Wired Magazine, via Reuters, recently reported that Google is starting a venture capital firm called Google Ventures. That’s appropriate. But the question begging to be asked is why would Google be interested in spending millions of dollars on seed money and new startups? I mean, beyond the old-fashioned mantra, “We hope to make a profit.”
Google knows that, more and more, pay per click advertising is going to be the way that new online companies gain the targeted traffic that they need to stay alive. It has been proven that the quickest way to success is to engage your target market with PPC. SEO is effective, but to be truly effective you need to spend time and money to drive a targeted campaign toward search robots. That does take time. Social media is still an unproven playing field.
But PPC is the way the new companies get needed exposure and targeted traffic fast. That’s why Google is looking for new startups to give money to. The reasoning goes like this:
- Google helps the new start up by giving them seed money to grow
- A part of that seed money is used on advertising (where do you think most of these companies will go for online advertising?)
- As the company grows and succeeds, they will spend more money on advertising, the vehicle that got their early success in the first place
- Google will still see the survivors’ money over time as those companies that succeed will continue to spend money on PPC
Of course, none of this means that new start ups should shun Google. Indeed, if anything, it means they should embrace the search giant. Take the money, spend it on pay per click advertising, grow your new online business, and spend more on advertising (and SEO). That’s how it will be done online and Google knows it.
