On Google Finance and financing by Google

Jason Calacanis definitely gets it:

Google, of course, has taken a hard line from inception that they are not in competition with their content providers who run Google Adsense. However, Google Finance will certainly give pause to finance partners who run Adsense. Those partners have to now ask themselves "by running adsense are we supporting our competitor?"

If you’re a decision maker at a media company with online presence, you better listen to Jason… this comes from the guy who built a ~$30M (estimated) media company by relying mostly on AdSense for revenue.

This reminded me of a short story on the topic. For the sake of simplicity, lets abbreviate the names of the companies involved to (btw – why are the letters A, B or X, Y always used?….) – companies F and G.

Baseline: F Company (or – "FC") is an online media company that has a loyal
readership and has its own ad sales force. It has long standing
relationships with many of the prominent advertisers in its space.

Year 1: FC decides to replace a bunch of its ads with ads provided by G
Company (or – "G"). In parallel, it downsizes its in-house ad sales force
and forgoes many of the advertiser relationships it had maintained in
previous years. Year 1 turns out to be great – ad revenues are roughly the same as
before, but costs are down due to the reduced sales force.

Year 2: The monthly check from G keeps coming, and FC decides to outsource its whole ad sales to G, while relieving its
entire ad sales team. G now has direct ad relationships with most of
the advertisers that used to advertise directly with FC in the past. Revenues are decent, even if somewhat stagnant.

Year 3: G rolls out a new channel with content scrapped from FC as
well other sources on the web, making it superior to the content that
FC provides. Users love it and flock to G’s content.

Status of both companies at the end of year 3:

G – Has great content, a loyal and growing readership and a wealth of advertiser relationships.

FC – Has content, but readership is declining.
It has no advertiser relationships at this point, and relies on one of its biggest
competitors for revenues.

Is your company one press release away from leaving you obsolete and with no direct advertiser relationships?

Full disclosure: As co-founder of Quigo I will benefit if you make the wise decision and switch over to AdSonar after reading this blog…

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The Google/Yahoo antidote?

Interesting question by Ken Doctor to McClatchy CEO Gary Pruitt:

5. Will you push TMG (TGM?) for new collective investments, for instance,
in buying an ad matching company, like Quigo or Context Web, so that
the news industry’s reliance on Google and Yahoo for paid
search/contextual revenue can be reduced?

Well, I certainly agree that any newspaper (or for that matter, any other traditional media company) in the country that’s still relying heavily on Google AdSense for monetization is committing long term suicide. Ad sales is one of the three core assets a media company has (the others being owned content and readership).

A media company outsourcing its ad sales, is like a restaurant shutting down its kitchen and outsourcing the food part of the business to McDonalds.

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"It takes an awful long time to not write a blog book." ~Douglas Adams

Took an awful long time, but here I am. Hope to join an interesting conversation.

Now lets jump in and see what this whole blogging thing is about!…

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