How Google’s Riff with China Will Impact Google Search Network Partners
As it appears we may finally have a resolution to the long running feud between China and Google over the next few days, we thought it would be a good time to take a look at what impact a Google pullout from China might have on Google’s Network Partners, It appears that most of the larger members of the Google Partner Network have little to no exposure in China. This is a good thing for Google, as they are already taking a great deal of heat from partners, affiliates and agencies based on China. However, both America Online (NYSE: AOL) and Vertro (NASD: VTRO) have some search business in China.
America Online is one of Google’s largest search partners and some portion of their international revenue is earned in China. While last year’s wave of restructurings pulled most of their employees from China, they still have a revenue generating chinese portal. Could this be an opportunity for the new MSFT/YHOO combination to serve ads for AOL? AOL’s contract with Google expires in December of this year, so any opportunity for the new YHOO/MSFT partnership to get their foot in the door could be significant.
Vertro does not break out its China revenue, but we know China was one of the first test markets for its non english speaking country international toolbar tests last year. While just over 25% of its active ALOT toolbars are broken out as “rest of world” (non “region one”), we also know that China is just one portion of that figure and Vertro’s ALOT toolbar has a significant number of active toolbars in India and Brazil as well. Additionally, Vertro management has indicated that the toolbars in this “rest of world” category monetize at about 1/10th of the revenue an average toolbar in region one (US, UK and Western Europe), so all “rest of world” revenue combined contributes less than 5% of Vertro’s revenue and we know that China represents only a portion of this figure. Additionally, Vertro already has a relationship with Yahoo Search Marketing to provide Pay Per Click ads for its news and image search functionalities, so it would not be that difficult to transition to showing YHOO (and very soon YHOO/MSFT) ads for China toolbars.
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