Who is the next Google?

Microsoft announced today it is buying Yahoo. Both of these companies are Google’s biggest ad competitors. But neither has challenged Google’s price increase and this buy out indicates we will not see it in the future. In 2005 many start-ups and out sourcing firms in India used Google ads as their primary source of customers. The average cost that I determined from researching 100 companies in 2005 was $25-50 a customer. All those ads are now gone. I assumed it was Google’s new method of not showing an ad every time. Buying some online ads revealed the real cause. The cost of running the same ad as in 2005 and getting the same response rate is now $1500 per customer.

Google explained why they dumped these customers. The profit margin is low. They can make more profit with less effort by only supporting the top customers. Google was right. They have continued to grow their profit and companies that could have stepped in and paid the higher prices. Companies like Wal-Mart have shown that a market exists in selling volume at a lower profit margin. Who is the company that is going to offer a competitively priced advertising at a lower profit margin? It may not even be the same service. Does anyone know who is becoming the Wal-Mart of advertising?