Google Cuts Off Its Big-Media Dreams

Like Napoleon marching into an abandoned Moscow, Larry Page and Sergey Brin have led Google's advance into traditional advertising only to find nothing to loot. Now begins Google's long imperial retreat, starting with 40 layoffs.

Susan Wojcicki, the millionaire sister-in-law of Brin who also holds a management role in the company, announced the job cuts in a blog post, as she laid out plans for Google to exit the business of brokering radio ads, a business it entered in 2006 when it bought dMarc Broadcasting for $102 million.

Up to 40 Googlers will lose their jobs, a small percentage of the 20,000 remaining employees at the search giant. But the real cut here is to google's ambitions.

dMarc was Google's first big move outside online advertising. It followed swiftly with announcements of forays into selling ads in newspapers, magazines, and TV. The strategy had more to do with Wall Street than with Madison Avenue, though: Google desperately needed to create the illusion for shareholders that it could tap more than just the market for Internet search ads.

Google has already pulled out of print advertising. Now radio is gone. Will TV advertising be next? Wojcicki, in her blog post, insisted that Google would keep trying to break into the TV business. The rationale: Like the clicks that give Google feedback on which ads work and which ones don't, Google can track when TV viewers change channels in the middle of a TV ad.

The feedback loop of clickstream data has made Google victorious online. The more ads it sells, the more data it has; the more data it has, the more accurate its targeting is; and the more accurate its targeting, the more money it makes for advertisers and publishers, drawing yet more ads. Microsoft and Yahoo, with a smaller base of advertisers and users, never stood a chance.

That dynamic simply doesn't exist with radio or print advertising. And the channel-switching data Google touts simply is not informative enough to shape TV-advertising campaigns.

Napoleon's rout in Russia, far from home, was followed in a few short years by defeat just outside the borders of France in Waterloo. His army was still mighty after Moscow. It was the long, cold march back home that devastated it. Could Larry and Sergey's hubris lead them to a similar defeat?