The obvious choice for a Google chief

In its new managing director, Google Australia wants someone who can aggressively exploit opportunities for what will soon be the country's largest media company by revenue. There's one man who fits the bill to a tee.

Yesterday Google Australia announced it was looking for a new managing director. Nick Leeder – who is currently MD – is relocating to France in April to run Google there. Since joining Google from News Limited, Leeder has improved the visibility of Google with advertisers, media and the political world. Leeder positioned Google where it deserved to be positioned – as not only one of the leading media companies in Australia, but as one of the leading consumer brands as well.

It is hard to fathom the sheer size of Google in Australia when it comes to its share of advertising revenue. The digital advertising pie for 2012 was, according to the Interactive Advertising Bureau, a $3.3 billion one. Of this, around 54 per cent is allocated to paid search activity. This makes paid search alone a $1.78 billion dollar industry. It would be safe to assume that Google commands at a minimum 96 per cent of the total paid search market, which makes its revenues from paid search somewhere around $1.7 billion per year. And this continues to grow; paid search is still the most resilient of all digital advertising categories and grew in 2012 by 27 per cent, almost three times the rate of general display. Not a bad business to be in.

On top of this you have video revenue from YouTube – the video advertising market in Australia is around $90 million, and it’d be safe to assume YouTube as the dominant channel would be seeing at least half of that, making it a $45 million annual contributor. And then you have revenues from the Google display network, sites it represents on the behalf of others or sites that carry Google based advertising, which should be contributing north of $80 million annually to the group. Combine these three areas and Google Australia is a $1.85 billion dollar revenue generator with significant growth prospects... growth prospects that should see it top $2 billion in annual revenue in 2013 and $3 billion by 2015.

Let’s put that into perspective. Ten (inclusive of Eye) generated $865 million for fiscal 2012. Seven West, for the same period, made $1.957 billion. Fairfax took $2.3 billion (this included New Zealand operations TradeMe and the Fairfax New Zealand newspapers and radio assets). Southern Cross Austereo brought in $687 million. In terms of revenue from Australian operations, only Seven West Media is comparable in size to Google, however no media company in Australia – or the world – can rival Google when it comes to operating margins, which makes Google easily the most profitable media business in the country and soon to be the largest by revenue as well.

The Google Australia managing director role is not a traditional MD/chief executive role like the one David Gyngell is performing at Nine, or Greg Hywood at Fairfax. It is, in the company's own words, the position of ‘Country Director'. Ultimately, the Country Director role is predominantly sales focused. From the currently live job advertisement: "Setting the commercial strategy for the market, the Australia/New Zealand Country Director is responsible for defining what Google must do to deliver on its mission for local advertisers, publishers and partners. You’ll understand deeply the context of the market, and set a vision that inspires people; working with customers and market influencers to establish clear objectives that help Google take the right steps towards the long-term vision.”

A key task for the new leader of Google is to continue the good work Google has been doing over the past 18 months in developing the commercial side of YouTube, which has made it virtually unrivalled in the video space in terms of volume and sophistication for both advertisers and users. Despite search growing in 2012 at a 27 per cent rate, video represents the strongest growth prospects for Google in Australia.

So in a new leader you ideally want someone with significant media experience with the Australian market, ideally in a business turning over revenue close to Google’s current position, who understands the TV world in terms of programming (which is key for YouTube, for securing content partnerships) and in terms of advertising (the commercial requirements of buying and selling TV spots), who has a strong understanding of the wider media landscape (remember, Google is both a competitor and a partner to pretty much all media companies in Australia) and can aggressively target and exploit growth opportunities.

In Australia this is a shallow pool, but there is one potential candidate who stands out right now. He is currently out of a job. He played a key role in one of the greatest commercial TV turnarounds ever seen. He has overseen a large-scale digital play. He has managed a large media agency and even run marketing at one of the nation's largest advertisers – which incidentally was in the automotive sector, one of Google’s most lucrative. No, he’s not from a pure digital background, but neither were Google Australia’s two previous leaders. Karim Temsamani joined Google from Fairfax and before this was at Time Inc.; Leeder joined from News Limited and prior to News was also at Fairfax.

The person I’m talking about is James Warburton.

Despite his tenure at Ten being widely criticised, Warburton has been involved in the media and advertising industry for the better part of the last 20 years in Australia and up until twelve months was widely acknowledged as one of the best operators in the business. In my opinion, Warburton is a good fit for what Google needs in Australia, with a strong commercial acumen, experience selling and delivering large scale deals in the tens of millions, and a solid track record of winning share in an intensely competitive area at Seven. At Seven Warburton was ultimately responsible for sales across the group – a group including Seven’s TV assets as well as Pacific Magazines, The West Australian and Yahoo!7. He is a strong fit in terms of experience.

And wouldn’t it make for a delicious sub-plot in the increasingly volatile yet intriguing Australian media marketplace. Ex Ten chief booted by the bored moves to digital innovator Google and plays a key role in YouTube becoming Australia’s third free to air player behind Seven and Nine, while Google moves into revenue territory previously unseen in the Australian media industry.

Of course there are some other potential candidates. Aside from Warburton two obvious choices come to mind, both from Fairfax, in Nic Cola who heads up marketplaces for Fairfax and is widely regarded as a strong executive and Jack Matthews, who is chief executive of Fairfax’s largest division – Metro Media – and another well respected and well liked executive. Both have worked alongside Google’s new Asia-Pacific chief, ex Australian managing director Karim Temsamani.

Given the musical chairs taking place over the past few months, anything is possible.

Ben Shepherd is a media and technology consultant. He blogs at Talking Digital, can be found on Twitter @shepherd and LinkedIn http://linkedin.com/in/shepherdieu

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