Category Archives: News & Content

Google Trying to Broaden Revenue Stream

More evidence that Google is very aware of it’s single stream revenue vulnerability, and is looking for ways to broaden it. VP of global online sales, Sheryl Sandberg was cornered by Piper Jaffray’s Safa Rashtchy about their ongoing experimentation for new ad formats, including video, and indicated that while it’s still in testing phase Google will continue to play in this particular sandbox. “I think it’s fair to say we have basically just started,” said Sandberg.

Based on my understanding, the testing will be far more aggressive in the AdSense network than it will be on the actual SERP’s, and that’s a good thing. One has to approach further commercialization of a search results page with tremendous trepidation. In fact, my advice would be, don’t even go there.

Google, Microsoft, Print, TV and other Thoughts on a Rainy Day

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!

Microsoft and the NY Time’s new reader

I always find it amusing (and a little frightening) when reality imitates parody. Does anybody remember a SNL skit about wearing a VR helmet and reading a virtual book, which was Moby Dick? In effect, somebody sat in a chair, donned this huge awkward helmet, which gave the experience of sitting in a chair, and reading a book.

Now, Microsoft and the NY Times have come perilously close to this with their new on screen News Reader.

http://www.businessweek.com/ap/financialnews/D8H9AJC8B.htm?campaign_id=alerts

The idea is to simulate the experience of reading a newspaper online, to more fully engage the reader. There is a cost. Apparently, the reader costs more than a year’s subscription to the Times.

Is it just me, or is this really dumb? We choose to read our news online because the online format gives us a different experience and more functionality. We are rapidly adapting to a new online way of assimilating information, and this includes news. To me, this is kind of like buying a car, but then getting a horse to pull it.

Partnership-Palooza! But Do Any of Them Matter?

My inbox was inundated today with talk of new partnerships. Obviously, the search engines are rushing to fill up their dance cards (and when was the last time anyone used a dance card? Maybe it’s time we put that saying to rest.)

What’s interesting about these is the importance of sheer number of users in various online communities. The most travelled intersections of the webs are beginning to look to each other for obvious synergies, trying to stake out a larger slice of online interaction. It’s a bit like an online land grab.

Yahoo and eBay

This is a pretty straightforward swap. Yahoo can show it’s ads to eBay’s 75 million users, and in return, Yahoo will help bolster eBay’s defences agains Google Base, which is seen as a major future threat to the auction based marketplace. Me thinks this threat might be a lot more bark than actual bite, as Hitwise’s Bill Tancer points out in the linked article.

Google and MSN and MySpace

This one’s still in the rumor category. Apparently, MySpace is the single biggest referrer to Google, accounting for 8.7% of its traffic, according to Hitwise (nice job grabbing press mentions Bill!). Apparently, MSN is also sniffing around MySpace, and they probably have things to prove after being beat out with AOL by Google. This one is probably more defensive than strategic for Google, who would hate to lose almost 9% of their traffic to a competitor. On the other side, I would think the motivation is huge for MSN, who have to start turning around their declining marketshare to hang on til the release of Vista. The hope with Vista is that tighter integration of search into apps and OS will immediately bolster marketshare.

Meanwhile, MySpace is booming, with no end in sight. They experienced 1000% growth in users last year, becoming the most visited property online. And it’s all about the numbers.

Associated Press and Topix

The last partnership isn’t really a partnership. Topix.net is a search engine that will work with Associated Press to try to enhance links to the lead source of a news story. The problem is that when stories go out on the wire, they’re picked up by other papers and the news engines don’t differentiate between them. The paper that breaks the story wants credit as the original source. Topix will enhance the links to the paper that’s been identified as the source.

There’s one flaw in this strategy. Who the hell is Topix? Nobody uses them to find news. People use Yahoo…26 million of them. People use CNN, about 24 million. They’re the number one and two sources of news (finally, one area where Google isn’t number one!). Going down the list, Topix ranks 29th, with 2.7 million visitors. So, all together now, a collective yawn as we say, “Who cares?” Again, the importance of visitors, or lack of them, is painfully apparent.

The so called partnership begins to make more sense when you know that Topix is controlled by three newspaper publishers, Gannett, Knight Ridder and Tribune. So it’s not so much a partnership as a directive.

It just shows, popularity is the only currency that matters online. If you have visitors, you matter.