What Google Gave up to Get AOL

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Microsoft may not have been able to get the deal done with AOL but what Google gave up to make it happen is turning out be pretty interesting. Here are some details from the New York Times (registration required).

Finally, around 9 p.m., Richard D. Parsons, chief executive of Time Warner told Eric E. Schmidt, chief executive of Google, that he would accept Google's recently sweetened offer. Google, which prides itself on the purity of its search results, agreed to give favored placement to content from AOL throughout its site, something it has never done before.

And according to the Los Angeles Times

"Google pays a $1 billion premium for an insurance policy that insures domination of a very valuable part of the Internet economy," said Jordan Rohan, an analyst with RBC Capital Markets.

and

negotiators agreed to promote AOL's services across Google.com, a change for the company that made famous the sparse white Web page. Google also hired AOL to sell non-search ads to Google's advertising partners.

Google will continue to take 20% of the revenue generated when people click on the text ads in AOL Search, and AOL will take 20% of the revenue from flashy banners and other display ads it sells on the Google network, according to people familiar with the deal.

So did Google do the right thing, John Batelle wonders if Google may have jumped the shark. AOL feels "Feels like it's a dream come true" according to the Washington Post. It's pretty unclear at this stage of the game exactly where and how much AOL will intrude onto Google's spartan homepage layout, and how much content from AOL will invade organic and paid SERP listings. One thing is for sure Google did just take one big giant step towards portalization.

Comments

Portal, portal, portal...

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It's pretty unclear at this stage of the game exactly where and how much AOL will intrude onto Google's spartan homepage layout, and how much content from AOL will invade organic and paid SERP listings.

I wonder if they will use the same model as their music search? That is, whenever a query matches some AOL content then that will appear at the top of the SERPs like the music stuff does. Man, that could drive a lot of traffic to AOL.

Right on schedule

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One thing is for sure Google did just take one big giant step towards portalization.

So how long has Google been Public now?

Boy oh Boy, Microsoft should

Boy oh Boy, Microsoft should of pulled everything out of the hat to beat this deal... it will prove to be a very costly mistake.

Microsoft wins

Yes, that's right. I think Microsoft pulled out just so Google could swoop in and over pay and infect themselves with the virus called AOL.

AOL sucked, sucks and will continue to suck. If I see any AOL logo at Google I will cringe and the Google brand will look A LOT cheaper.

Microsoft will be laughing about this. I bet Google stock GOES DOWN on Monday.

Time Warner is happy to get rid of 5% of AOL and raise the valuation of a dying dial up company full of late adopters and technologically challenged users.

Good luck Google, you are going to need it.

AOL

AOL sucked, sucks and will continue to suck. If I see any AOL logo at Google I will cringe and the Google brand will look A LOT cheaper.

...

Time Warner is happy to get rid of 5% of AOL and raise the valuation of a dying dial up company full of late adopters and technologically challenged users.

I agree to a point - AOL has been slowly dying with a poor reputation, so if Google advertises the company too prominently on its own sites, it may negatively impact Google's brand.

MS: AOL requests "unethical"

The tide quickly turns. The once dark lords don't cave to requests for preferential treatment; the now grayish knights say, "Yeah, sure, whatever you want."

The laundry lists of Google's concessions to AOL is damned striking, basically changing the way it operates and drastically tilting the playing field.

Google will offer promotion to AOL in ways it has never done for another company

  • Got content? So does AOL, whose links will be featured in a special section alongside the SERPs. (Labeled as ads, but basically free.)
    .
  • Know how to optimize a page? So do the folks at Google, who are going to (ahem) "provide technical assistance so AOL can create Web pages that will appear more prominently in the search results list." (Fairness: They state that the algo will not be preferential.)
    .
  • Got video? Again, so does AOL. G "will make special efforts to incorporate AOL video programming" and "feature links" not marked as advertising "to AOL videos."
    .
  • Got Adwords? Want to get clicks from AOL users? Get ready to compete with "AOL only" advertisers. Almost sounds like advertisers will be bidding against themselves.
    .
  • Got Adsense? This looks like it might actually creat more inventory. AOL will "sell some display advertising that will be placed on the vast network of Web sites for which Google sells ads."

The folks at AOL somehow see this as not as complicated as the proposed deal with Microsoft. That must be on the financial end someplace, exit strategies and such; this seems pretty complex to me as far as operating goes.

And it's possible that some of my sites just took a good shot in the shorts as far as the content and optimization concessions go. Time to pay more attention to some other projects I've had at a slow simmer the past few months.

MS Won

Billy only loses when he wants too.

GOL..

hehehe

They have jumped the shark IMO

Between this 'favored placement', and the opaqueness they've recently instituted in their adwords bidding/placement algo's it sure seems to me that they've forgotten their roots.

Used to be people loved their search - they're now going to potentially contaminate that. Used to be their adwords algo was clear and easy to work with and if you spent some time providing the best ads you could, there was a clear link to results - that's now gone in favor of some calculation that's not disclosed. In short, there's little to nothing that Google offers that is unique, better, or even all that good anymore.

The *only* thing they've got now IMO is residual traffic (granted, it's a hell of a lot of residual traffic). As long as they've got traffic, they'll continue to get the ad dollars. But the only thing left now to topple google is a viable competitor - what's google got anymore that a strong search engine, well promoted, couldn't beat? Not much.

what's google got anymore

what's google got anymore that a strong search engine, well promoted, couldn't beat?

an enormous network of advertisers. even if they lose traffic, they still have adsense. and perhaps that print ad thing, which i think could be a great way of harnessing the network value of their advertiser customers. and if google analytics gets going, they could use that as a tool to further extract revenue off their site.

of course if they lost search, that would be a rather huge blow. but they're at a point where i think they could survive that and still be a huge force. IMHO google, like MSFT, is here to stay.

what's google got anymore

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an enormous network of advertisers. even if they lose traffic, they still have adsense.

I think his point was that viable AdSense competition looms just waiting for momentum to occur...of course this is directed at YPN and Microsoft's offering. Two biggies coming against you is bound to hurt once things pick up for them.

On a different note...

From more experienced users' perspectives, the AOL deal is pretty "lame", but for the mass of "AOL-types" out there, it will probably be a bonus - a bonus they are counting on. I hope it doesn't work for them. I think things need to be cleaned up a bit in a few of the major internet "areas" right now.

SB

What's AOL got?

It's got a shitload of content.

No matter the troubles with the Time-Warner deal, one of the best things that happened to AOL is its access to much of its corporate siblings' (read "publishers") content.

Plus, it was developing portal content long before Yahoo, and has a trove of self-developed and co-branded content that has been hidden behind closed doors.

Watch for the flood of AOL listings once the Google engineers teach AOL's folks how to write pages specifically for its engine. The entire G landscape has changed.

Another question surfaces: How Y! etal are going to look on the "enhanced" AOL pages? Considering that these pages are going to be SEO tweaked by a competitor according to instructions by another competitor, would this be seen as gaming the system? A sticky wicket, this one.

and its got more than that

it has a different demographic, so a hell of a lot more new direct googlers potentially, plus it has a big base of broadband users all ready to be turned into Google broadband users and build that brand...

Competition

I'm more concerned on Google offering SEO services to AOL. I like competition, but from a search engine?

Get ready to watch AOL pages

Know how to optimize a page? So do the folks at Google, who are going to (ahem) "provide technical assistance so AOL can create Web pages that will appear more prominently in the search results list." (Fairness: They state that the algo will not be preferential.)

So this provides a pretty good opportunity for all the rest of us to learn a few things too, just by watching changes on AOL pages. Or am I over-simplifying?

Bill Gates

As much as I would have liked to see MSN Search results spread further throughout the web, I'm not going to pile on MS for losing this deal.

Something tells me AOL pushed this past the point of it providing any value and beyond being a digestable marketshare play. Keep in mind that a billion dollars isn't that much money over at MSFT. That's about what they put in the coffers every 30 days. As much as people want to prop up how much money Google makes, if Bill Gates woke up one morning and somebody told him that he was making Google money, he'd jump out of the window. If it made any sense whatsoever and the remnants of an idiotic DOJ would let it fly, MS could buy AOL with the corporate debit card and then giggle about it over lunch.

Bill Gates is an avid card player...and those I know who've played with him say he's a damn good one...so he and the very intelligent folks at MS likely saw something that made really bad sense down the road.

My guess is that we'll learn how good or bad AOL's deal to MS was very shortly, what with the TW board meetings and MS's broadcast to the shareholders.

Beyond that, I'm just happy to have search marketing news still glued to the top of business sections all around the world. At a macro level, we all benefit from the increased industry awareness. Viva la search!

Think of the children, er, Google engineers!

We're all being so selfish... thinking about users, advertisers, etc.

But what of the Google Engineers? Am I the only one that thinks they needed some *MAJOR* consoling after the deal? ("We bought a stake in WHAT?!!" [imitating n00b voices:] O MY GOD! ME TOOOO! LOLLOLOLOLOLOLLL!!!!!1")

Next time you see a Google engineer, give him or her a hug. I think they'll need it.

Even if they don't change

Even if they don't change the algorithms to promote AOL, I think it is shady to say that they are giving them inside access to what works. If they provide them anything more than a link to the webmaster guidelines they no longer have ANY of that neutrality they were concerned with 2 weeks ago.

oh come on

we know its not really neutral anyway, for starters the *rumours* of adsense reps giving tips and advice to big spenders are way too detailed/widespread to be entirely without grounding and secondly the eval.goog bunch (and presumably others before them) must certainly mark sites as 'essential to these results' - whether you get the advantage by being told what to do or get it by being marked up 10% because of who you are neutrality is in the eye of the beholder

Demographics

This is one thing that's always confused me. AOL has a base of some 20 million plus accounts. With whatever average of users per account you want to figure, total users come up to some plus-plus or plus-plus-plus of that base number.

Now a couple of my sites fall squarely into the AOL demographics but see comparatively few referrals from AOL search. Other folks experience the same thing.

So, where are all these AOL users?

My gut says that they're already using Google instead of AOL search. No real proof, just a feeling with a cursory look over site stats -- many more AOL users than are reflected by AOL search referrals.

I think the reason might be that AOL users don't realize that AOL search uses Google -- it isn't co-branded -- so that many go directly to Google. They're already in our referrer base, it's just a bit harder to suss them out.

Beating Microsoft or growing Google

Motives are always tough to discern, particularly if two suitors are in the thick of a competitive negotiation for the fair maiden's hand. I fear this may well have happened because Google wanted to keep out Microsoft. I doubt what Google wins from the association with AOL will outweight the costs of accepting a semi-portal approach involving an AOL presence. AOL is a minor presence in the market place and brings a whole lot of negative baggage. Pity. :(

u Slow u Blow

MS/Gates and his new relationship with Berkshire and Warren Buffet have changed the way they invest. No speculation only blue chip and has turned MS into a dinosaur. U have to speculate in the Tech biz to win. It is to competitive and evolving all the time not to.

The deal might be alot better than anyone thinks. However, we really don’t know anything. Nobody listened to the 2 executive plan joint strategy for the future. But one thing is for sure, the Google spider now reaches into the most powerful Media Company on the planet and the new found influence can have a huge impact in many different ways.

High powered business is in the alliances you make which will help you spread your power. We don’t even know who has been buying and massing large blocks of shares top Google executives have been selling. Its not me or you, it might be the investments bankers of T.W. or the Chairman of JP Morgan. We do know that the Google corporate spider is indexing its way thru the main power channels in business right now which ultimately controls everything. The Bot is moving fast.

bwelford said “AOL is a minor presence in the market place”. That is just not correct, some sites draw a higher percentage of traffic from AOL than from Yahoo or MSN. They are a much bigger player than people think.

Plus 10 million AOL users to totally "Googlize"

The bets on and I go with Google.

What Google might end up like...

Is anyone else afraid Google could end up like this?

http://www.bbhosts.net/google/

I know I'm scared...

What else, popup ads...or worse....AOL FLASH BANNERS!!!

am I the only one

who considers AOL's proxies a way to cloak from Google?

At $25/month it was well worth it even with the interminably slow throughput (usually no worse than public proxies) and aggravating technology limitations. I just assumed a persona of an "AOL User" and found a lot more inner patience.

Now Google concievably has an opportunity to "organize the AOL proxy clickstream". I know, I know the tech world is so much bigger than tin-foil-hat SEO vs. Google issues, but am I the only one thinking you can't hide behind an AOL proxy any longer?

Disclaimer: for the less-enlightened out there that might be thinking "why would someone be hiding from Google behind a proxy", there are many reasons for an SEO to cloak activity from Google. The biggest is to protect the client from unintended side effects of Google's insatiable appetite for "data" and their insistance on machine algorithms that can't tell an hired market researcher from a curious searcher.

or mayby its just financial?

John Battelle thinks the figures add up...

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If that happens, Google's makes a cool $2 billion on its 5% stake - close to what it made when it first went public. And this time, they don't even have to do a road show....

I bet Google stock GOES DOWN on Monday

I bet Google stock GOES DOWN on Monday.

Up 7%.

I think that whilst a lot of internet savvy people think AOHell is terrible, Joe Average user thinks it's pretty good.

Indeed, I don't think the stock market...

...cares about geek perceptions at all.

It doesn't matter what Google engineers think about AOL. Or what we SEO geeks think of AOL. Frankly, it probably doesn't even matter what Joe Average user thinks of AOL.

All that matters is the money... and short-term money at that.

And no, that's not an indictment of Google, but rather a gripe about the American stock market, surely the most shortsighted financial engine in the industrialized world.

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