I'm sure few people missed Google's announcement last week that profit was up seven-fold, news that left Wall Street analysts agog and sent the stock up 11%. The basic investment case is simple:
- advertising online is still only a very small fraction of global ad spending, but it is growing at 5 times the rate of overall ad spending
- Google dominates online advertising
One argument marshalled by Google skeptics is that someone's bound to come along with a better search engine, and that when they do, switching costs are low for users, and advertisers will quickly follow.
So Google is moving as fast as possible to raise those entry barriers, even as it continues to work on improving its search technology. One of the ways to raise those barriers is to distribute itself widely and deeply into many other people's websites and desktops. One way it has done this is to make freely available certain tools and API's that people can use to build useful solutions of their own, whether on their own personal computers or on their servers. An increasingly well-known example is the free distribution of the Google Maps API.
This initiative is part of a broader phenomenon many call "Web 2.0", which involves linking disparate "web services" to create interesting and useful applications. This approach was written up recently in the New York Times, which marks an important milestone for the trend in our own "Marketspace Technology Relevance Filter" (MRTF) test. In programming circles, the trend is known as "AJAX", which stands for Asynchronous Javascript And XML.
The universe of AJAX-based solutions out there is booming and morphing quickly, since it allows people to contribute and consume valuable information in very efficient ways. Further accelerating the trend is the ease of developing these solutions, which makes it possible to deploy them for smaller groups with tighter affinities, where viral marketing is much more powerful. Also, AJAX-based applications provide ways for people and organizations with unique data sets to monetize them (through advertising, for example) in heretofore impossible ways. And where business cases appear, investment inevitably follows.
Since we believe in being hands-on to better understand these trends, we've been fiddling a bit with these tools in our spare time. Here's one of our efforts (IE doesn't like something in my Javascript, but this page loads fine in the Mozilla Firefox browser if you have that). Obviously this is a modest experiment, but it only took an hour to deploy.
Inevitably and even more interestingly, new services like Ning (mentioned in the NYT article linked above) make it possible for amateur- and non-programmers to build a wide variety of interesting applications using a wide variety of "web services" APIs. Here, for example, is a restaurant review application prototype using the Google Maps API that took 15 minutes to deploy, starting with pre-existing models.
Applying the MRTF, which says to marketers that a new idea will be relevant five years off minus a year for each of four factors (mentioned in mainstream media, major organizations using it, no major change in customer/ user behavior required, and no major new infrastructure required), this is very real within the next year and a tool that marketers should understand and innovate with right now.
(Special thanks to my colleagues Chris Collins and Micah Halsey for pointing me to the NYT article and the Programmable Web Matrix links.)
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