It seems everyday we hear that Google has acquired another company. Occasionally, we hear about a massive buyout, such as YouTube and DoubleClick, or partnership, such as with AOL and MySpace. Google executives mingle with other industry leaders and insiders. This helps to keep them well-informed of their competition as well as potential purchases. Yet, Google’s acquisition strategy is different from most other companies. Many of their acquisitions seem to come out of nowhere and seem completely random. However, these seemingly, random acquisitions are not random at all.
In addition to human resources, Google utilizes their extensive search technology as a massive data mining resource for their competitive, cooperative, and investing advantage.
They have access not only to what consumers search for, but also what advertisers are looking to sell. Additionally, they know what content publishers create on their sites to monetize their advertisements. In other words, Google knows what’s hot, all-the-time!
Since Google has the search engine advantage, they know where web traffic is going before anyone else. Their bots crawl the web to discover trends, in addition to indexing keywords and content. Sometimes this leads Google to aggressively bid for a company, while competitors are left scratching their heads in bewilderment.
Follow the Numbers
Google’s secret is to follow the numbers. With their data acquisition and statistical gathering technologies — GoogleBot, Web Search, Blog Search, Maps, Finance, AdWords, AdSense, and so on — they can piece together the big picture. This picture helps Google to determine the value of a corporation and whether it is a potential, acquisition candidate.
To estimate the value of a corporation Google can determine several factors, among others, from their data:
- size of the audience
- growth rate of the company
- current and potential competitors
- potential investors
- related technologies
- market potential
Due to these enormous advantages, it is unsurprising to see new search engines still entering the market. This is especially true of vertical search engines, which is search for a particular niche market, such as real estate search. While, these new search engines are not always able to compete with the larger search companies, such as Google, Yahoo!, and Microsoft in general and universal search, they can still compete in their niche market, as well gather useful and valuable information.
Although, Google’s acquisition track record has not been completely perfect, they have utilized their powerful investing and acquisition tools to their advantage.
What do you think of Google’s acquisition strategy? Who do you think they should acquire next?