Google’s Chief Legal Officer, David Drummond, posted to the company’s corporate blog today announcing that Google has stopped pursuing an advertising agreement with Yahoo. In the post he writes about government regulators and some advertising expressing concerns with the proposal, and also talks about how he believes it would have been good by delivering more relevant ads to users.

I’m all for more relevant ads provided that my information is being protected and that personally identifiable information remains confidential. I also don’t want my personal information being used to deliver ads to others, even people I know.

Far more interesting than this particular partnership is Google’s next move. For all of their success in search they are still looking for that breakout next act. Microsoft had hardware and then software. Apple had the mac desktops and then the iPhone. Google certainly has many successes under their belt, but it is critical that they come up with their next act to maintain their leadership position over the long term. This is not a unique challenge to Google, but given their success and power they have a very bright spotlight shining upon them.

Following is a guest post from Samuel Degremont, Manager in the Digital Practice in our Paris office. Samuel advises clients on corporate and marketing digital strategy, blogs and social media actions, online buzz creation and crisis management as well as online community management. You can follow his up-to-the minute thoughts on Twitter or read his commentary on the Burson-Marsteller Paris Blog (in French). For other guest posts on the Digital Perspective blog, see here.

I’m back from Stream 2008, where I met WPP’s top digital minds as well as a lot of interesting people including Tim O’Reilly, Jason Calacanis and Yossi Vardi - a lot of entrepreneurs, venture capitalists, tech and media participants.

Focusing on how our Digital industry would evolve in the coming years, the “unconference” allowed everyone to participate in discussions related, one way or another, to Digital. See below for a few examples.

Adaptation in Africa

Google’s Anil Hansjee explained the business development logic of the company within developing countries, particularly West Africa (see an introduction to the discussion here). Africa is viewed by Google as a “huge long-term market,” in other words, the infrastructure and usage does not allow Google to market their already successful advertising solutions and productivity tools (including GMail).

For instance, in Kenya, infrastructure in terms of Internet connectivity is rather poor, and equipment rate (computers, Internet access, Internet cafes) is relatively low and lack a presence. Internet business is split among a lot of small players (about 20 ISP with an average of 3000 users). Local content production (which would be searchable, indexable, and of value to local Internet users) is not produced in mass.

Kenyans, however, do connect together with low-end devices such as inexpensive cell phones. From what Anil mentioned, there are more SMS messages exchanged in Nairobi per day than in NYC.

In this difficult local market, Google sees a lot of potential and adapts its global strategy to more practical tasks than “organizing the local content”. Rather, Google empowers local users with tools that allow the development of local use and content.

Google therefore invests time and money with local partners to build a more robust technical infrastructure (for Internet access) and partners with local Telcos to work on mobile (SMS) based solutions: weather forecasts for agricultural needs, SMS banking systems, Classifieds etc.

It’s a sound strategy (relying on local partners and leveraging their local knowledge) which will probably benefit Google in the long term, both commercially and in terms of brand loyalty.

Adaptation in India

Back from Stream, I gave some thought to the SMS solutions available to developing countries, and I found the example of India of interest.

The situation in India (not discussed during Anil’s presentation) is slightly different than what happens in Africa. The subcontinent has a much better infrastructure in terms of mobile carriers, with an estimated 300 million mobile phone subscribers at the end of 2008. Internet use is not much developed, with an estimated 40 million users (2006).

Local players (see below) have adapted to this situation, and offer therefore services for SMS users that allow effective reach and advertising distribution.

• SMS Gushup: This Indian startup allows users to create groups to which they can send SMS updates. As compared to the web-based Twitter micro-messaging service with an estimated daily exchange of about 3 millions messages per day, SMS Gushup sends about 10+ million SMS per day to its groups of users. The “Rockstar” group on SMS Gushup has 99627 members, top groups appear to have 50k members on average…which is enormous. The business model is based on advertising, where every single SMS sent to the group contains a small ad link, which pays for the service. Premium groups are ad-free but require a monthly subscription.
• Google: Finding a more developed infrastructure in India than in Kenya, Google released an equivalent to SMS Gushup called Google SMS Channel, which you can access once logged into your Google Account. The service was just released earlier this month so the number of group members is still low (in the 2000 figure), but it shows how Google adapts to the local markets it operates into.

Adapt, or Perish?

In fact, global models distributed the same way across the world don’t work. It’s the case for cars, it’s the case for a lot of consumers goods. It’s also the case for web-based models, which definitely need adaptation to the technology and uses at work in each country. When there’s not much use, help build it. When usage is different from your primary target countries, adapt to it, or fail.

And its also the case for leading PR and Media companies around the globe.

First, companies have adapted to the growing, exponential Internet use by hiring Digital specialists and allowing resources to internal training (as we do regularly at Burson-Marsteller – see here) – and if they did not follow this adaptation path, they’ll probably be considered less and less pertinent by their clients.

Second, companies need to constantly adapt to their local markets. They’ve done this in in traditional PR and Advertising for decades, and they need to have the same approach towards Digital campaign conception and implementation.

Because every country looks about the same in terms of Internet use at a macro level, it’s tempting for companies to go for global Digital campaigns. However, on a micro level, usage and maturity of the audience are so different from one country to another that adaptation - at least - is mandatory, but it’s even better to have a co-creation with the local Digital specialists.

That’s what we’re trying to build at Burson-Marsteller, with Digital Strategists in charge of coordinating different market areas where our clients operate. The Strategists ensure that a global Digital vision is implemented with an adaptation to local Internet needs and usage.

Behind the fanfare that was the Microsoft and Yahoo acquisition news yesterday morning as well as Facebook CEO Mark Zuckerberg’s leaked financial results for 2007, Google quietly swept in with the announcement of a Social Graph API (Application Program Interface) for the web.

Brad Fitzpatrick, who was a driving force behind the promise and success of LiveJournal, recently jumped ship to Google to spearhead a project that details the web’s many social inter-connections. For Fitzpatrick, it was turning the web from a medium of information sharing and gathering, to one of communal value. Here’s his problem statement from August 17, 2007 before he joined Google:

There are an increasing number of new “social applications” as well as traditional application which either require the “social graph” or that could provide better value to users by utilizing information in the social graph. What I mean by “social graph” is a the global mapping of everybody and how they’re related, as Wikipedia describes and I talk about in more detail later. Unfortunately, there doesn’t exist a single social graph (or even multiple which interoperate) that’s comprehensive and decentralized. Rather, there exists hundreds of disperse social graphs, most of dubious quality and many of them walled gardens.

Currently if you’re a new site that needs the social graph (e.g. dopplr.com) to provide one fun & useful feature (e.g. where are your friends traveling and when?), then you face a much bigger problem then just implementing your main feature. You also have to have usernames, passwords (or hopefully you use OpenID instead), a way to invite friends, add/remove friends, and the list goes on. So generally you have to ask for email addresses too, requiring you to send out address verification emails, etc. Then lost username/password emails. etc, etc. If I had to declare the problem statement succinctly, it’d be: People are getting sick of registering and re-declaring their friends on every site., but also: Developing “Social Applications” is too much work.

This is exactly the reason why Google swooped up Fitzpatrick after leaving SixApart. He’s right, people are getting frustrated using numerous usernames and passwords to sign-up for various social networks, blogs and wikis. But isn’t the “walled garden” approach the bread and butter for Facebook? Read more:

Facebook’s answer seems to be that the world should just all be Facebook apps. While Facebook is an amazing platform and has some amazing technology, there’s a lot of hesitation in the developer / “Web 2.0″ community about being slaves to Facebook, dependent on their continued goodwill, availability, future owners, not changing the rules, etc. That hesitation I think is well-founded. A centralized “owner” of the social graph is bad for the Internet. I’m not saying anybody should ban Facebook, though! Far from it. It’s a great product, and I love it, but the graph needs to exist outside of Facebook. MySpace also has a lot of good data, but not all of it. Likewise LiveJournal, Digg, Twitter, Zooomr, Pownce, Friendster, Plaxo, the list goes on. More important is that any one of these sites shouldn’t own it; nobody/everybody should. It should just exist.

With this in mind, Fitzpatrick and Google have created, in theory, the most efficient and disruptive mechanism for social sites and applications we have seen. However, as Nick O’Neill points out, the numbers game don’t favor Google’s initiative: with over 70 million users on Facebook, the Social Graph API is limited to public spaces such as Twitter, SixApart and Flickr.

Until the day where social spaces on the web become open, this API will stay dormant. However, if this does change, Google and Fitzpatrick are certainly the ones to do it. What do you think?

I read on CNN yesterday about Yahoo and Google planning to offer social networking applications through their email page functions. Both companies have already made significant strides in allowing users to customize their home pages and aggregate content and functionality from various sites into a personal portal page.  However, I think that email is at odds with social networking given that email is inherently a personal communication.  Sure, I can block content from being seen by the world on social networking sites, but content is largely available to people I’ve marked as friends. Email is often more transactional then social, and that is a significant difference. I get the point about my email contacts being the genesis of my social graph, but no offense, there are some folks in my contacts database that I prefer to communicate with only on an as necessary and transactional basis.  Now, having widgets that tie my social networking information into my Google home page would be something I’d really go for. I’m all for the idea of a centralized home page that is aggregated, and eventually curated, just for and by me.  But leave my email account alone.