As we get ready to transition retail clients’ shopping feeds in to the new CPC based Product Listing Ads format, it got me thinking of all the other free services that Google could potentially charge for, or better promote some lesser known freemium products, and how that would affect both marketers’ and Google’s bottom line.
- Shopping Listings: This was a missed opportunity for many retailers. Those that did take advantage of optimizing and submitting product feeds received great value from those free listings for years. Google is now changing this to a CPC model. This has two major implications. First it will weed out a lot of smaller players including affiliate type online stores. It will also mean any retailer with an SEM program now has to increase their CPC budget just to remain competitive. Google’s stated intentions were to improve the results, which may occur, and their obvious goal of increasing revenue will definitely occur. Investor documents suggest “retail and general merchandise” accounted for $2.8 billion in AdWords revenue in 2011. I have heard retail clients may need to increase their SEM budget 30% to cover new Product Listing Ads. That’s another $840 million. Sure it may not mean much to Google’s $37.9b in revenue (2011), but I know many companies that would kill to make $840 million a year total.
- Analytics: Offering Google Analytics for free basically weeded out any analytics packages besides the major players like Omniture and Coremetrics. Although Analytics is officially a freemium model most people take full advantage of GA for free. Do you know anyone who pays for the Premium edition? Probably not many yet, but this will change as web sites collect more data and Google sets limits in the free version. Although Google gets non-revenue value from Analytics (gold in the form of free data on millions of web sites and uses) do you think people would actually stop using GA if it cost a minimal monthly fee? An earnings call suggested GA is used on 10 million web sites. If Google charged $10/month that would be $1.2 billion each year. If only 10% of web sites paid $10/month that would be $120 million /year. Chump change for Google for sure but no matter what numbers you use GA is like a bond waiting to be cashed.
- News: Have you ever submitted a press release online? We do, and it’s a valuable method of increasing web authority if for any other reason to get links. Services like PRWeb and MarketWire may cost $200-300 per posting. Is getting preferred placement on Google News worth $100 per release? Most definitely.
- Hangouts: Sure there are other free web conferencing services out there. But companies like Webex still get people to pay $19/month for this service, what could Google charge?
- Google Docs: Do we even need to discuss the potential…pending…market share Google Docs will steal from Microsoft Office? A one user license for Office is $119. Sure you can pay $5-10/month per user for Google docs, but think of all the people that currently use it for free. A few updates, more marketing, more premium subscriptions, more revenue.
- Cloud Storage: Another freemium model that most people use for free. Ever hear of Dropbox and their suspected $240 million in revenue? Just another small opportunity for Google.
- Other: Google Translate, Calendar, Play, Picasa, etc. All services you can find for free other places. But there are also poor companies trying to charge for these services.
There obviously is a lot of benefit to Google to offer valuable services for free. But just reflecting on a world where Google charged for everything is an interesting, scary, lucrative thought depending on your role (technologist, marketer, investor).