Startups: depending on Google is risky
For unknown reasons (i contacted incredimail to find out more) Google terminated its business relationship with Israeli startup Incredimail.
According to Reuters Adsense was representing a substantial part of the revenues of the company. The impact was immediate and the stock lost nearly 41% in Nasdaq.
I really hope Incredimail can solve that issue. Actually i am sure they will (Microsoft might see here an opportunity)
Google can be a fantastic business partner but if for some reason you loose it it may impact significantly your operations. Not only from a revenue point of view but also from a distribution point of view.
A lot of startups are building their distribution strategy on Google page rank and their ability to be well ranked in search results. This SEM strategy is good and even cheap in the short term but risky if Google changes suddenly its algorithm or decides to takes you off the index. This happened recently with lots of startups and services that were using abusively internal backlinks to increase their page rank.
The real challenge is to become a destination site not staying a Google shadow
Update: Mike at TechCrunch has published a note about this too. He mentions this could have to do with fraud. But nothing is confirmed for now.
Update 2 : i just had a chat with one of the founders of Incredimail which confirmed that as a public company they cannot disclose the reason why this all happened but that this is not related to a fraud issue. Also confirmed that in a few days all will be sorted out (with or withouth google?)
interesting... I wonder what their motivations were behind releasing that level of information to the AP
Posted by: noone | 14 January 2008 at 02:21 PM
Regarding update #2 and "...also confirmed that in a few days all will be sorted out...".
This is good 'insider information'. Thanks for the tip.
Posted by: Jay | 15 January 2008 at 03:54 AM