Late Thursday Michael Arrington of TechCrunch reported Google is in talks to acquire Twitter, or at least develop a real-time search engine with Twitter.
This is not a huge surprise given that Google has acquired a lot of companies over the years, including YouTube and the blogging platform Blogger from the co-founders of Twitter, Biz Stone & Evan Williams.
Google has so much cash ($15 billion as of Q4 balance sheet, $7.8 billion operating cash flow) it can easily acquire Twitter without it hampering their business. They could over-pay for Twitter and still not have too much to worry about with respect to weakening their financial footing.
After Google bought YouTube a couple of years ago I was having lunch with a friend who said to me "They paid $1.8 billion! How can they ever recoup that?'' I replied "You act like that's a lot of money, but it's not to Google. They will make that back in a few weeks."
Google's revenue for Q4 was $5.7 billion, so if they paid say $2 billion for Twitter, that's about one month worth of revenue. No big deal to them.
As Arrington points out in his article, Google has done such an incredible job of monetizing search it has enabled them to stockpile loads of cash and buy up whatever new outlets spring up where they can serve even more ads (Blogger, YouTube, and soon Twitter).
While social media gets all the hype these days, it is search that continues to provide the mechanism for publishers to monetize their content and for advertisers (like me and my clients) to drive traffic to websites and gain sales or sales leads efficiently.
More and more people are starting to use Twitter to talk about brands in real time as they interact with them. And those brands want to know all about it, whether to respond individually (The W Hotel pestered me until I told them to just leave me alone), or simply gather the information to see what they’re doing right and what they’re doing wrong.
Posted by: Jaimie | April 07, 2009 at 12:50 AM