Google is one of the few companies able to position itself
continuously for major moves in the internet market, Craigs
Investment Partners broker Chris Timms says.
Through acquisitions and research and development, Google had
build up a competitive position in the most important digital
consumer markets, including mobile and digital structure,
digital services and monetisation.
''This diverse range of products and services have allowed
Google to be exposed to the largest areas of user traffic on
the internet, which it can use to leverage its advertising
Google had recently realigned its sales go-to-market strategy
into a performance advertising group and a brand advertising
group where before, it was split between products, he said.
The push focused on the YouTube online video business but
also included Google's display advertisement network and its
social network, Google Plus.
The bulk of Google's advertising revenue was from performance
with advertisers only paying when a consumer clicked on their
advertisement. The company was starting to make gains in the
$US30 billion ($NZ36.4 billion) digital ''brand'' category.
''With the increasing shift of video consumption to the
internet, this move is very timely for YouTube and could
signal a new opportunity for 2014. YouTube gives brands a
very wide reach and provides access to targeted audiences
very few online media providers can do.''
YouTube had more than one billion views per month and saw a
50% increase in daily watch time over the past year, Mr Timms
Google planned to repackage YouTube to look more familiar to
television advertisers, making it easier for big brands to
evaluate YouTube advertisement buying.
It also recently started using Nielsen's Online Campaign
Rating service which helped advertisers measure the
performance of YouTube advertisements, similar to TV
advertisements, he said.
''Google is investing in creative ad formats which pivot
around user engagement. The company's marketing teams have
found simply taking television ads and transplanting them on
YouTube was not a successful strategy and that ads needed to
be tailor-made for the internet.''
Last year, three video advertisements created by brand
marketers, specifically designed for YouTube, made it on to
the list of the top 10 most watched videos for 2013.
In early January, Google announced the agreement to acquire
Nest Labs for $US3.2 billion.
Nest was a manufacturer of digitally-connected home products,
including the Nest Thermostat and Nest Protect smoke and
carbon monoxide alarm.
Along with its operating systems investments of Android,
Chrome and devices like Chromecast, the acquisition of Nest
Labs added to Google's efforts to take its platform into the
home, Mr Timms said.
The company was an active acquirer in the fourth quarter
including in AI, buying DeepMind Technologies, robotics
company Boston Dynamics and launching the Open Automotive
Alliance with GM, Honda, Audi, Hyundai and chipmaker Nvidia,
to bring Android to cars.
''The general theme seems to suggest Google is looking to
move into more personal computing in the home, the car and
the workplace with smartphones, tablets, PCs, set-top boxes,
TVs and robots.''
At the end of the second quarter, Google had $US58.7 billion
in cash and equivalents on the balance sheet, or $174.80 per
Management had made it clear its cash balance was still
considered a strategic asset for long-term growth.
Therefore more acquisitions in the near term could be likely,
Mr Timms said.