nexus_2One of the bigger unknowns surrounding the Nexus One is whether or not Google would eat some or all of the cost of a handset in order to get it in the hands of as many people as possible.  This article won’t be a debate on whether they’d do it but rather how they could justify it.  Let’s have some fun and assume that they have already announced it.

Google Gives Everything Else Away


Google already has a history of giving things away that they could (or should) be charging for.  Their GOOG-411 service is better than any directory assistance I’ve ever used.  How is that they gave that away?  Think of all that was learned by its usage. They know every business, name, and location ever searched for.  That’s valuable data.  Further,  each voice-activated search has variations in accents and phrasing that is being used to perfect the speech synthesis we now enjoy on handsets.

You could say same things about Google Maps Navigator.  Even in beta, it rivals every paid GPS service I’ve had the chance to experience.  How can they justify giving that away freely?  I believe that monetization will come from location-based advertising.  As one drives, ads will popup on the screen alerting users to nearby specials, promotions, and events.  Rather than hitting people over the head with too many, I expect some form of opt-in agreements where the user can select layers or interests.  Maybe you’d like to know of hotels and restaurants as you drive around in a rental car while on a business trip.  Letting the consumer choose which messages they hear makes it less obtrusive. At the same time, it addresses privacy concerns for those who are worried Big Brother knows your exact whereabouts.    I’m willing to bet that your local pizza shop might consider advertising their deal of the day to passersby looking for a quick bite.

Targeted Mobile Advertising

Forget driving down the street and getting hit with ads and alerts.  We could be beyond that before long.  How long do you think it will be before you point your camera phone at a restaurant to see what that day’s specials are?  Businesses wouldn’t even have to broadcast an ad that hits everyone.  Instead, they can display their offers only when prompted by the user.  Think of this as the new pay-per-click.  Google is more than equipped to handle the metrics, letting advertisers know how effective campaigns are, what works, what doesn’t.  Nobody looked at your business this week?  You don’t have to pay.  Have a loyal customer base always looking to see your daily or hourly specials?  You’ll want to let them know as they drive by.  I imagine businesses would be willing to pay a premium for this kind of advertising.

Home Page Placement

Only twice that I can recall has Google offered advertising on their home page.  Both instances were Android-related.  I don’t think that was a coincidence.  Quick recap for those unaware: When the T-Mobile G1 and Motorola Droid were released, Google had a simple text link advertisement listed under the search bar for a day or so.  It was an unprecedented move the company who long kept ads away from the search page.

If anyone knows how effective those ads were, it would be Google. Sure, the ads were designed to drive traffic to Verizon and T-Mobile‘s websites, but we know they were keeping an eye on the response.  What if Google saw something in those two short ad campaigns that really excited them?  What if, in those short campaigns, the click-through rate (CTR) was so impressive that the company realized they should be using this space for their own products?  It’s not unrealistic to think Google could do the same for their own phone.  This is not to say they would go about placing banner ads on the page.  Maybe something an ongoing ad under the search bar would be enough to recoup the cost.

Your Turn

There are plenty of ways Google could get creative with advertising and search.  For all I know, they could be working on something completely out of left field that we’ve never even thought about.  If any company has been forward thinking over the last decade, it’s Google.  We need to understand that just because they haven’t done something in the past, doesn’t mean they won’t in the future.

I’d love to hear your thoughts on this.  Do you have anything to add or suggest that might make another potential revenue stream?  Please, leave a comment below!

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