Sunday, May 25, 2008

The Backlash Begins

There was an interesting article in today's London Sunday Times that could have been briefed in directly by WPP, criticising Google for its domination of the search advertising market.

Regular readers will know that I have long had sympathy with this. Google now have an extraordinary 81% of the UK search market (because it's the best product), but therefore control a similar amount of the search advertising market.

Fast growing companies rarely make provisions for the problems they face when they become oligopolies or monopolies, and it's extraordinary that the UK media and ad agencies have left it so late before taking Google to task.

The company now accounts for 8% or all UK advertising and is shortly set to become the largest advertising medium in the UK, overtaking ITV.

There's little doubt that Google, along with the rest of the media industry, will suffer a blip over the coming months as advertising belts are tightened, but they are set to benefit even further as companies who have cut back on their advertising realise what part of their spend actually drives and converts business. By the end of this year I fully expect Google to have 10% of the UK advertising market.

With Doubleclick and YouTube in its pipeline, this becomes a scary proposition and one that really does not need the traditional ad agency (although clients seem to still prefer having someone to blame, just in case, and therefore appoint online marketing agencies).

The trouble is, everyone needs Google, but in working with Google they are practically giving their businesses away. Facebook and MySpace have taken the move to commission original video content, but not so Google - and I doubt they ever will.

This is going to result in a fundamental shift in the TV industry that no one really comprehends as yet.

The fact that online TV channels are heavily regulated by the ridiculous 'TV Without Frontiers' directive from the farcical EU whilst YouTube has no specific regulation tells you all you need to know.

The existing media establishment have a point, and it's high time the regulators took a long and hard view at Google before it single-handedly owns, well, the media. Or is it already too late ?

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