As I have been saying for a while, the business model of Google (or at least a significant chunk of it) is that of an advertising sales representation company. A sales agent, if you will. Sure, Google is a media company and a technology company that dominates search and also has created all manner of cool stuff. But as this article in the New York Times about new advertising deals Google has to embed video ads on major media company sites, when it comes to their relationship with media companies (traditional and new), they are not viewed as “the enemy” but as a revenue stream. A bigger and bigger stream.
Like independent advertising sales reps, Google sells ads that appear on the websites of media they do not own. (In their case, they also have plenty of owned inventory their ads appear on, as well.) They take a commission (I’ve seen it estimated from 20-30%, depending on the volume of advertising) in the manner of an independent sales rep. They now have a large sales force calling on media buyers and product marketers — just like independent sales reps.
In the past when I’ve pointed this out, I’ve had some really smart people respond with insightful reasons explaining to me why Google is the enemy of media sites. Others have pointed out that Google is the hot air inflating the current bubble of Web 2.0 startups: if Google stumbles, the bubble bursts. If Google hiccups, we’ll all die of pneumonia.
I am not wise enough to figure all of this out. However, I’ll keep cashing the checks* until I do.
*While no ads appear on this blog, I am associated with some other websites that do derive revenue from Google Adsense. I like the checks they send, but they are not a significant portion of my company’s overall revenue. But the stream grows bigger each month.