Google Advertising: a platform example

In continuing my quest for better platform definitions, I’ve considered a few well-known examples.  In particular, I will try (over this week) to highlight some both well-known and smaller examples of platform companies.

Let’s start with perhaps the biggest…or at least most talked about…Google Advertising.  A measure of what I will discuss may seem familiar, but the core theme may be new. 

Remember a portion of my new platform definiton?  "In the process it generates value for all participants in the platform."  Keep that statement in mind for the next few days.

Google Advertising is a well known platform. It, in essence, provides advertisers a method of reaching out to a community of web sites (blogs, e-commerce, forums, etc) and have their advertisements placed where it will be most meaningful. When the advertisers sets up a programme in AdWords, they define their method of engagement (CPC or CPM). Similarly, when a content creator chooses to include Google Ads on their site, they are able to customize the experience to that which is most appropriate for their audience. Ultimately, the content consumer views ads that are both appropriate, contextual, and familiar. Therein lies Google’s "secret sauce". . .they are intelligently filtering, reviewing, and dynamically pushing content through their platform.

What are the benefits of adopting this platform? The content creator is paid for each click-through, the advertiser is reaching a target market in a scalable fashion (and achieving better conversion), and the consumer is, hopefully, being provided with content that is relevant, and interesting, to them.

The above is easy to understand as we are all familiar with the experience. Ultimately, however, the true value of the Ad platform (AdSense + AdWords + web content) is in generating money for their network. Their platform, and thereby the network around it, is successful because of the monetary value created.

The IP Commerce Platform, in a similar fashion, is about generating value for our network of partners. In fact, for every 1$ that IP Commerce makes through facilitating an interaction between our partners 3$ is generated for the partners in the network. The specifics of this share of revenue are, of course, dependent upon the specific business arrangement as modeled in the IP Commerce Platform.

One of the most important elements of any platform business is ensuring that value is created for all the participants in the platform ecosystem.

What’s your perspective? Agree? Disagree? Anything to add? Critiques?
The comment form is below. . .

March 25, 2008

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