Over the past few days, David Meier and I have been airing our disagreements when it comes to Google (NASDAQ:GOOG). Missed them? Don't worry, I'll link you back to that clothesline of articles at the end of this piece. Promise.
In a nutshell, David Meier argued that the popular company should refrain from trying to become the middleman in every online exchange. I disagreed. Why take on the likes of Yahoo! (NASDAQ:YHOO) and Microsoft's (NASDAQ:MSFT) MSN.com?
It's not just because it can, mind you. It's because it has to. "Using search technology to generate demand is Google's unique position," David wrote, and I agree. But now that Google has won that battle it needs to cultivate the supply to satisfy that demand. I mean, that's a great problem to have, isn't it?
Anyone remember that old arcade game Tapper? The one with the mustachioed bartender going from counter to counter to top off root beers? I was young and hooked on sarsaparilla, so my apologies if it was real brews that he was sliding down the bar counter. Anyway, that's Google today.
It's got so many sponsors bidding for clicks on paid search results that the company has been quick to launch its own Gmail email service and win the hearts of mainstream website publishers with its AdSense program.
How stocked is Google? Well, until this week it required that AdSense-approved content sites run no more than a single block of ads on any given page. In an email to publishers yesterday, it said it is opening up that option to allow for as many as three ad blocks.
In other words, the company has such a backlog of sponsored ads that it can't distribute them fast enough through its existing network of consumer access points.
Contrast this to Yahoo! and its Overture service. As the paid search pioneer, Overture should have owned this market. This is a niche that has the same size advantages as eBay (NASDAQ:EBAY), with sponsors flocking to where the eyeballs are. But Overture has been asleep at the wheel. Google launched the wildly empowering AdSense program more than a year ago, and Yahoo! inexplicably still hasn't come up with a response.
This is why Google needs to keep expanding. I'm not suggesting that it hit up Monster (NASDAQ:MNST) to compete against Yahoo! and its Hot Jobs site. I'm not suggesting that Google should be scooping up content sites such as iVillage (NASDAQ:IVIL) or TheKnot (NASDAQ:KNOT) to own the billboard space it covets. Well, maybe I am. So what? Is it really that outlandish? The reason that Google was able to rise so quickly and effectively against Overture was that it was the one that refused to remain stagnant.
You remember what happened when the Tapper bartender stood still, right? The empty glass mugs would slide off the counter and smash to the floor. It's a lesson worth repeating: stagnancy breeds Game Over.
- Misinterpreting Google by David Meier
- Be the Portal, Google by Rick Munarriz
- Google: Ultimate Demand Generator by David Meier
Do you think Google should acquire content sites or may it create a conflict of interest? If you were Google how would you satisfy shareholder appetite for growth? All this and more -- in the Google discussion board. Only on Fool.com.
Longtime Fool contributor Rick Aristotle Munarriz is a satisfied Google user. However, he does not own shares in any of the companies mentioned in this story.
