Today it was announced that Google was launching a mortgage comparision service.
This is a shrewd move by the Mountain View Giant as it neatly meets all of Google's objectives:
-it provides compelling useful content for its users;
-it opens another revenue stream; and
-it does not canabalize its existing ad words business in any meaningful way.
Google currently is not monetizing more than one half of its asset- the left side of the page natural search results.
Google has companies falling over themselves producing content to get noticed by Google.
If they are successful Google rewards them with top SEO positioning on the left side of Google's pages for "free".
In exchange, Google attract a massive audience and sells ad words on the right side of Google's pages - next to the "natural" search results.
Up till now, Google's left side/right side model has been a lucrative symbiotic relationship-one that if Google continues to launch products like their mortgage market place should continue and get even more lucrative for Google.
It seems Google realizes that there isn't much market share left to grab on the search side, so the best thing to do is to monetize their existing unmonetized left side page views and clicks.
They can do this by replicating the business models of companies that score very high on Google's natural search results.
Companies that score high on Google's left side get boat loads of traffic, so it never becomes necessary for them to purchase Google's right side ad words.
By replicating the content and business models of Google's top content providers, Google can have its cake and devour it too.
Google can do this in every verticle like real estate (without having to buy a listings aggregator, like Trulia)
By entering mortage they can provide a consumer experience almost as good, as good or better (which of the three - it doesn't really matter if you are Google) than the companies that currently occupy the top search results for key words AT NO EXPENSE TO THEIR EXISTING RIGHT SIDE REVENUE.
Click on the link above and look to the left and you will see the companies that score high in the natural results-these are the ones that Google gets paid nothing for but provide the content that attracts their visitors that enables them to sell the ads to the right.
Notice anything there? The companies on the free left side are nowhere to be found on the paid right side.
In effect Google is not monetizing the left side of its pages very well-until now.
If Google can place its own quality products at the top or at least somewhere on the left side of the front page they open up more "ad sense" inventory without canabalizing existing right side ad sense revenue.
Take a look at this link -it has TWO PAGES of Google sponsored links on it.
By placing Google's own "content" on the left side of the page on Google they can create far more inventory by merely taking one of the free natural search result links and giving it to themselves.
By doing so here is what happens:
-Google continues to provide quality useful content to its users;
- the "free" visits that left side companies receive by scoring high on Google become less plentiful and perhaps spur them to supplement their visits with some Google right side ad word spend; and
-Google makes more money on the left AND right sides of their pages by opening new inventory for itself up on the natural left side of the page and encouraging left side companies to join the bidding on the right side, thus potentially driving ad word prices higher.
The net effect of all this is that even the left side free riders that score high on Google shouldn't complain if all Google does is takes ONE of the natural links for itself.
After all moving from #2 to #3 may result in some loss of traffic but its not a crippling blow.
Consumers win (for now)
Google wins big
Companies that base their buinesses on Google free traffic -lose a little , for now. (and perhaps realize there is no such thing as a free lunch-although they may claim an antitrust violation-abuse of a dominant market position)
Companies that base their business on buying google key words - lose a little for now as their costs may increase (or they find alternative sources of advertising)