Google is like crack for Web publishers

Source Title:
With 'Free' Lure,Will Google Tap More Markets?
Story Text:

The Wall Street Journal has a long analysis of Google today. The article cites
Google leaading the way in a switch from fee-based services to free, ad-supported ones. It examples voice calling, cellphone service, console videogames, premium TV programming packages, telephone directory assistance and digital music as areas ripe for this. TW readers favourite, Marissa Mayer is quoted

"There are times when advertising does a better job than traditional business models at monetizing" services, says Marissa Mayer, Google's director of consumer Web products. She describes the simple calculation, which Google did early in its existence, as to whether a company can generate more revenue from advertising than it can from charging fees to its users. In Google's original business, it estimated the potential revenue from ads far outweighed what consumers might be willing to pay annually for its Web search services. Now, Ms. Mayer says, Google is trying to help book publishers, video content owners and others tap online ad revenue and make similar calculations.

They also quote a happy user of online ads

Many advertisers are enthusiastic about the prospect that Google might place their ads on an increasing range of outlets. "As the opportunity gets bigger, we get a greater benefit," says Bob Kurilko, vice president of in Santa Monica, Calif. The automotive research Web site bids to display its ads when users search for some tens of thousands of keywords on Google, Yahoo Inc., and other search engines.
"The bigger story here is what's driving this is traditional media [advertising] is no longer as effective as it used to be," Mr. Kurilko adds, saying search-related ads generally are better at reaching targeted customer groups than the likes of broadcast TV.

WSJ advises caution

The changes that such services are forcing on the economics of industries such as traditional media aren't entirely new. And the impact of the Internet on businesses ranging from bookstores to bank branches has been overstated in the past. Moreover, any broad downturn in advertising could humble ad-dependent Internet companies as it did several years ago.

And at the end there is an interesting thought from Ms Mayer, that Google are into all these extra services perhaps merely to increase web usage, and that Google gets an increase in turnover as web usage goes up. I guess the analogy was Rockefeller giving oil lamps to the Chinese, so that he could sell them oil

Google's Ms. Mayer says the company can generate greater revenue even when ads aren't directly linked to the services it may provide. By increasing Web use through free Internet access, for instance, the company should see a revenue boost through the search queries these users make. Ms. Mayer estimates search queries represent about 5% of Web use, with Google handling the greatest number of them.