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Advertising broker Google, best known for its search engine, is to launch an email service according to a Reuters report. The point of the exercise is to create a new virtual billboard for its lucrative keyword-based advertising service.

Google declined to confirm the story but a spokesman pointed out that Google already deploys its AdSense contextual advertising in its own newsletters. Using AdSense could garnish an email to your Mom enclosing your Christmas photos with links to camera manufacturers, compact flash retailers and photo processing outlets.

Contextual advertising has been behind Google's phenomenal growth: according to a recent Fortune peek behind the scenes, the company puttered along modestly before new CEO Eric Schmidt threw resources behind the ad push. Estimates reckon annualized profits run at $350 million on turnover of $900 million.

During the portal fever of the late 1990s, analysts exhorted sites to add features to encourage "stickiness": the amount of time that users "eyeballs" were spent on the site. (Evoking a picture of Internet users made entirely of glue, perhaps). But co-founder Sergey Brin wasn't convinced of the necessity when asked recently, and there's a danger in assuming next year's business model and superpower war will be refought on the same terms as last year's. Although it's true that Google is increasingly resembling Yahoo! and MSN in terms of content, and that Yahoo!'s Overture service is Google's biggest competitor, Google's business model simply requires lots of people to click AdSense ads; these don't need to be on Google properties, and most aren't.

In addition, as a broker Google is at least in a position offer to inject adwords into Hotmail and Yahoo!, rather than compete head on. There are genuine advantages to staying above the portal fray.

Much Adwords About Email

Google will have a hard time differentiating its email service from rivals, especially if those rivals opt to offer ad-free emails. One potential differentiator could be spam blocking, but here Yahoo! already does an excellent job, and Google's record with gamers doesn't auger well for its success. As the ensuing Slashdot thread points out, users attribute Google's dwindling reputation for search excellence as the result of focusing on ancilliary commercial activities.

"Getting rid of the page rank spammers should be their priority, not expanding into a commodity marketplace where they will have no real niche," writes one poster.

"Instead of messing around with all this e-mail stuff, how about you concentrate on actually making your search engine useful again?" writes another.

"It has become completely overrun with results like sony.dscp10.reviews.digital.cameras.hot.sex.now.fr eesexsite.com that it's becoming incredibly hard to actually get any information out of it. It used to be that when I searched for a product, you gave me user/site reviews on that product. Now, all I get is a bunch of people trying to make me buy it from them," writes another. "Please remedy this before trying to do other things."

Google's management should read that thread all the way to the very end. ®

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