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It’s a question we often ask clients, not because Google itself is necessarily a threat, but because the wider “Google effect” is. In profound ways, Google and many other “new” companies have changed the rules, positively and negatively, for content and information services companies. On the positive side, Google has made information more easily discoverable, thereby significantly increasing the overall market for information. Every company’s marketing strategy now includes making itself easy to find – and to appear in a top position – in Google searches. But the “Google effect” has many negative implications against which we recommend that information companies consider the following principles:
Beware Unknown Competitors: Today competition is as likely to come from start-ups as from traditional competitors. The start-ups are more dangerous because they often enter markets with new approaches that are disruptive. For example, they may look to gather and “edit” information with technology, rather than people or may harness a community rather than using a centralized editorial operation. (Think Wikipedia versus Encyclopedia Britannica.) Furthermore, these upstart competitors may inspire traditional competitors to innovate, making them more dangerous.
Combat Disrupters by Adding Value: For some of our clients, the most serious threat comes from a combination of search engines and free web sites that enable users to get the information they need at low or no cost. It is extremely difficult for established premium-priced vendors to cut prices or move to a free model, but they can succeed by adding value to their offerings – thus maintaining their competitive differentiation and their ability to charge premium prices. Adding value can take many forms, including integrating additional content, increasing timeliness, or overlaying workflow applications with content.
Be Open to New Business Models: Google and many others have legitimized advertising models for online content. While subscription and other pay models remain firmly entrenched in business and professional marketplaces, some established vendors in these markets are starting to add advertising models. Such changes in advertising models are not inevitable, but they may be appropriate for some information vendors, especially as they consider serving adjacent markets.
Use Alternative Sales and Customer Service Approaches: Sales forces and customer service platoons are accepted elements of traditional companies. Many new companies, however, are built on self-service models. (Think Google AdWords.) Not only does self service reduce costs, but it enables a business to scale faster. Furthermore, if well-designed, self-service delights customers because of the control it gives them. While self-service may not be a total replacement, it can be at least a very effective adjunct to conventional sales and support.
Make Innovation a Way of Life: It’s hard to get line managers to innovate when they are being judged and compensated on their short-term financial performance. By contrast, almost each week, Google Labs posts new, experimental applications and tools for users to try, even though few of these offerings are likely to generate any immediate financial return. Few other companies engage in this style of research, but many could benefit from earmarking funds for experimentation separate from the P&Ls on which line managers get measured.
We won’t attempt here to define a Google strategy. Every company needs to assess its own market position, threats, and opportunities and then plan accordingly. But companies that fail to develop a proactive Google strategy may find themselves caught flat footed by some of the changes described above – and others that have yet to happen.
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