Why Google Needs a Buddy

I was intrigued to find that despite having some of the deepest pockets in the industry, Google seems to have lost a bid for social media marketing company Buddy Media (according to Peter Kafka at AllThingsD).

Buddy Media may sound like a counter-intuitive soulmate for Google:  Does Google really want to help brands have a presence on Facebook?  And those competitive considerations, plus regulatory concerns, might have held them back from paying top dollar.  But it’s a shame they didn’t dig a little deeper, because nobody needs a buddy in social more than Google does.

As the premier search destination, Google has no trouble earning consumer attention or selling search ads.  But in social, the company has struggled.  They could keep trying to woo social users with new offerings, or they could try the back door:  social advertising.  But Google+ doesn’t yet translate into an attractive social ad buy, and so the company’s only option is to use competitors’ platforms (Facebook, Pinterest, Twitter) to broaden their advertising efforts.  In which case, a play for Buddy Media was really quite smart.

An acquisition of Buddy Media would have helped to protect Google’s position as the leader in online advertising.  They control 44% of global ad spend today (compared to Facebook’s 3%), but if social advertising becomes more important than search – and I predict that it will – those tables could turn with alarming speed.  Google is struggling to stay relevant in an increasingly social world, and if they don’t find a social buddy, they could lose their grip on the internet advertising needs of their clients.  Google needs to stay forward on the leading edge of advertising.  And the leading edge is social.

When Google acquired DoubleClick for $3.1B in 2007, it was with the recognition that to be a pro-level player in advertising online, Google simply had to have access to advertisers’ display budgets.  Now, this interest in social looks like it signals that Google has the same recognition when it comes to social spend.  Simply put, the social advertising market is about to grow to a level so high that Google can’t afford not to offer it to clients.

Even though Buddy Media would not have solved Google’s top-of-mind problem – convincing users to hang out, rather than search and leave – it would have helped to position them as an expert in social media marketing.  And that might have helped them develop, over time and with a new perspective, the formula for that elusive social secret sauce.

That alone would be invaluable to Google.  It’s no secret that the company that excelled in search doesn’t have social in its DNA, and it is unlikely to change that without help.  An acquisition is one of the few course-changing options that could make the difference.

More than anything, this week’s news demonstrates that Google sees tremendous value in social.  Now that the acquisition appears unlikely to happen, Google needs to turn its attention to other game-changers that could inject it with some social DNA.  Of course, Pinterest and Twitter should be on the list, and are probably worth far more to Google than any financial valuation would suggest.  But just as valuable would be a company that uses the social web to drive usage, audience, or conversion. Each of these would help Google advance its media offering and rewire itself for social.

Stay tuned:  I bet more news will be coming soon.  It’s good to see Google getting more aggressive.

What’s Really Behind The HuffPo Revolt (Hint: It’s Not About The Money)

I sent the following thoughts to Fred Allen at Forbes.com about how bloggers made The Huffington Post what it ultimately became, and profited all along the way.  For Fred Allen, Lewis DVorkin, and all of Forbes’ leaders, they are taking on the challenge of merging world-class editorial and brand reputation with the new reality that one can’t pretend to serve one’s customers best by writing all the good stuff onself.

Just realizing that the formula needs to change though is only the beginning.  It immediately leads straight to serious questions to conceptualize and implement:  now they have to figure out how to combine two different philosophies – one of proprietary branded editorial, and one of curation.

It’s a live laboratory as we get to see them take on the challenge, even as AOL and Huffington Post have a similar challenge of bringing their own two approaches together.

My comments to Fred are reprinted below; and Fred’s thoughts are here at Forbes.com.

There has been a backlash against Huffington Post in light of its acquisition last week by AOL.

People who were willing to contribute to HuffPo for free are suddenly irritated that the AOL deal creates a payoff for shareholders but not for them.  Since AOL is a publicly held corporate entity, these contributors’ expectations have changed, and now they want to get paid.

It’s a noisy revolt, but I think HuffPo’s dissident contributors are waving spatulas in the air, rather than guns.

Underlying these revisionist claims of exploitation, one thing has been clear from the get-go: The dominant motivation of the bloggers who have posted on Huffington Post has always been far more about narcissism than altruism.

The reason Arianna Huffington was able to attract such thoughtful and provocative bloggers in the first place was because her site is a promotion machine. With each new post and blogger added, Huffington’s creation became a more powerful destination. And that meant that the site was even more attractive to the next potential blogger. The choice for a new contributor was simple: Set up your own blog, and patiently hope you can build audience over a period of years, or join the club and get instant exposure. Like the AAA automobile club or AARP, the more members in the club, the greater the value became.

The benefits of joining Arianna’s legions were numerous: Posting at HuffPo offered instant reach, credentialing, and ego gratification. Make no mistake about it, these benefits were valued by contributors all along the way. (If they weren’t, then Huffington Post wouldn’t have any contributors in the first place.) In fact, these non-financial benefits have proved far more valuable to contributors than cash.

Looking back, then, it’s definitely been a win-win: Bloggers built their own value while creating value for HuffPo at the same time.  And in the AOL transaction, absolutely nothing changes that value equation retrospectively—except jealousy.

Now, on a prospective basis, the only question is whether the value received by contributors going forward will be just as great.

In terms of traffic, there’s no doubt that it will be. But the real issue is whether the HuffPo brand under AOL’s auspices will be as valuable when it comes to providing the most important of all of Huffington Post’s assets—the halo of its brand prestige. From my perspective, this remains to be seen.

And, finally, consider this: If The New York Times had acquired HuffPo, would there be a blogger revolt at all?  Absolutely not!

This highlights the greatest opportunity and the greatest risk for AOL and Arianna Huffington. If they can truly enhance the Huffington Post Media Group so that it’s an even stronger and more prestigious media destination, then their pipeline of great content will expand further, because the benefits of contributing will continue to grow. On the other hand, if the brand is diluted down to “old AOL” standards, then all will be lost.

Tim Armstrong was wise to put Arianna Huffington personally in charge of this, because the success of last week’s deal may very well hinge on her ability to promise, persuade, and deliver at a high bar. AOL will be relying on her strength of vision, her standards, and her personal brand to bolster not only the Huffington Post’s brand, but AOL’s as well.

So the real threat to Huffington Post’s contributors is not that they will be exploited; rather, it’s the potential loss of the media machine that has been promoting them for so long.