Why Google Will Buy Milo.com

Appeared in the MediaPost, November 25, 2009, quoting David Barnes, Director, Business Intelligence:

One piece Google needs in its retail shopping engine, Google products, is the ability to determine if the items searched for online are in stock at local physical stores. Acquiring Milo.com would instantly give Google the technology to make that happen.

So, my recent phone conversation with 23-year-old Jack Abraham, Milo's co-founder and CEO (and son of Magid Abraham, comScore co-founder) came as no surprise. Abraham started to mention an email from someone. I said, "I'm surprised you haven't heard from Google with an offer to buy the company and its assets." He answered, "Funny you mention that. Actually, I received an email from -- " but stopped in mid-sentence, presumably after remembering he was speaking to a reporter. So I inferred that something might be up.

Milo not only gives shoppers the ability to buy online, but it drives local sales in brick-and-mortar locations. And that's what Google needs to complete its shopping engine. Traffic to Milo.com has grown 400% in the past three months, according to Hitwise.

Milo isn't an online comparison shopping engine that provides a pixel at the checkout page to track sales, but retailers could rely on a code that gives the engine credit at the point of sale in the physical store. It would not only help retailers and the search engine determine how to allocate profits, but it could give marketers insight into where to put their marketing focus.

There's no advertising banners or paid click listings. Jack Abraham, Milo's co-founder and CEO, calls the site "one big advertisement."

For marketers at manufacturers and retailers, opportunities reside in getting consumers out of their homes and into physical stores to tempt them with complementary products. I can see Milo offering advice, such as "shoppers who bought this, also bought that."

In March at a Kelsey Group conference, Chris LaSala painted a picture of Google products. He told conference attendees the focus would turn toward getting product and stock information from small and medium-size businesses to help them sell product online. It would also allow shoppers to search for local businesses with available products.

The service hasn't quite materialized as close to the vision as LaSala described, but that could be because Google might need to acquire the relationships and the technology made possible by those at Milo.

That deal seems likely also in view of Google's current steady rate of acquisitions. Since Google CEO Eric Schmidt made the statement during the last earnings call on acquiring roughly one small company monthly, he hasn't let us down. Three acquisitions in November include AdMob, Gizmo5, and Teracent, according to Wikipedia.

The acquisitions of GrandCentral in July 2007 and Gizmo5 this month have led the advertising industry to believe Google will introduce a phone manufactured by a third-party original equipment manufacturer (OEM) and distributed by HTC. The combined companies make up a service called Google Voice.

A cellular phone equipped with a powerful retail search engine or feature would give shoppers on the go the ability to find available products in local stores.

Google also has made investments in Clearwire, which continues to hunt for radio frequency (RF) engineers, an expertise Google might need to support the hardware. Speculation suggests the phone would include WiFi, WiMax, cellular and VoIP capabilities, but at least one analyst is confident Google still doesn't have enough hardware capability to introduce a phone service alone.

Let's say Google will launch a branded phone and find an original design manufacturer (OMD) to do their job. The company still needs to have hardware experts to walk through the certification, according to the analyst. Similar to how Apple outsourced manufacturing to Foxconn, the company still needs hardware engineers to make sure everything meets specifications.

Products must pass SAR (specific absorption rate) requirements for cellular devices, and all wireless-related products require approval from the Federal Commissions Commission (FCC). But they probably won't need an RF Engineer to overlook it since there is only one RF component (WiFi) instead of between five and six in a mobile phone, according to the analyst. She also says the Clearwire products (or any phone Google has manufactured) will need at least another RF component, WiMax. "I'm thinking Google is just going to work with Clearwire to make sure Google Talk is integrated in Clearwire devices and no interferences would occur, and ensure the VoIP quality," she says.

Advertising and marketing industry execs have mixed views, though all seem to think Google will provide some sort of hardware. Kevin Lee, Didit CEO, believes the biggest opportunity Google has is building a Skype competitor that integrates into Gmail. One login gets you voice, email and Wave.

Omnicom Media Group Director of Strategic Operations Eric Anderson does not think Google will start manufacturing handsets. "Google would rather be the plumbing than in the constant battle of coming out with new hardware."

Perhaps Google will license a phone under the Google name, chimes in David Barnes, director of business intelligence at Resolution Media. "Google getting deeper into the mobile space keeps competition lively among the carriers and creates a platform to extend open-source development."

Barnes thinks the "biggest restriction with the iPhone is you have to jailbreak it to access WiFi, VoIP, and cell networks at will." He adds, "if Google were smart, it would run its phone across all three platforms."

And, that circle lets Google give retailers access to consumers wherever they go.


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