Something Less than Positive about Google

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Banc of America Securities has rated Google at neutral. Discussion over at Forbes.

Basically the thought is that, while Google has built a strong brand, it hasn't really had to compete, business-wise, yet. To translate its name recognition into dollars and cents the company will have to market which will significantly drive up expenses, and BOA doesn't believe that in return Google will be able to command top dollar for advertising, thus squeezing revenue possibilities.

Most of this is pretty reasonable. Advertising is king. This is why, even though they got to the game late, Microsoft can compete. They have the resources to endure not being the top dog for a long time. On the other hand, now that they have gone public, Google is on the clock. They may not have to achieve profitability yet, but they have to show that it can be achieved in the foreseeable future.

I do dispute the notion that Google can't set premium advertising rates. They've done a great job of building their brand and have become an online superstar. Granted, the size of their following is ireelevant since advertisers pay by the impression and click, but I'm having trouble figuring out why an advertiser wouldn't be lusting after the Google audience. In addition, from everything I've read, with their technology Google's audience targeting is among the best available.

This will be an interesting case to watch. Many strong players have gone public and wilted, in much more patient times. Now the heat is on ... if anyone can make it, it's Google.


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