Google & News Corporation Strike USD$900 Million Deal

On the 7th of August 2006, Google announced one of the biggest online deals in the history of the internet with News Corporation. The multi-year agreement between News Corporation’s Fox Interactive Media and Google will see Google part with approximately USD$900 Million dollars and for that pleasure, it will deliver exclusive search and keyword targeted advertising to the growing Fox Interactive Media network of sites.

The agreement states that Google will provide advertising to the Fox Interactive Media group sites, which include a swag of technology, computer gaming sites, sport related and also the behemoth that is MySpace. The benefit to News Corporation is also clear; with strategic alignment with a leading technology company like Google – it will allow News Corporation to transform its company into the dominant force in the digital media realm.

This deal, in my opinion, is going to position Google to be the premium provider of online advertising in the future. Google obviously already delivers an excellent product for the text based advertising, however affiliation with Fox Interactive Media should see them deliver more image based advertising. If they do start delivering more image/flash based advertising, this should translate into Google enhancing its current AdSense and other advertising programs which should put it clearly out in front.

The amazing thing about the agreement is that it is going to cost Google approximately USD$900 million dollars between 2007 and 2010. News Corporation have to be particularly chuffed about the whole situation since they only began investing heavily in the internet space in July 2005 with their high profile purchase of MySpace for approximately USD$580 Million dollars.

It sure is a changing landscape in recent times.