to the advertisers.

Yahoo recently promised to kill the typical "10 blue links" results in favor of more dynamic presentations. Google immediately took that idea one step further and did away with results altogether for many searches. While Yahoo, Microsoft's (Nasdaq: MSFT  ) MSN/Live/Kumo/whatever, Time Warner's (NYSE: TWX  ) AOL, and IAC/InterActiveCorp's (Nasdaq: IACI  ) depend on exposing users to as many ads as possible by keeping them on their sites, Google is going the other way. All it takes is one ad -- the right ad in the right place -- and Google's cash flow is secure.

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Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like. The Motley Fool is investors writing for investors.

Read/Post Comments (2) | Recommend This Article (7)

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  • Report this Comment On May 21, 2009, at 5:44 PM, oceanye wrote:

    I sold my poosition in google today as it is too cumbersome and always on the verge of being sued by someone. I can do without all the controversy.

  • Report this Comment On May 21, 2009, at 5:47 PM, oceanye wrote:

    My portifolio is in good condition, but as I am a neophyte at this logic game I'm sure I can use the info.Sounds good to me.

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