Media Spotlight: Can opportunistic Google find a strategic vision?

What obstacles to growth is Google likely to expect after its float, Alasdair Reid asks.

In the history of the internet, rich and strange though it has been, Google is unique. Most of us became aware of it in the run-up to the bursting of the dotcom bubble - but we didn't find out about it courtesy of the sorts of grotesque hype that characterised that era. We became aware of it through word of mouth. Google was a classic "tipping point" story.

The word travelled far and fast because Google actually worked. It was, and is, superb at what it does. And it was, and is, unique in another, arguably far more important, way - especially when it comes to branding.

Google is a haven of white space in the noisy, cluttered, garish, trashy fleamarket that is the internet. The homepage features a logo and a window in which you are invited to enter your search term. The rest is blank.

No pretence at being a portal, complete with everything from horoscopes to share prices; and certainly no wall-to-wall banner ads and commercial hyperlinks.

Sure, Google made money via "sponsored" search results, but the whole business was presented in a discreet take-it-or-leave-it fashion and the site certainly didn't irritate you to distraction with all manner of pop-ups and overlays.

That, though, might be about to change - and the pressures on Google to find new sources of revenue are cranking up by the day. A few weeks back, when it was first announced that the company was seeking a stock market flotation, Google's founders, Sergey Brin and Larry Page, were asked what the grand strategic vision was for the company. They replied that there wasn't one. Google had always been opportunistic and that would continue to be the case.

Opportunistic? When you become a listed company you find yourself at the mercy of a small, but hugely powerful, group of analysts, who not only have to be lunched on a regular basis but who also have to be drip-fed a constant stream of more or less plausible strategy documents. Analysts don't do "opportunistic".

And on the debit side of the equation, Google has been less than sure-footed in some of its recent initiatives, opportunistic or otherwise - concerns have been raised about potential privacy issues surrounding its proposed Gmail e-mail service and its Froogle e-commerce site is not tipped to be a runaway success.

Meanwhile, even before Google has floated, the financial pages are demanding that it deliver greater growth potential. Some of this is downright fanciful.

There have been calls for Google to evolve into a "true platform" - in other words, a general purveyor of software akin to the Microsofts of this world. Others have been urging it should become a portal.

Does it need to evolve beyond its existing paid-for search model? The paid-for listings market has, after all, been growing rapidly over the past two years and in the UK alone, according to the Internet Advertising Bureau, it takes around 41 per cent of a £350 million market.

Google is by no means the only company surviving on sponsored links but it is the dominant player and it runs a sophisticated sales operation. It does not, contrary to belief in some quarters, insist on dealing directly with clients.

Charlie Dobres, the chief executive of i-level, is sceptical about the growth prospects in this market.

He says: "This market has been overhyped. In some categories, it has become overheated and people are having to pay incredible amounts to command the top search terms. Inevitably, they will start questioning the value they're getting. It's been interesting to hear people starting to say that at £20 billion the flotation is overvalued."

Robert Horler, the managing director of Carat Interactive, disagrees with Dobres' pessimistic assessment of the search market, although he does point to another danger to Google's growth prospects. "Things will get interesting when MSN launches its new search product. Then it will be game on," he reckons.

On the other hand, he points out, while Google is dominant in the US, the UK and many European markets, there are still many countries where there's room for improvement.

But Horler says it shouldn't even think about trying to attract more mainstream advertising revenues. He states: "The portal business is fraught with problems because you need publishing skills and that is clearly not where its expertise lies. But who knows? It's going to be interesting because, following the flotation, Google's whole culture is going to have to change significantly. Things are never the same when you are compelled to deliver shareholder value."

Dobres agrees that it's the white of the site that's at issue here. "The attraction for many has been the clean whiteness, it's true. It has been a visionary company with clear values. The question is whether you can keep that touchy- feely side when you are a multi-billion-dollar company. The point is that Google only works if the user experience is good," he says.

SPONSORED SEARCH MARKET

Overture

- Launched in 1997 in the US.

- Nasdaq listing in 1999.

- Service developed as add-on to existing search engines.

- Launched in France in 2002. Moved into a handful of other European

markets last year.

- Taken over by Yahoo! in 2003.

Espotting

- Launched in the UK in 2002.

- Merged with Findwhat.com in 2003.

- Operations in all major European markets.

Google

- Launched in 1997 in San Francisco.

- A search engine first and then became involved in paid-for listings.

- On track to make a profit of £160 million this year.