How Facebook can attack Google’s Ad Words castle
Bill Gurley has posted a great piece about Google’s business strategy that has turned into today’s “must read” post. In it, he accurately describes Google’s ad words as its “castle” and its open source strategy as its “moat.” Simply put, Google creates, supports and gives away platforms like Firefox and Android that enable Internet access in order to ensure its lead position as the default search engine everywhere.
As Bill rightly points out, direct assaults on Google by land look pretty hopeless. It looks pretty dark for direct competitors like Bing. It also creates collateral damage by destroying any business that wants to make money building a phone operating system or browser. But does that mean the castle is perfectly defended?
I believe that Google has a massive vulnerability, but it isn’t from a direct search competitor. Essentially, Facebook is substitute for search, not a direct competitor. As people discover products and services socially, they will go directly from intent to purchase–bypassing search entirely. This threat is not theoretical; indeed, one of customers at SocialFeet has truly zeroed its SEM budget in 2011. While dramatic, I think this move is a leading indicator of where smart merchants are moving. If so, this is very bad news for Google’s adwords castle.
This dynamic is an air attack, and Google’s castle, despite its incredible land moat, looks entirely defenseless against it.