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.