For the past few articles I've been using poker as the analogy to explore the options for parking companies when negotiating with Google. As we have seen the balancing act that Google has established between themselves and the parking companies is critical and it just so happens that the easiest solution on how to manage it is to ensure that there are a number of parking companies (players) at the table which are all roughly the same size.
This creates competition in the industry and will mean that Google's potentially biggest problem is continuously fighting for market share rather than wondering how to stop them from cheating at the game.
You've only got to look at the creative ways in which some of the parking companies endeavour to migrate more traffic over to themselves to realize that the competitive round of market forces is alive and well. Google has managed a situation where it's better to fight with your neighbour rather than with the Giant in the corner.The worst thing that could happen for Google is if all of the parking companies decided to stop trying for market share and joined forces.
From the poker game perspective this would mean that all the players get up and leave the table but decide to move all of their remaining chips over to the one remaining parking poker player and create mega-park. What's going to happen now?
The final player has resources to build an advertising exchange and explore other technologies, processes and innovations. This final player decides to play two tables rather than just the one.
Google and Yahoo don't particularly like this but the problem they face is that without this player there's no game and as we explored earlier that wasn't a good outcome for either of them. When they try and say that they only play exclusive games the remaining parking player can just say "no". After all, two games need to be played.
Consolidation is the big danger for Google. If there is consolidation of parking companies or massive domain portfolios then Google runs the risk of losing their market dominance. Google needs the traffic but mega-park has multiple options where they can monetize it. This is where I believe that many people will finally realise that the defining unique resource in the domain industry is traffic and NOT advertisers.
Source: Posted on WhizzBangsBlog by Michael Gilmour -- Reprinted with permission -- June 13, 2008