When New Media Becomes Old

So, who should Google be most afraid of - a recharged Microsoft/Yahoo combo or half a dozen graduates applying the finishing touches to a bold new business plan in a garage in Beijing.

The location or the nature of the office notwithstanding, internet history suggests the latter. The internet remains as unpredictable as ever, especially when it comes to working out how this dynamic medium can be harnessed for the benefit of advertisers. Sure, the current crop of major players are sensibly spreading their bets, from social media to mobile to integrating search and display. The prospect of meaningful advertising revenue from any of these, however, remains elusive.

Microsoft, meanwhile, faces the daunting task of pulling off its first mega-merger, while Google has lost its air of invulnerability after missing profit estimates, in part because it over-estimated how much money it could earn from social networks.

However, don’t side with the guys in the garage just yet. The incumbents’ trump card, years of experience of what works in search and display respectively, is something that risk-averse marketers like a lot. Moreover, Microsoft’s approach for Yahoo and Google’s bid for DoubleClick promise to develop this knowledge significantly, building norms and measures that make advertisers feel comfortable about spending a lot of money online – the sort of sums that many feel the internet deserves.

Truth is, there’s time enough for Microsoft to absorb Yahoo, or for Google to wean itself off search. Advertisers are just coming to terms with established ways of advertising online, and with marketers paying more attention to the next quarter’s results than a long-term strategic plan, budgets aren’t moving anywhere fast, anytime soon.

No doubt the rules of online business are about to rewritten once again (has anyone cracked micro-payments online yet?). But we should also expect Microsoft and Google to mature from being new media to old, offering brands the comfort of a familiar place where the people holding the purse-strings know how everything works. Sure, web being what it is, people will still be complaining that advertisers aren’t keeping up with changing media habits. Only this time the old media beneficiary of this conservatism promises to a company like Google. Or will that be Microhoo…

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