Google is revamping its business development organization in an effort to better coordinate deal-making across its many different products and, ultimately, increase the money it can make off newer areas like gaming, healthcare, and its smart assistant.
While the company has long relied on eye-popping sales and profits from its traditional search and display advertising businesses to buoy its wide range of other free or cheap products, this change shows its need to plumb alternate revenue sources.
To that end, Google announced an internal reorganization this week that expands its Global Partnerships org beyond advertising-related teams to encompass more product areas.
Until very recently, if a big company wanted to spend money across a handful of Google products like ads, Android, and smart home devices, it would likely have separate points of contact for each. That lack of cohesion could leave partners confused or frustrated, and caused Google to miss potential deals, the company says. While having autonomous business development teams could allow different product areas to experiment and move fast, the lack of coordination had started to outweigh the benefits. This change is meant to provide simplified negotiations for partners and a more compelling value proposition for Google.
“This will help align and unify the way we approach partnerships,” organization head Don Harrison wrote in a note to employees announcing the change. “The new structure will improve our ability to present a coordinated face to partners and allow us to contribute to business and product strategies that span across Google.”
For users of Google’s services, it could mean seeing new healthcare integrations into their smartwatches or more sponsored content across products like Assistant or the Google Play app store.
In 2017, for example, Google’s Home smart speakers promoted Disney’s Beauty and the Beast film. Though the company refused to call the reference an ad at the time, this new org structure will presumably make it easier for brands to arrange that kind of advertising in tandem with spending in other areas.
The reorganization doesn’t officially change the business development structure of YouTube or Google’s cloud units in the same way it changes for the hardware, Android, healthcare, or gaming teams, though the company says it will still strengthen collaboration between them. It also does not give business development teams any new access to user data.
While the company started working through these changes months ago, the significance is underscored by its recent earnings report in which Alphabet posted its slowest revenue growth since 2015, sending the stock off a cliff. The report showed rare weakening in the company's traditional advertising business.
One investor asked on the call about how Google incentivized its different business units to work together. This reorganization shows one approach.