Google is rumoured to be interested in acquiring the social news website Digg. While this rumour has been circulating for a while both CNET and TechCrunch are reporting on the possible purchase this week with Techcrunch going as far as a headline reading, “Google In Final Negotiations to Aquire Digg…”. The rumoured purchase price is around $200million.
A number of people might wonder why Google would want to buy Digg. I think there are a number of reasons ranging from technical patents and processes to the number of eyeballs Digg could bring to Google’s ad inventory.
Google makes the vast share of its revenues from paid search advertising. Approximately 95% of Google’s quarterly revenues come from AdWords advertising. Every website displaying AdWords constitutes virtual real estate for Google to plunk billboards on. If someone else owns the property, Google does a revenue share with them when visitors click on AdWords ads. If Google owns the property however, it has to share with nobody. Digg draws a lot of traffic.
Digg also has patents and processes Google might wish to incorporate into future sets of search engine results. As noted in a post here last Friday, Google has been seen experimenting with search results that use a Digg-like voting and comments system.
Search engines exist as navigational tools for the Internet. As the volume and type of information on the Internet changes, the nature of search engine results will change. That likely necessitates the development of new search interfaces. Google already uses dozens of different interfaces beyond the regional or nation-specific ones.
Google does not present the same search interface to all users. Google has an almost unlimited number of ways to trick-out or personalize SERPs to meet any search-user’s wants or needs. There are a number of ways search results could be improved upon if users were allowed to vote and comment, though such interfaces might not be chosen by all Google users.
Google has a lot to gain acquiring Digg and $200-million is likely a low number. Even if Google didn’t do anything beyond run AdWords on the site, it would eventually pay for itself.
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