Google, Balloons and Emerging Markets

Google is rumored to be showing a strong interest in providing Wi-Fi connectivity to rural markets via balloons (or blimps) that target regions in sub-Saharan Africa and South East Asia.  These emerging markets are ideal, because infrastructure is inadequate for cable connectivity and Google can reach an enormous amount of people at the same time, due to dense populations.

Dubbed “high-altitude platforms,” these mechanisms will reportedly be able to connect roughly a billion more people to the Internet worldwide, according to Wired.  The blimps’ signals are said to be able to reach people in areas that are hundreds of square miles.  For Google it makes perfect sense, they create their own demand by absorbing the cost of connectivity so they can create a larger base of users.  Furthermore, Google simultaneously provides societal benefits by introducing the internet to the masses.  These new users will use popular apps and services like Google Search, Gmail, Google Maps, YouTube, etc.

Google has probably found the perfect social innovation business, where they facilitate social good and eventually profit at the same time (fits right in their motto of ‘don’t be evil’).  Google will help citizens of developing nations connect to the internet, while helping themselves to new advertising reach and boosting sales of low-cost, Wi-Fi connected Android handsets.  More internet users means more advertising reach to drive online ad sales for many of Google’s apps and services, as online advertising is almost 90% of Google’s revenue.  In additional to selling online advertising, Google will reap data about consumer behavior and online interactions.  As developed markets become saturated, it’s only natural to look at emerging markets.  Google has taken the bold step of developing that market themselves with this low cost Wi-Fi strategy.

Although the potential of these markets is enormous, Google will have to wait some time before it can profit from this initiative.  These new users will be years away before they’re in a position to purchase and transact online.  However, one strategy that can work in the mean time for advertisers is to utilize brand awareness.  Companies like Coke, Nike, Proctor & Gamble and other such brands should market these new users to build brand awareness and loyalty.

By providing the actual internet to users, Google is looking to become a vertically integrated company that not only provides the information of the internet, but also the internet itself.  Google will portray itself as a social do-gooder and simultaneously look out for its market share and profits in the long run.  This could not be a better win/win for Google, if all goes according to plan.