It’s raining and I’m not feeling particularly industrious, so I’ll push back the “To do” pile a little bit farther and catch up on some blog posts.
There’s been a lot of buzz lately about the search engine’s foray into the world of print advertising, and Tacoda CEO Dave Morgan tries to pinpoint where Google’s attempt to introduce an auction based model to print could have gone wrong.
One point put forth in the column (although not Dave’s) that’s worth considering is that an auction based market is a tremendously efficient one. It has little overhead and it allows prices to find their own sustainable levels, based on the value in the buyer’s mind. This worked well for search because it presented untapped value. There was no place for search to go but up. Which it did.
Print is another matter. It represents an entire food chain with an accompanying industry that subsists on it. That comes with built in inefficiencies and therefore, pricing inflation. Arguably, when introduced to an open, dynamic, buyer controlled pricing market, print had nowhere to go but down. Which it did. And that was the problem.
But Dave points to another issue, and that’s the significant differences between print and search. Search is driven by intent, which means that search interactions generally lead to a purchase event in the not too distant future. And each click is an expression of that intent, which makes it easy for markets to start assessing value to the click. This measurable value provides easy justification for the bid price. In fact, it’s this direct response approach to search that’s introducing many of the challenges we face in trying to quantify value to search touch points as we move further away from the purchase.
Print is a different animal. It’s often used for branding, a much less quantifiable objective, and it’s not clickable. There’s no way to immediately and easily assign value, which makes bidding a guessing game at best, rather than a provable strategy.
In the end, it comes to down to a number of factors, including underestimating the inertia of the print market, the fact that in a price inflated market, an auction based model will find efficiencies, not profit, and, once again, Google thinking that as soon as they enter a new market and affix a Google label, the world will change rotational direction to accommodate them.
And yes, there is a theme emerging in my posts. I’m not a Google basher. I like much of what they do, I like their cocky optimism, I love what they’ve done for search and deep down inside, I do hope they reinvent at least part of the way we do business (nods to John Battelle) but the fact remains that I don’t agree with their strategy of attacking everything at once. It’s not sustainable.
I was in an interesting conversation yesterday with a multi year veteran of the technology wars. He said that Google takes a typical engineer’s view of the universe, and that is in any model, including business models, the more points you have between the producer and the end consumer, the more friction that is introduced. Google’s view is that friction is inefficient and should be eliminated, disintermediated, freeing the flow to go direct. Other companies, through long experience, including Microsoft, have learned differently. Friction is good, friction is valuable, and friction is inevitable in a world populated by people, not machines. Each friction point is an opportunity to add value.
With the two different views of the universe, it’s interesting to note that Microsoft is looking to enter the offline world as well. They announced that their vision of adCenter is a multi channel platform, that will introduce an auction based model and search like accountability to other channels, including television and print. Boy, if you thought print was a tough model to crack, wait til you take on television! Google’s problem, says Microsoft, is that they didn’t understand the print medium. By the way, in this story near the bottom there’s a really interesting line that speaks of many blog posts to come:
Bradford also indicated that Microsoft was gearing up to compete with Google for employees. She said Microsoft hopes to lure staff from Google when the company’s stock options begin vesting next year.
But another post, another day.
I don’t disagree with introducing efficiencies in the ad buying market. I believe it’s long, long, long over due. And I love the idea of introducing more accountability. But everyone has to understand going in that this means the tearing apart of an existing and considerable power construct (or several) and reinventing from the ground up. That takes time and resources. It takes patience. It takes adoption. Each of these speaks to a strategy that will take a considerable time for execution and to turn a profit. The fact that everyone is jumping on the Google print experiment (including Google themselves) because it wasn’t profitable out of the gate is a little ridiculous. Did Google really think they were going to change the world that quickly? Did the analysts? Did we learn nothing from the Dotcom bust?
Speaking of Google and TV, there’s an interesting column over at iMedia by Alan Shulman about the Googleization of TV. Check it out.
Okay, the rain is stopping, I thinned a few items out of my “blog fodder” in box, my “To do” pile is inching closer and the hordes are starting to gather at my door. Time to get back to work!