Henry Blodget's post on the impending crisscrossing of lines on Google's and Microsoft's core businesses is timely. In 2009 sometime, Google's search ads business will be larger and more profitable than Microsoft's core Windows operating system business. (If Microsoft is lucky, that won't be the day Google launches a hostile takeover bid for Microsoft, a development Sergey Brin slyly alluded to several years ago, when such talk could easily be dismissed as a joke, or painful delusions of grandeur.) Labels: facebook, free, google, microsoft, search engine advertising, windows, yahoo
Cloud computing, and ad-supported online business models are assumed to be a new naturally dominant business model. Chris Anderson has begun talking about the "power of free," as he gets set to release a new book on the concept.
But I think many analysts fail to grasp the complexity of the scenario. (Well, maybe it isn't that complex, actually. My wife, who teaches labour market theory among other things, notes that China can win a lot of business by simply undercutting other companies in the garment sector. But then India, or somewhere else, undercuts them. The result isn't beneficial to the guys who did the first round of undercutting.)
Today, Google is very wealthy, from a core economic driver. It is so wealthy, it is able to give away many products and services for free - sometimes, after acquiring a leading paid or freemium player in a space. This activity has been rampant. Blogger was acquired and its premium version was given away for free. Google Analytics continues to grow in sophistication. It costs $10,000 - $200,000 less than competing products; i.e. it's free. Google Checkout simply undercuts the pricing of PayPal on merchant services. Google Docs and Spreadsheets takes aim at Microsoft Office, and again, it's free.
This is what Microsoft used to do. It used to take out whole lines of business by adding them as a "feature" to Windows or Office. Now, it seems, the tables may have turned. Microsoft could only do that when it had a natural monopoly. That's being whittled away by open source, cloud computing, and giveaways galore. Much of that competition is going to come directly from Google.
So why do some analysts feel that Google itself is immune from tit-for-tat, any more than China can lose garment trade to an even cheaper competitor?
As consumers find ways of getting what they need from companies who choose to make it accessible with no advertising, ad supported models themselves are shaky. Brin has often said it himself: a competitor is only a click away. I can't avoid all commercial messages: I can't drive on a different highway, use a different subway platform, or wriggle out of my airline seat. It's a bit difficult to miss the glossy ads on the magazine I choose to read. And some messages, I actively seek. Google's business isn't going away anytime soon. But the real heyday of Google from a consumer standpoint might have been in the years when expectations of future profit (and some funding still in the bank) were subsidizing a search site that showed *no* ads.
[And as an aside, it's essentially the same phenomenon and "ethos" (an "ethos" that is more of an economic model dependent on acquisition or massive funding) that drives many Web 2.0 companies. Many of them make the mistake of divorcing "the power of free" from the need to be acquired. Others are smart enough to know when to fold 'em, for healthy valuations.]
If "free" is so great, then isn't even freer even better?
There is a certain false cleverness, then, about business models that smugly give stuff away to put others out of business, based on the knowledge that some other parts of an enormous (and hopefully, diversified) conglomerate can subsidize the insanely great deal consumers are getting on the other stuff. It works as long as that profitable part is safe! For most companies, it isn't.
Make no mistake though, for a handful of gigantic companies, these models are *very* clever and they work very well. The overall profitability comes from bringing a very large number of consumers and businesses into the "fold," and figuring out how to maximize profits from the few areas that consumers will actually "pay" for. Yes, in an era when everything seems free, I even have to put "pay for" in scare quotes.
That's why today I dub the large Internet companies (we used to call them portals) Super Funnels. It's far more complex than just the rather simplistic idea that we can offer cloud-based services cheaper, or free, or support whole lines of businesses with ads. But it is all about the rampant amount of investment capital and cash flow that makes it possible to create amazing user experiences and products that cost very little... as long as some element of the whole process, and hopefully many elements, are wildly profitable. Achieving this is not like falling off a log. The funnel has to be very well engineered, and the pockets have to be very deep.
Connected to my analysis (which basically says, beware of "the power of free" if all that means is an ad-supported model that assumes x% of users will tolerate and act upon advertising) is the rampant assumption that display ads online are holding up well as an economic model. What are the CTR's and ROI on such ads? So poor, metrics gurus have to come up with new measures that disguise the lack of engagement. Where people are really going to share and interact - platforms like Facebook - will let you bother users for a $0.30 CPM... and this may be the high-water mark.
Search ads are largely safe, for now, because they are quasi-classifieds, and because Google engineers the ad program to make the ads and the sites they lead to actually as good as or better than the sites in the organic/blended index results. That leads to the question, won't somebody eventually come up with more pleasing organic index results? What if someone releases something very, very good, and makes it available without ads for three years? They'll need a few hundred million dollars to try that stunt on any serious scale.
Can someone out-Google Google? Eventually, someone will, but for now the discourse of "the power of free" will sync up well with the next 5-10 years of Google hyperprofits. It's just a mischaracterization that "free" has true power, divorced from its rare, Super Funnel context. Google is the most efficient Super Funnel today, which will continue to be very disruptive to former dominant ones like Microsoft (other targets will be phone monopolies and the list goes on). To get back to a scale that can challenge Google's dominance, Microsoft has been rightly looking to bulk up to achieve more scale in today's dominant ("power of so-called free") business model. Hence its interest in Yahoo, Facebook, and others. Can Microsoft "go it alone" in this quest, as the current discourse of Ballmer and Gates suggests? It's highly doubtful. If they do not return to several bargaining tables soon, the buildout will take too long.
Posted by Andrew Goodman
| | Permalink
 |
 |
Friday, January 18, 2008
This short item about the Google-DoubleClick merger made it into B2B magazine. Although it appears so from the one quote, I'm not actually a full-on critic of the merger. I see it for what it is, a move that solidifies Google's dominance in the online advertising field, but I also noted the "glass half full" scenario, which is that this merger could allow Google to implement an innovative exchange model for online display advertising that would be significantly better than their current content targeting program in AdWords. Moreover, Google's motivation in terms of their continued wish to sign up new advertisers and publishers in their network, coupled with their "already scaled" efficient business model, means they might heavily discount any markup they charge for operating an ad exchange. That part of my comment didn't make it into the article. Labels: doubleclick, google
What also didn't make it in was my note that Google would probably have to divest itself of Performics to avoid conflicts of interest in media buying - a topic that I went into some depth on. Kevin Lee must have said about the same thing, as that view was attributed to him.
As a market maker and platform builder, Google might be big and scary, but they're also likely to be a reasonably cheap and efficient enabler of business. (Sound familiar... like last generation's biggest technology monopoly?)
Posted by Andrew Goodman
| | Permalink
|
|
Tuesday, November 20, 2007
As is often the case, Danny surprises us with a level of detail in his rejoinder to Senators Hatch & Kohl about the impending Google-DoubleClick merger. Labels: doubleclick, google
The short answer seems to be that Danny defends Google's position against certain distortions.
I'm not sure I feel as certain about the issue, but Danny has certainly clarified the logic. Antitrust legislation probably needs to ask whether it would be legitimate and likely that the company under review would grow into a dominant position in a new area even without the acquisition, or if this event would "make" the new entity into a monopoly where it was once a "player" in a more competitive environment.
Based on global economic precedent, you have to wonder what it all means. Does anyone regulate the consolidating beverage industry? Does Procter & Gamble get questioned for its massive reach and control of shelf space?
Did anyone question Quaker Oats buying Snapple? Sounds funny now, doesn't it? That's an acquisition that didn't lead to global dominance. In fact, Snapple tanked as a brand. Some acquisitions can just be expensive failures.
Here, the acid test needs to be how dominant the acquired company is - what it really controls in the industry it operates in, and whether that will lead to total dominance for the acquiring company. Google overpaid for DoubleClick based on the momentum of the industry and Google's favorable stock price and cash reserves. If they'd picked it up for $500 million a couple of years prior, no one would have whispered anything about regulation.
You could almost look at the parallel with Google Analytics and Google Website Optimizer. Google acquired Urchin, transformed and integrated the product, and moved into an increasingly dominant position in web analytics. With Optimizer, they developed a product in-house, fast gaining market share -- rather than acquiring Offermatica or similar software companies. The point is, none of these acquisitions arguably create a "closed territory" for a regulated service or something built on scarce public resources, such as may exist in banking, telecommunications, or transport. They still operate in the software industry where buyers have many choices, and there are no serious barriers to entry.
Until you get to Microsoft's size and level of dominance at the behavioral level, that is. And that's the territory Google's moving into. So literally taken, no move by Google is technically afoul of the law, but eventually, as with Microsoft, it all adds up. And then the feds will go looking for faults. And they are sure to find many.
To restate: the fact that the impact of all of Google's integrated activities is to give it massive control over multiple industries, enjoy monopolistic advantages, and become a leading repository of business and personal data, does not necessarily mean that a particular acquisition like DoubleClick conflicts with the letter of the law.
I guess the question will be, is this the straw that broke the camel's back?
Posted by Andrew Goodman
| | Permalink
|
|
Friday, August 17, 2007
(via SEL, via Eric Goldman) American Airlines brings a suit against Google for allowing competitors to use terms like "American Airlines" to trigger their own ads. The question is: will the existing law and precedent suddenly change because this time, it's American Airlines? Doubtful if you ask me.
The upcoming SES panel (next Tuesday) on copyrights and trademarks should be a good one, as always.
Posted by Andrew Goodman
| | Permalink
|
|
Monday, May 21, 2007
rkgblog writes about Jimmy Wales critiquing Google's lack of transparency. Beginning life in 1998 as GnuHoo and then NewHoo, the Open Directory Project (ODP) was conceived as a competitor to the Yahoo Directory. The work was to be done by volunteer editors, and the end product was to be licensed to any portal or site that wanted to take advantage of the information. Doesn’t sound like much of a business? Well, it turned out to be a pretty good deal for the founders. The directory’s popularity led to its acquisition by Netscape, which was later acquired by AOL. AOL became the Open Directory’s major distributor, but the directory was also licensed (at no charge to the publisher) in many other places around the Web. Google began using ODP data fairly early on, calling it the Google Directory. An innovative feature was Google’s use of an “overlay” technique, ranking results in a given ODP category in order based on the site’s Google PageRank score. This was illustrated with a green bar (on a scale of 0 to 10, similar to the way the info is displayed by searchers using the Google toolbar). This could have been a very useful feature indeed had there been more consistency to the underlying content in the directory. The so-called Google Directory still exists, but it has been completely de-emphasized in the Google Search user interface. A couple of key Open Directory players, founder Rich Skrenta and marketing exec Chris Tolles, eventually moved on to a new venture: Topix, a sophisticated news search engine that competes directly with Google News. Topix is now 75% owned by three major media companies: Gannett, Knight-Ridder, and Tribune. The ODP came under criticism for many of the same reasons Wikipedia is maligned in some quarters today: a lack of “professional” editorial quality control. The lack of transparency of site submission procedures to the website-owning public, and the huge variations in the degrees of disclosure of editors’ biographical information meant, for me, that this so-called open directory was far from it.[i] The construction of a comprehensive high-quality human-edited directory remains an elusive (and perhaps now irrelevant) task. The ODP founders were correct in their assumption that a distributed model for vetting editorial recommendations was the only possible way to get a comprehensive categorized directory to scale with the growth of the Web. But they also oversold the value of human contributions insofar as even tens of thousands of these couldn’t scale adequately to cover the enormous explosion of online information – not as compared with improved search algorithms and search interfaces, to say nothing of the massive acceptance of the concept of online collaboration and a wider range of tools to support this. In the past I had come across a couple of alternatives to ODP; two notable ones were put forward by Steve Thomas (Wherewithal, Inc.) and Dave Winer (RSS pioneer). Both would rectify the problem of a fixed category structure being controlled solely by the category owner. They’d allow for collaborative taxonomy, so to speak. Ho, hum. Many of these seemingly radical critiques of ODP have become staples of today’s so-called Web 2.0 movement. Thus many of these early debates have been surpassed by growing acceptance of the need to develop technologies to subtly handle “upstream” of self-organizing editorial output from many users, rather than a top-down (if seemingly democratic) categorization scheme. Contributing to the organization and sharing of information has to seem fun or worthwhile, and much of the ODP community moved onto other passions. A spinoff site called ChefMoz – also a good idea – found little appeal in the broader public and proved that ersatz claims of “officialdom” for an open-source, .org-based human review site were grandiose; sites (mere websites!) such as Chowhound and Yelp now achieve considerably greater popularity pursuing virtually the same goals. The emergence of a range of ODP offspring proved that it was never really the open directory. It was a human-powered directory that chose to call itself “open.” (A similar realization will no doubt dawn on users of and contributors to Wikipedia, too. It won’t prove to be the be-all and end-all.) “Humans do it better,” the ODP slogan, was proved wrong in the sense that algorithmic approaches such as Google Search won mass acceptance from users over and above hand-categorized, ostensibly quality-controlled directories. That said, new methodologies of tapping the so-called “wisdom of crowds” (such as Digg) have meant that the machine algorithmic approach isn’t the only winner in the marketplace for ranking and rating online content. And certainly, algorithms can’t create content as tens of thousands of Wikipedia participants have managed to do in their improbable construction of a huge online resource. In the meantime, then, a whole world of user-built information sources has exploded on the scene, with Wikipedia and Digg leading the pack. Many of the pathologies (and opportunities) that bedevil (and excite) Wikipedia and Digg users today were endemic to ODP. In hindsight, this makes Skrenta and Tolles pioneers to a greater extent than perhaps they realized. If Google hadn’t moved to fill the void left by its struggling predecessors, someone else would have. Scientists in various research projects were working on new ideas about how to rank the importance of web pages vis-à-vis a given user query. What Google did was to popularize some of the best emerging ideas about how to design a large-scale search engine at a time when others were losing momentum. Some of these ideas are so central to the task of ranking pages in today’s web environment that they were adopted in some form or another by all of Google’s main competitors (including Inktomi, AltaVista, and FAST). The working paper that explains Google’s PageRank methodology, “Anatomy of a Large-Scale Hypertextual Web Search Engine,” is frequently cited.[ii] But the field of information retrieval technology is rich with ongoing experimentation by hundreds of well-funded scientists, some well known, some not. Some scientists take a slightly different approach to the problem tackled by Page and Brin, organizing the Web into topic-based “communities.” Teoma, a search engine acquired by Ask Jeeves (now Ask.com), is the most public example of this approach.[iii] The two approaches tend to provide somewhat different results, but they are clearly cousins of a similar generation of thinking about the “hyperlinked environment,” and both have been a boon to researchers seeking that elusive piece of information online. In practice, algorithms such as Google’s and Ask’s today are really meta-algorithms, looking for “signals” on a wide and shifting spectrum of measures of quality and relevancy, while attempting to filter out or devalue huge volume of junk, spam results. Today’s search engines might be clever enough to measure website usage patterns, background business data, and more. (One potential signal, the age of a website, is now seen as so matter-of-fact that search marketers have a nickname for the apparent difficulty in getting well-indexed in Google if you’re a new website owner: “The Google Sandbox.”) In addition to all that, there are attempts to determine user intent in search queries, to serve up personalized results or even different types of results (news search, maps, financial charts, weather) based on the user’s history or the nature of the query. In today’s mature world of search, no one methodology is billed as “the” best way of arriving at the ultimate ranking of results on a given search query. But arguably, Google consolidated its lead in search based on the mythology that its PageRank system was an invention that led to brilliantly accurate search results. In any case, the idea behind PageRank was brilliant and intuitive when it was brought to market in 1998. The governing principle revolves around a map of the linking structure of the Web. Pages that have a lot of other important pages pointing to them are deemed important. “PageRank can be thought of as a model of user behavior,” wrote Brin and Page. “We assume there is a ‘random surfer’ who is given a web page at random and keeps clicking on links, never hitting ‘back’ but eventually gets bored and starts on another random page. The probability that the random surfer visits a page is its PageRank.” This was a significant advance over previous generations of web search. Although most major engines had experimented with a variety of ranking criteria, many of them had depended heavily on basic keyword matching criteria. Not only did this make good information hard to find because so many pages were locked in a virtual tie for first place, it made it easier for optimizers to feed keyword-dense pages into the search engine in a bid to rank their commercially oriented pages higher. Although this game of keyword optimization is quite effective to this day in ranking pages well on unpopular queries (even on Google Search), it seems to work rather poorly on common queries. The ascendance of PageRank means that on a Google Search for auto insurance comparison, for example, it’s likely that a well-known site will rank well here rather than some random site that just happens to contain those keywords. When I tried the query, I saw a number of leading insurance comparison sites, and very little “junk.” This dovetails with the notion that authoritative recommendations do indeed confer authority as far as Google’s algorithm is concerned. But it won’t take you long to find a few head-scratchers in the mix. It’s difficult to get a monolithic sense of which types of pages rank well. But few would dispute the fact that a high volume of quality links pointing to one’s site is a great way of getting Google Search to treat you well. PageRank isn’t dead, it’s just part of a bigger mix of factors than ever before. The ability to break all these “virtual ties” among similar search results was a breakthrough for search engines. Almost all major search technologies today are significantly more sophisticated than those from the mid-1990s. I recall a time when many websites used a free licensed version of Excite Search for their internal site search. The technology was weak, often providing a clutter of irrelevant results. If search was this bad in closed corporate environments, it was definitely in need of improvement if it was to help users sort through the enormous clutter of pages available on the Web. For searching relatively fixed data sets, such as finding pages within a single website, today’s technology is significantly improved over yesteryear’s. The open source movement has even brought us libraries of sophisticated search engine code (such as Lucene SOLR), meaning that a powerful small-scale search engine can be customized at a reasonable cost. A public web crawler in the same family, Nutch, has gained notice as well. A free, open-source web search technology in 2007 is nearly as sophisticated as industry-leading search engines from a decade ago valued in the hundreds of millions of dollars, but they’re still far from beating Google at its own game. Why? Nutch – like many other search technologies – doesn’t scale as well. In the understatement of the search engine century to date, the Nutch founders write: “Much of the challenge in designing a search engine is making it scale. Writing a Web crawler that can download a handful of pages is straightforward, but writing one that can regularly download the Web's nearly 5 billion pages is much harder.”[iv] It doesn’t stop there. Taking those billions of pages, now you’ll have to assess them all and determine how much authority each link on each page should be allowed to “pass on” to other websites and pages. Because some site owners will be up to no good (premeditated linking schemes), or simply because fortunes change, the map of how much authority (or, what type of authority) is conferred by all hyperlinks on record is going to need to be updated regularly. A web search engine must also be able to sort out “duplicate” (often stolen or “scraped”) content from the original content, so it doesn’t end up giving visibility to the wrong source. The calculation of link structures and associated authority weights alone – let alone getting the underlying approach to how to do the calculation right – is beyond the capacity of any small-scale search engine infrastructure. Beyond massive computing power and indexing technology, then, Google’s advantage continues to rely in part on the ability of PageRank and other related technologies to sort out valuable information from information that “dumbly matches” the user’s query. Want proof? Do a search on your favorite topic at Technorati.com, the blog search engine. It’s powered by Nutch. I’m betting you’ll find quite a number of “spammy” results in the mix, in spite of some recent tinkering with a weak cousin to PageRank, an “authority score.” What’s surprising is that Google’s own Blog Search also appears easier to flood with duplicate content and spammy sites than its main search index. To be clear, the calculations involved in determining PageRank are just the beginning when it comes to determining how high a page ranks for a given user’s query on Google.... [i]. “Why the Open Directory Isn’t Open,” Traffick.com, [ii]. Sergey Brin and [iii]. For a user-friendly overview, see Mike Grehan’s interview with Paul Gardi, “Inside the Teoma Algorithm,” July 2003, archived at e-marketing-news.co.uk. [iv] Mike Cafarella and Doug Cutting, ACM Queue 2:2 (April 2004). Labels: google, jimmy wales, open source, wikipedia
I've just been briefly reviewing the history of Google and competitors in capsule form, as I write the new edition of the book. Kept me up late thinking about it, to be honest.
There is something so compelling about an open source search engine: maybe search can actually get better if it goes in that direction - tapping into distributed developer expertise. In non-public or low-scale settings, search engines like Nutch and its cousin Lucene SOLR have so much promise. And why not? It becomes "our" search engine that allows "us" to customize, while not being beholden to a particular overlord.
Some of that vibe, though, was what led to the Open Directory Project many years ago -- and what happened?
On balance, it looks to me that Nutch et al. (open machine algorithm) and Wiki-something are two very different approaches to the problem. Open source search in the traditional sense is open to a community of developers, and freely licensable. Wikified search is bound to be open in that looser, sometimes chaotically obscure or corrupt way somewhat analogous to the (problems and opportunities of) old ODP. Importantly, the Wiki concept still relies too much on people to produce content. This will not necessarily scale. It's useful for some things, hopeless for others. Another problem is that Wikipedia users won't necessarily be better at the production side than users distributed across many involved online communities. They might be worse.
This is a draft of some thoughts that might go into a book (below). A few older bits still need cleaning up. What are your thoughts?
--
The Google Difference: A Third-Generation Algorithm
Posted by Andrew Goodman
| | Permalink
|
|
Monday, April 30, 2007
In Canada, the fast-growing Yahoo office on Front Street has in fact overflowed and it'll be awhile before they move into their new digs on Queens Quay. In the meantime, a satellite office on a high floor in BCE Place has been established. That means some national sales reps from Yahoo and the same from Google see each other on the same floor. Can you imagine?
Maybe the worst part for both is the name of the building. Combined, Google and Yahoo sport a market capitalization about 7X BCE's.
Posted by Andrew Goodman
| | Permalink
|
|
Thursday, April 19, 2007
Business 2.0 writer weighs in with "I can't believe Google can't attract some standout marketing talent from the world of consumer packaged goods."
Yep, Google can't brand. They don't do that verb.
Today, they announced quarterly revenues above $3 billion (though the mainstream press has taken to showing "revenue not including income passed along to ad partners"); higher than their revenue for all four quarters of 2004. And once again, record profit.
With all due respect to my close friends from the world of consumer packaged goods: these hypothetical helpers could scarcely have done anything but completely screw up what Google managed to build without them.
For some reason, Froogle didn't take it off. But it isn't because it had a stupid name.
Remember when they said that Google had better hire more "traditional advertising industry schmoozers" lest it be defeated by the wiser, more schmoozy, Yahoo?
Whether Google has succeeded in spite of, or because of, their quirky corporate culture -- is it really becoming for any of us to second-guess what it's resulted in to this point?
Posted by Andrew Goodman
| | Permalink
|
|
Tuesday, April 17, 2007
A few weeks before the recent announcement that Google is buying DoubleClick, DoubleClick announced it'll be developing a "NASDAQ-like exchange" for the buying and selling of online advertising. Proof positive that the online ad space continues to heat up, rather than diving into an irrational "bust" as in 2000-2003. Labels: anand subramanian, content targeting, contextual ads, contextweb, doubleclick, google, jay sears
Wait a minute, though, you may be saying. Aren't ad networks and the way ads are bought and sold today somewhat "market-like"?
Not as much as you might think. Check out Google's current contextual offerings, for example. As a publisher, do you think you can signal to the advertiser using an "ask" price? Do you have much control at all if you join one of the various ad networks and let their system allocate inventory, as opposed to using your own inside sales force? Nope. And what about the ability to stand out as a quality publisher amidst the crowd of remnant type inventory? Again, tough to do. So, tough to monetize to your fullest potential. Because the current market maker is not facilitating a true market. In that sense, DoubleClick's new promised offering, and Google's acquisition of DoubleClick, could constitute a significant step forward in online advertising efficiency.
DoubleClick won't be the only one working on a great way of putting online ad buyers and sellers together. ContextWeb, quietly licensing its matching technology since 2000, and more recently, acting as a media middleman in its own right, is working on a new "name your price" functionality in a new, highly automated ad marketplace system. I had the chance to walk through a demo yesterday with CEO Anand Subramanian and VP of Business Development Jay Sears. While the release isn't slated for a couple of months, publishers are already being targeted for a beta signup. The hook, "Ready to Make More Money than AdSense?," is not new to publishers, admits Subramanian. "Typically a publisher will become dissatisfied with their AdSense earnings, will install code from a competing network, but that will be even worse, so it's right back to AdSense," he says. But that's because these competing networks don't present a credible alternative. They represent the old school of what ContextWeb calls "Yet Another Ad Network," with fewer features, not a true marketplace, and no critical mass of buyers and sellers.
The company won't yet disclose the full range of features of its new system. To me, it seems to address the combined needs of advertisers and publishers very well, leaving neither the "prime inventory" nor the "long tail" unaddressed. ContextWeb's quiet long-term presence in the space seems to have given the company a wealth of ideas. A decent revenue stream from its current agency relationships, plus venture funding from, among others, Draper Fisher Jurvetson, has given them the long view needed to build a better platform.
If you're a publisher of quality content, here's hoping the days of "Yet Another Ad Network" will soon be a thing of a past in your balance sheet.
Posted by Andrew Goodman
| | Permalink
|
|
Monday, April 16, 2007
Because I'm a lazy writer, I'll begin this next sentence thusly: Labels: antitrust, doubleclick, google, microsoft
"In the ultimate irony..." Microsoft invokes antitrust in response to the Google-Doubleclick deal.
BTW, stay tuned for my forthcoming post on the "Brain Exchange" over at ContextWeb on the topic of "Is Google Too Powerful?" My general (and somewhat evasive) commentary was written without the DoubleClick deal in mind.
Posted by Andrew Goodman
| | Permalink
|
|
Friday, April 13, 2007
The latest Hitwise figures show Google increasing its monthly share of searches again in March, at the expense of Yahoo (down slightly), and Microsoft (down slightly). Labels: ask.com, google, hitwise, metrics, netratings, yahoo
Microsoft's numbers can be attributed to a few glitches, depending on who you talk to. A rebrand of the search offering (bad, confusing idea, I think) or difficulties with Hitwise's methodology.
Netratings estimates a slightly lower number for Google, 55.8% for February. Unlike Hitwise, they seem to assign 5% share to AOL Search. Whichever ratings agency you trust, it's clear (again) that Yahoo is in real trouble of losing its status as any kind of default search box for anyone. That would spell big trouble for the organization as a whole.
So I'd like to focus a bit further on the danger Yahoo faces if they let these numbers slip any further.
* First, they've spent too much on search to abandon it.
* Related to that, they've invested too much in Panama, which was built *primarily* to monetize Yahoo Search and only secondarily as a platform to bid on content, to lose any more search share.
* Third, search is good.
The "typing stuff into a box" thing is too important a category to cede, no matter how navigation may shift in the future. It is not good enough to say that Yahoo has a great diversified model that will make them money from all kinds of ad formats and fees. True, but it's not powerful enough to compete "unfairly" as a real heavyweight, if users stop using their properties to search.
So how to acquire enough of those searches? Big ideas grown internally aren't necessarily the way to win people over from their Google habit. So how to acquire enough momentum to re-establish it as people's habit to search on a Yahoo property for at least some of their needs?
* One way to get some of this back would be to acquire local search properties - like the very hot Yelp. You don't have to get into unfathomable social search or expensive Facebook acquisitions, under that scenario. There are some growing, fairly conventional, properties with a slight cachet of cool that are doing quite well. Get them now, before the price doubles.
* Next, keep building out those verticals. If your leading properties are losing to upstarts, acquire the upstarts purely for traffic. Then get the AdSense ads off them.
* As stated above. Acquire specially selected content sites purely because they're AdSense sites. Revamp the monetization plans of those sites.
* Make sure to internationalize your search for these acquirable properties, of course. Yahoo has certain major international holdings, but they need more.
* Biggest of all: Ask is clinging to some market share, and would immediately add several "type it in a box" type properties to Yahoo's stable. Moreover, IAC owns other vertical properties that would work to reinforce other things Yahoo is doing. Although it could be painful, there's nothing that says Yahoo couldn't launch a bid for all of IAC, sell what doesn't fit, and keep what does. Yahoo's valuation is currently about 4X IAC's. People worry about Yahoo's executive bloat, but the best way to reduce the bloat ratio is in fact to grow your overall top line and overall traffic, as long as it's strategic and as long as a lot of it is scalable search type stuff.
* Try to absorb a handful of departing, cashed-out Googlers who are somehow going to be convinced that this is a really cool challenge.
* Least likely, but a good idea for both companies: convince Microsoft to give up on search and paid search platform building. Re-partner on both fronts.
* Piss off Wall Street somewhere around Q1 of 2008, by implementing a short-term de-monetization plan across all properties to increase user satisfaction and traffic growth. Basically, spend the rest of this year studying how you can monetize your traffic *less*. In verticals, in search, in apps, etc. I know that's already happened in a lot of places, but try to hive off a little more - your effective CPM probably bounces back anyway if you're patient. (See Godin, Seth. The Dip.) Don't think Google didn't just spend the last couple of years doing that after beginning life obsessed with it. The paradox of Google's gentle de-monetization initiatives is that it made them money hand over fist in the long run.
* Finally -- though it didn't work so well for Lycos, consider leaving acquired brands intact. (It works for IAC.) If you acquire Yelp, don't fold it into your overall plan but rather let it maintain its identity for the most part. Use your leverage to distribute it more widely and improve the product.
This post brought to you by the philosophy that launched this site in 1999: while the search & traffic ownership game is not quite winner-take-all, it is something close to that. Monopolistic-type advantages will make it more likely for people to default to your offering. When you own the traffic 100%, profit margin on monetization is superb. Profit margin on brokering media is highly squeezable. There are some searches out there that neither Yahoo nor Google own. It would make a lot of sense for Yahoo to swallow the price tag now, and begin owning them.
Go big or go home!
Posted by Andrew Goodman
| | Permalink
|
|
Monday, February 26, 2007
Seth Godin wonders whether media buyers are right to pull ads off Google's and Yahoo's contextual networks because of how loosey-goosey they are with their approach to placement -- they match ads to pages, rather than allowing the advertiser "channel control." Labels: content targeting, contextual ads, google, google adsense, long tail, quigo, seth godin, yahoo
While it's true that Y!&Goog would benefit from better sites joining their networks, I agree with Seth that being so afraid to show your ads on "Joe Schmo's Sports site" could be doing the client a disservice.
I thought we already had this debate. In the early going, lot of us were critical of the contextual ad programs for a number of reasons - mine was simply the poor performance, fraudulent or crapulent publisher partners, etc. Others in the biz, with more of an agency bent (and most likely to cheer for Quigo, Sprinks, etc.), demanded that Google's content targeting allow more direct control of what websites ads show up on, as opposed to forcing advertisers to accept the open-ended "smart matching" concept that used semantic technology to match ads with content.
So... first Google responded with site exclusion. Then, they released a site-targeted flavor of content targeting, in a parallel program. That as a direct response to these agency-style demands. Site targeting allows you to browse a menu of sites, add them to your list, and only show your ads on them.
I monitored ads running in both flavors for several months. A funny thing happened: the old "flawed" content targeting program got better, and my approach to managing those campaigns improved. The ROI came in line with search. Meanwhile, nothing on the "site targeting" side was converting. The performance was much worse.
At a couple of conference presentations I guessed that this is in part because computers do a lot better job of matching my ads against a million potential candidate pages than I possibly can in scanning down a list of 50 so-so potential publisher targets. You settle on 20 or so of these sites, then become obsessed with spending the full budget on just those. They convert poorly, so you've overspent on this handful of websites. That's a fairly typical scenario.
In short, because of computers aiding in the matching, classic content targeting offers more efficiency, as the systems get perfected.
Seth, both the intuition and the data point towards there being nothing inherently wrong with Google's approach to matching ads with content. No, the program isn't perfect, but placing high-CPM ads on big brand sites just because I want to appear respectable isn't exactly a challenge. It's more of the same: take too much of the client's money, and waste it, and claim the blue-chippiness of that approach as a benefit.
Both approaches -- the finicky put-me-only-here approach, and the "ROI-or-else" approach -- work in the marketplace. For very different reasons. Funnily enough, Google now offers two parallel programs to suit different ad buying constituencies, and are working on rolling out multiple ad products down the road, to keep everyone happy.
Posted by Andrew Goodman
| | Permalink
|
|
Wednesday, February 21, 2007
Across the pond, they have actual scrums - in rugby. No need to talk about those metaphorical media scrums. Labels: chris sherman, google, matt cutts, search engine strategies, ses, ses london
And then there is a third type of scrum, the table near the door after Google's Matt Cutts completes his keynote conversation at Search Engine Strategies. A bit smaller and more polite than the U.S. Cutts Scrums, this one still had Matt pinned pretty good against a piece of furniture.
You can find my full writeup of Cutts' wide-ranging keynote conversation with Chris Sherman at SES London last week, over at Search Engine Watch.
Posted by Andrew Goodman
| | Permalink
|
|
Tuesday, February 13, 2007
Nah, not really. :)
But their ad, "Google London Sales Job," did appear as a "web clip" in my Google Mail account.
The number and breadth of ad sales positions being added in the London office is surprising.
Posted by Andrew Goodman
| | Permalink
|
|
Friday, February 09, 2007
Posted by Andrew Goodman
| | Permalink
|
|
Google's confirming publicly that they believe the current Internet may become choked by online video. This is related to a barrier to Google's growth -- one of the only serious ones -- that has been nagging at me for some time: globally, they don't own the pipes. Big utility monopolies still hold a lot of cards around the world. The smart money would likely partner with them. (We've noted in the past that this has been one of Microsoft's strategies globally -- taking stakes in utility companies.) Labels: feed reader, google, internet, net neutrality, online video, pipes, portals, readers, technorati, ted stevens, tubes
G's massive investment in infrastructure in the US is no doubt partly going to address this. It'll be fascinating to see how it unfolds. Net neutrality is at least a debate in the U.S. today. In some nations and economic zones, there are very different terms for the debate.
Meanwhile, Yahoo has released a mashup service extraordinaire, called Pipes. It's going to be worth a lot more study, but basically it provides an easy way for the layperson to pull disparate data sources into a web page -- like a smarter more agile feed reader? Kinda makes my head hurt: does it compete with Google Reader or supersede it? Some commenters are saying it's really nothing too new, and other products like RSS Bus would be better for those who are technically inclined. Stay tuned. (If you really know what you're doing: Jeremy Zawodny points to something called GData.)
And meanwhile meanwhile, over at Techcrunch, Arrington does something we apparently no longer make time to do: reviews and compares new Hotmail, new Yahoo Mail, and Gmail. All of these web 2.0 apps get the thumbs-up, but Google comes in at #1. That's about what I'd say. I actually use both old Yahoo Mail and Gmail, and don't particularly enjoy new Yahoo Mail. I'll likely consolidate everything in GMail, a decision I think you eventually have to make (one way or another, with Y or G) so you're using the same calendar and IM app and not confusing the hell out of yourself.
Mail, at least, we already use. Both Google's Co-Op and Yahoo's Pipes probably deserve weeks of our time, and here we are blogging about engagement rings and Ted Stevens. Time to tackle the to-do list. Also, posting will be light for the next week due to SES London.
Other random thoughts to wind up the week:
And Technorati's edgecraft: is it just me, or is calling a "buzz description" a "WTF" (as in "write a WTF for this query") pretty edgy? Edgy, I think. As I've told a few of you, my office building is owned by a commercial real estate company called WTF Group. Seeing that logo on the wall has gotten me through many a day.
Posted by Andrew Goodman
| | Permalink
|
|
 |
The Traffick Search Engine Directory :: |
| » Internet Marketing » Internet Tools » Search Engines |
» Web Browsers » Web Portals » Webmaster Tools |
» About the Directory » Add URL » Traffick Report: Flock |
