Stephen Byrne

The limits of Google.

Last month Millward Brown Optimor published their fourth annual BrandZ Top 100 Most Valuable Global Brands rankings and would like you to believe Google's brand is worth $100 billion, more than double estimates for Coca Cola. While I have debated the worth of this kind of valuation and the plethora of sometimes questionable brand surveys in DIFFUSIONblog, in the wake of the beta release of the Google Wave, it seems now a good time to consider the limits of the brand.

Some people think Google breaks the brand model i.e. no advertising on its home page, no advertising per se but both these measures are merely symbolic. While Google may have inspired what many see as a form of brand disruption, is game changing and is somehow Schumpeterian, it is a behemoth brand utilizing both the common architecture associated with a monolithic brand as well as exhibiting a traditional set of values not unlike Apple and Virgin. 

Similarly, you could argue that Google has unlimited potental as a brand and its brand extensions merely reflect this. However, iwhile Google is a highly successful company but with 97% of its revenues coming from Web advertising and 68% of that from advertising on its own Web sites, it is still very much a single proposition company.

Google’s market dominance means it has virtually reached the limits of organic growth and anything further can only come from transformation via acquisition and perhaps through product and service development, in much the same way Apple has. Sure it’s testing the field with Wave, Chrome and Android, which appear to be the spearheads of a greater platform strategy but if we take YouTube as an example of expansion by acquisition, it seems fairly evident that Google is a one-trick pony.

Since its 2006 acquisition of YouTube revenue estimates have varied wildly with analysts like Bear Stearns and Credit Suisse suggesting Google will see between $90 -240 million in revenues this year.  It’s a big range but as the number three brand on the internet YouTube only made around $80 million last year and while that’s no small potatoes, it is struggling. Given Google’s 2006 acquisition of YouTube came with a $1.65billion price tag and Credit Suisse estimates operating costs at around  $711 million this year.  Therefore it’s reasonabl e to assume that despite Google’s deep pockets, the operating gap is not going to be tolerated for too long. 

So what does this mean for the Google brand? Of course, YouTube’s traffic will continue to grow exponentially, with no clear end in sight as will the not inconsiderable cost of this business. Set this against mildly successful efforts at monetizing content via advertising and the overall state of the advertising market and you come back to the central problem for YouTube and ultimately, Google. The non-propietary nature of both its search engine and content that forms the basis of the Google brand and proposition is, at the same time, its achilles heel.

To get further understand these limits, look at the performance and what I see as the eventual fate of Yahoo. Like Google, nearly all of Yahoo’s revenue comes from search and display advertising. Since Google’s 2004 float Yahoo has been losing share in search and though Yahoo is still the second most popular search engine, its searches are inferior. While Yahoo’s content continues to attract users for the moment, its search traffic is secondary to choice of Yahoo as a portal. The problem is that while content from the portal generally helps generate search traffic, yet without either distinctive content (everyone accepts that content is no longer a competitive advantage) and superior search, Yahoo is going to decline. What is best described, as Yahoo’s kitchensink approach to both content and feature development, is not disimmilar to that of Google’s. In this market “innovation” is a very tired word.  Yahoo has Flickr. Google Picasa. Yahoo has Finance. Google Finance. Yahoo has Mail. Google Gmail and now Wave. Yahoo has Groups. Google Groups. Now just think of Google’s failures with News, Lively, Orkut and Knol and then apply that to a similar Yahoo’s list of failures or better still AOL, its hard not to draw the conclusion that the direction for both brands is anywhere but down.

On revenue and market performance measures alone, Yahoo is a sombre example of how little stock one can place in single proposition revenue models. In 2004 Yahoo reported net income of about $238 million and had a market value of about $36 billion. At the same time Google's stock market value was around $16 billion based on a net income of around $106 million. Microsoft’s offer for Yahoo last year put its market value $45 billion, against a brand valuation 7.45 billion. It had barely moved and most people thought Microsoft was being generous and Yahoo missed the boat.  Now with the rankings reversed and sobriety entering market valuations, Google’s Wave is looking like no tsunami.


There are no comments for this article


Stephen Byrne DIFFUSION Stephen Byrne
Position: Director of Strategy
One of Australia's most consummate international strategists & planners Read Stephen's full bio

Latest Articles by Stephen

June 24 | Some thoughts on transmedia strategy, brands and the future of media planning.
August 26 | Enter at your own risk: the real value of social media-based brand engagement.
July 31 | In a turning bay: on the future of brands in social media.

Article stats

30 Days: 0 articles, 0 views
All time: 0 articles, 0 views

    Follow me on Twitter



    DIFFUSION is a global brand agency with outposts in Sydney and most recently in San Francisco.  More info & Contact Details



    NSW Public Sector Grades 9-10 High Performance and Leadership Workshop NSW Public Sector Grades 9-10 High Performance and Leadership Workshop

    Develop and refine core skills and key leadership capability to achieve success and excel in NSW Grade 9-10 level roles and beyond.

    WA Public Sector Level 7-8 High Performance & Leadership Workshop WA Public Sector Level 7-8 High Performance & Leadership Workshop

    Develop and refine core skills and key leadership capability to achieve success and excel in Western Australian 7 - 8 level roles and beyond.

    Executive Assistant Development Intensive Executive Assistant Development Intensive

    Adding value and enhancing your personal and professional effectiveness as an Executive Assistant.

    The Women in Project Management Leadership Summit 2018 The Women in Project Management Leadership Summit 2018

    Practical advice and strategies to guide female leaders for career advancement in the project management space.

    Public Sector Workforce Analytics Workshop Public Sector Workforce Analytics Workshop

    Emerging tools and frameworks to enable best practice workforce analytics and planning for HR Professionals.


    Q Limited Q Limited

    Q Ltd owns a group of specialist interactive advertising and digital marketing communication companies that help businesses identify, target and communicate effectively with their target market.

    Adconion Media Group Adconion Media Group

    Adconion Media Group is Australias largest independent Digital Audience Network with over 75 staff across offices in Sydney and Melbourne.

    Hill & Knowlton Hill & Knowlton

    Full-service global publication relations agency with specialists in digital PR as well as in a range of other areas.

    InShot InShot

    InShot is a digital branded entertainment agency offering clients professional guidance in Connected TV and Social TV platforms.

    BeamMe.Info BeamMe.Info

    BeamMe.Info is a button that can be installed easily on any website that allows a user to send content from the site to their mobile phone by SMS.


    LATEST DIRECTORY LISTINGS Boost SEO - add your company for free

    Mad Dog PromotionsProtonbits Software Pvt LtdCat Rubbish RemovalEnertec Windows & Door SystemsVacuumSpotSally Dasouki - Melbourne Victoria, AustraliaVazooky DigitalDr TurnerAspect Shade