Google shows off upgraded products, ad growth

By Eric Auchard, Reuters 29 October 2007 10:31AM

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"We can now see an integrated strategy for the company," he said at a day-long series of meetings with analysts, investors and news reporters at its Silicon Valley headquarters. "It is a coherent strategy that solves real problems customers have."

"We used to just talk about (this vision)," he added. "But now we have real customers."

The event was partly overshadowed by a rare defeat for Google, as rival Microsoft paid US$240 million for a minority stake in Facebook that valued the social network site at US$15 billion. As part of that deal, Microsoft snared an exclusive banner advertising deal across all Facebook sites.

But Google executives hinted Microsoft may have overbid in order to buy itself market share, even as it said its own deal with Facebook rival MySpace was running "ahead of plan."

Google co-founder Sergey Brin was asked whether Google faced a threat as more and more Internet activity now occurs within social network sites rather than on the open Internet.

"We don't feel, at a higher level, that we need to own every successful company on the Internet," he told an audience of several hundred. "We can partner with these companies."

Google operates a popular social network of its own, Orkut, though its appeal is concentrated in Brazil and India. It also supplies ads to the biggest such network, MySpace.

"We have a great relationship with MySpace," Brin said of a year-old deal with the News Corp company. "We probably partner with on the order of 20 different social networks."

BRAND ADVERTISING NEXT REVENUE SOURCE

Google, which is growing revenue and profit four to five times faster than rivals Microsoft and Yahoo Inc, is expected by Wall Street analysts to generate revenue of US$16.6 billion this year, virtually all through online advertising.

Tim Armstrong, president of North American advertising sales, said every one of its top 100 advertising accounts was increasing spending with Google. He described a major consumer packaged goods customer that only advertises 1 percent of its brands via Google services, leaving 99 percent to go.

He said Google was making headway with major advertisers, ad agencies and media buyers in its mainstay pay-per-click Web search ads, and, increasingly, in corporate brand advertising.

"We are getting real traction for multiple reasons," Armstrong said. "Brand and search (advertising) are moving closer together."

At the event, officials showcased a range of improvements to existing Web-based applications, seeking to demonstrate the progress the company is making in focusing on features within products rather than flooding the market with new products.

"We realized a while ago we can't continue to simply add products to our lineup for (the) very reason that people won't know about it," Brin said.

Among services showcased was a new feature of its personalized home page service, iGoogle, that synchronizes data from different mini-applications known as Google Gadgets.

IGoogle product manager Jessica Ewing showed a personalized page that pulls in data from different parts of Google Finance. When a user changes stock ticker symbols in one frame of the page, other frames automatically update to reflect the change.

Gmail users will soon be able to click through Web-based e-mail at the same speed they would be able to when checking e-mail on Microsoft Outlook running on a desktop computer. Google has also begun to incorporate into Gmail features from Google Apps software for word processing and spreadsheets.

"At Google, we constantly feed the winners and starve the losers," Jonathan Rosenberg, Google's senior vice president of product management, said of how the company allocates resources to fund innovative products while cutting out poor performers.

(Additional reporting by Michele Gershberg in New York)

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