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More expensive than sex.com: Google buys tall building

Posted December 3rd, 2010 by Andrew Goodman

In today’s ClickZ column I finish up a series about marketing budget allocation decisions. In the course of this discussion, I have wondered aloud about the value of “marketing” related investments as diverse as vanity URL’s and renting Class A office space. And I’ve claimed that “signaling bonus” can be at work/play: you not only get benefit A from the investment, but your positioning or esteem in the eyes of the press, partners, investors, potential employees, etc. goes up.

When it comes to the fancy office space renters, Google has gone one better: they liked their space in Manhattan so much, they bought the whole building.

Google is about to purchase the building that houses its chic operations on 8th Ave. in New York, for a reported $1.9 billion.

In this case, though, I’m sure it’s a matter of practicality and good economics as much as “look at what who we are and what we can do.” By not buying the building, you commit yourself to ongoing, potentially exorbitant rent costs down the road as well as potential increases in asset prices (though the latter is unlikely).

The same goes for domain names. What if it’s a pretty good idea to buy that vanity URL now, and $50,000 is actually cheap compared to the $150,000 you’ll pay in three years, when it’s become a very good idea?

All goes to show, many “marketing” investments cannot be boiled down to pure ROI. For companies with more cash or access to capital, there is more flexibility to take advantage of the opportunity to buy up valuable real estate — literally, or virtually.



2 Responses to “More expensive than sex.com: Google buys tall building”

  1. Adam Audette says:

    More than anything it’s simply a huge tax advantage before the end of the year.

  2. Adam Audette says:

    Don’t know, but Microsoft’s is really strange like July or something.


 


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