Google's stock took a 9 percent hit in after hours trading today because the company committed the gravest of sins: Generating $8.13 billion in net revenue over 3 months when Wall Street analysts wanted them to generate $8.4 billion.
In the aftermath analysts remained fairly bullish on Google, but cited a few chinks in the Internet's behemoth's armor. But something they didn't cite sticks out to me: There has been a sizeable increase recently in the number of companies offering online ad services to small and medium-sized Web sites, a la Google AdSense.
Granted that's just one part of Google's revenue stream. Their search engine dominates the paid-search ad business. They're behind Android phones and apps. They own YouTube, and who knows what Google+ will turn into.
But I run a family of SEC-focused college sports Web sites, including the UGA version, The Dawgbone. We've been contacted over the last few months by three different entities offering the same services as Google AdSense - user-targeted advertising, paid-by-impression revenue sharing and ad performance tracking.
It used to be that Google, and only Google, offered this service, as best I could tell. Believe me, I looked.
Yahoo! has had their own ad service and a partnership with newspapers for years, but they don't work with amateur and semi-amateur content providers. This recent proliferation of companies that do creates competition in a segment Google didn't just dominate, they essentially owned in full.
Is this micro analysis of a macro issue? Granted. A small piece of Google's pie? Maybe. Worth noting that Google saw total ad clicks rise 34 percent last quarter anyway? Absolutely. But the point is, when you're an innovator you have to keep innovating, or the pack starts to catch up.
And it ain't easy.