It Didn’t Take Long: Google’s Social Media Acquisitions

The predictions made previously in “A Coming Wave of Social Media Acquisitions” (10/19/09) did not take too long to happen. Google has made some very interesting moves in social media this week.

Recent moves by Google.

• Reportedly agreed to acquire Gizmo5 for $30 million on Nov. 9^th. Gizmo5 has VoIP technology that would make them a technical alternative to Skype for Internet telephony applications and services. They bring shipping products and a 140 person team of people.
• Also on Nov. 9th, it was widely reported that Google had agreed to purchase AdMob for $750 million. AdMob has technology for serving display ads on iPhones and more recently, Android phones.

What’s all this add up to?

Gizmo5

This move brings core Internet telephony technology to Google Voice, using IP technology to place calls, and potentially video conferences, around the world. The means that Google Voice which can only offer call forwarding, messaging, and message transcription services, can now offer Internet calling as well. This was a key gap in their product offering that has now been filled.

With Gizmo5 SIP technology, Google customers will be able to use the Internet to make free calls. It’s a pretty easy bet that this will also be integrated with Google Talk to provide inexpensive video calls and conferencing over the Internet.

Where this all gets really interesting is when you put these services on a smart phone, such as an Android phone. How will Google’s carrier partners (such as Verizon) react to Gizmo5 technology on smart phones?

Also, this is a great time to make a move in Internet telephony with Skype in legal battles with eBay about who actually controls the core technology.

AdMob

This is a critical strategic move for Google if they want to remain the leader in online advertising. Smart phones are still in their relative infancy but the trends are clear:

• Smart phones continue to grow steadily: 13% worldwide in 2008 and 4% this year with 26% growth in APAC in Q3 2009 according to Canalys.
• The latest release of Google Android-based phones, brings some competition to the smart phone space, but also enables new wireless carriers who have not been able to offer smart phones due to the exclusive relationship between Apple and AT&T.
• Many people worldwide are having their first Internet experience and possibly their only Internet experience via mobile, wireless devices.

The mobile audience expects services on their phones to be free or near-free. The challenge is to generate advertising revenue from this audience. It is also clear, particularly in North America, that this audience does not like to be advertised to. So, how does one go about generating ad revenue on wireless devices:

• Make it useful and relevant to them personally. Google does this today by gently tying ads to online search and mail, serving up useful and unobtrusive suggestions.
• Make it helpful. In the context of an augmented reality type of application, it would be very helpful to know the types of businesses around you and what specials they might be offering.
• Make it entertaining.

Look for Google to offer an even more comprehensive “one stop shopping” set of offerings to corporate advertisers, which now will be even stronger in the mobile arena.