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Will life change as Google becomes Alphabet?

For people in advertising and media anyway the likely answer is ‘Not much.’

Sundar-PichaiSeparating the Google search and advertising business from the company’s other ambitious, sometimes barmy, bets allows founders Sergey Brin and Larry Page to concentrate on their own playpen, leaving the running of the major part of the enterprise to new Google CEO Sundar Pichai (left).

And it’s surely a direct response to investors who feared that the company’s venture activities, like the now discontinued Google Glass and the abortive bet on Motorola, were draining away value. They still might, of course, but at least investors will be able to see where the money is going. Google shares rose on news of the announcement, adding a heady $28bn to its value.

If Brin and Page’s bets don’t pay off then it would be easy to separate the companies completely.

Do Brin and Page, and former CEO Eric Schmidt who’s becoming executive chairman of holding company Alphabet, have the ability to be more than super-successful geeks? Be new versions of legendary investor Warren Buffett whose Berkshire Hathaway this morning announced that it was buying aerospace supplier Precision Castparts for $32bn?

Buffett doesn’t do new and modish of course; he owns things like Heinz and a slew of railroad companies. He’s a long terms investor in Coca-Cola. He was also a big shareholder in Tesco.

So Brin and Page have a doubly difficult challenge: show they can invent as well as manage a bunch of barely related businesses.

As for Google’s ad business, it should benefit from the extra focus it will now receive from new CEO Pichai, who rose to prominence through his stewardship of the Android operating system, now powering most of the world’s non-Apple smartphones.

Such focus may cause a ruction or two in adland. Google’s focus will now be on monetizing its various properties, most notably YouTube. It’s already tightening the way people can buy YouTube ads, which may mean that a number of adtech companies find they don’t have a business any more.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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