Google's proposed satellite coverage for developing countries makes me wonder what Google's economics are in localising for the poorer countries. The big advertisers are in the developed countries, as are their customers. For example, US advertisers will target consumers located in the US; but they will also:
- ...target global consumers who visit google.com - which will be of interest to brands such as Nike. Take a Zambian consumer clicking on a Nike ad. If this Nike ad is on Google Zambia, the click will cost Nike a minimal amount, as there are few other advertisers with whom to compete. If the click comes from the same Zambian consumer, but on google.com, Nike will have paid a lot more. So Google loses revenue by directing that google.com traffic to its Zambian website.
- ...forget to geo-target at all, and therefore reach all consumers who visit google.com. In this case, Zambians visiting google.com will click on ads for a US company that did not want to target them. If this Zambian had stayed on Google Zambia, Google would not have earned that revenue (or almost any revenue, given the paucity of ads on Google Zambia). Google would argue that serving irrelevant ads to consumers is bad for business, but I am not sure if that applies in developing countries where the revenues to be lost are so small and where consumers may not have many useful alternatives anyway.
These are inefficient situations, but inefficiencies are an important contributor to Google revenues (hence the lack of a cost-per-action product, for example; or the lack of AdSense revenue split transparency; and so on).
The calculation will not be this simple (other factors include, for example, the need for overflow websites as google.com has amassed more advertisers than it can serve), but localisation to the developing world may well cost Google money.
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