Thursday, March 24, 2005

Mr. Softy's Hard Sell [ Motley Fool Take] March 21, 2005

Mr. Softy's Hard Sell [ Motley Fool Take] March 21, 2005

The Fool has laid out the the key questions. The race is on by MSFT and others to build-out distribution channels for advertising. Google has captured a lot of real estate cheaply. Investors such as Barry Diller and MSFT are spending heavily to "own" more space. Buying ASK JEEVES gives Diller and ASK a way to reach the customers while paying the advertising out of one hand and into the other.

The new MSFT search is highly target-able and therefore attractive to advertisers. In the same way that Yahoo and MSFT have had to copy Google, Google will have to offer similar products. The speculation is that Google will offer such a product before MSFT can get its distribution channel built. Of course, MSFT already has distribution through a lot of sites; it simply made a mistake by not going after this business earlier.

Ironically it was that developed the model that is used by Google and GoTo was eventually purchased by YHOO. Eventually large ad buys will be competitively placed. Those large firms that need to advertise will negotiate the tightest deals they can get through GOOG, YHOO, MSFT, ASK, AOL and others.

It is so easy to sign up for Google's AdSense program. Google does all the work. Google has promised to be more open in regard to the way revenues are split. Small advertisers and providers will never get the best deal. Since the internet is a place with a very wide distribution, the millions of little guys will keep Google in the green for years to come.