Following my last post on Google’s reluctance to beef up its presence in Indonesia, I heard news of its Q2 earnings falling short of expectations. Google (GOOG) has a long tradition of exceeding market’s expectations, and its surprisingly poor performance resulted in an immediate stock price correction of around 8 percent.
I have no doubts on GOOG’s long term prospects whatsoever. It is and will be the king of search market for foreseeble future. It’s network of advertisers is vast and people are literally “worshiping” to become its publishers, with its wildly popular adwords/adsense program. Many aspiring publishers–or bloggers–mistakenly believe that having an adsense account is “key to the riches”. A few months ago I heard a number of bloggers here whining loudly after their adsense accounts had been banned– due to suspected click frauds. As if the sky’d fallen upon them. Hundreds, if not thousands, of books and ebooks have been written on how to make money through Google Adsense. We have scores of them in bahasa Indonesia alone, despite the fact that GOOG doesn’t allow PPC ad placement on Bahasa webpages.
What GOOG has to do now is expanding beyond the US market. And that’s exactly what they are doing. One of the last big moves was its acquisition of ZAO Begun, a leading Russian contextual ad firm for USD 140 million.
That’s an interesting piece of news that I want to discuss.
I can’t help but wondering. If GOOG FINALLY decides to enter Indonesia, the same strategy can be employed. Rather than building a network of advertisers organically, wouldn’t it be faster if also combined with acquisitions? If so, who would be the viable acquisition candidates?
Two companies/sites immediately cross my mind: KumpulBlogger.com and KlikSaya.com. Despite small, they are currently the biggest local online ad aggregators. Combined, they control over 5000 local advertisers/publishers. In a couple of years, if they keep on improving and aggresivelly marketing their propositions, they will be too big to ignore. Certainly not by GOOG.
Search technology is what they are missing. They definitely need it if they also want to aggregate local search traffic. As I mentioned before, GOOG ‘s search results are not very relevant for contents in Bahasa. If the two are serious enough to develop a search platform specializing in Bahasa, GOOG can be beaten easily. I will elaborate later why I believe so, but for the time being, suffice to say that opportunity to beat GOOG in Indonesia is wide open. (As in Eastern Europe, Japan, China, and other regions where english is not widely spoken).
And, Yahoo and MSFT can be the potential suitors, too. What bugs me is why Microsoft doesn’t see the fact that neither Yahoo nor GOOG are strong in certain markets and it can start challenging the two by acquiring those markets. Why GOOG, who is already big, that acquires ZAO Begun and not Microsoft? Isn’t easier to beat an enemy at its weakest points-rather than going head-to-head?
Just my big curriosity.