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Bounded Rationality in a World of Information

First published October 11, 2013 in Mediapost’s Search Insider.  

Humans are not good data crunchers. In fact, we pretty much suck at it. There are variations to this rule, of course. We all fall somewhere on a bell curve when it comes to our sheer rational processing power. But, in general, we would all fall to the far left of even an underpowered laptop.

Herbert Simon

Herbert Simon

Herbert Simon recognized this more than a half century ago, when he coined the term “bounded rationality.”  In a nutshell, we can only process so much information before we become overloaded, when we fall back on much more human approaches, typically known as emotion and gut instinct.

Even when we think we’re being rational, logic-driven beings, our decision frameworks are built on the foundations of emotion and intuition. This is not bad. Intuition tends to be a masterful way to synthesize inputs quickly and efficiently, allowing us generally to make remarkably good decisions with a minimum of deliberation. Emotion acts to amplify this process, inserting caution where required and accelerating when necessary. Add to this the finely honed pattern recognition instincts we humans have, and it turns out the cogs of our evolutionary machinery work pretty well, allowing us to adequately function in very demanding, often overwhelming environments.

We’re pretty efficient; we’re just not that rational. There is a limit to how much information we can “crunch.”

So when information explodes around us, it raises a question – if we’re not very good at processing data, what happen when we’re inundated with the stuff? Yes, Google is doing its part by helpfully “organizing the world’s information,” allowing us to narrow down our search to the most relevant sources, but still, how much time are we willing to devote to wading through mounds of data? It’s as if we were all born to be dancers, and now we’re stuck being insurance actuaries. Unlike Heisenberg (sorry, couldn’t resist the “Breaking Bad” reference) – we don’t like it, we’re not very good at it, and it doesn’t make us feel alive.

To make things worse, we feel guilty if we don’t use the data. Now, thanks to the Web, we know it’s there. It used to be much easier to feign ignorance and trust our guts. There are few excuses now. For every decision we have to make, we know that there is information which, carefully analyzed, should lead us to a rational, logical conclusion. Or, we could just throw a dart and then go grab a beer. Life is too short as it is.

When Simon coined the term “bounded rationality,” he knew that the “bounds” were not just the limits on the information available but also the limits of our own cognitive processing power and the limits on our available time. Even if you removed the boundaries on the information available (as is now happening) those limits to cognition and time would remain.

I suspect we humans are developing the ability to fool ourselves that we are highly rational. For the decisions that count, we do the research, but often we filter that information through a very irrational web of biases, beliefs and emotions. We cherry-pick information that confirms our views, ignore contradictory data and blunder our way to what we believe is an informed decision.

But, even if we are stuck with the same brain and the same limitations, I have to admit that the explosion of available information has moved us all a couple of notches to the right on Simon’s “satisficing” curve. We may not crunch all the information available, but we are crunching more than we used to, simply because it’s available.  I guess this is a good thing, even if we’re a little delusional about our own logical abilities.

Reengineering Hiring

First published August 9, 2013 in Mediapost’s Search Insider

In all my years in business, the one thing I found consistently difficult was hiring good people. We spent a lot of time honing our screening skills, but I sometimes suspect we would have been just as far ahead by flipping a coin.

Over time, we found we achieved pretty good success rates with our lower-level hires, but the one area where consistent success eluded me was in our management recruitment. It seemed that the more senior the position, the worse our track record was. We had a few outright disasters.

When it comes down to it, hiring someone is making a prediction. You examine the evidence and try to foresee if that person will perform at an acceptable level in the position you have vacant. And, as I said in my last column, we humans don’t tend to be very good at making predictions. The more there is at stake in the position to be filled, the worse the consequences if our predictions are faulty. In looking at our past management hires, I realize that it wasn’t that our predictive powers were any less effective, it’s just that the pain of being wrong was more acute.

So, it was with some reassurance and more than a dollop of schadenfreude that I learned that Google has had exactly the same problem. That’s right, Google — the same company that has a zillion brilliant engineers working on every problem known to mankind. But those engineers have to come from somewhere, right? Someone has to hire them. And there, ay, there’s the rub!

In a recent interview in the New York Times, Laszlo Bock, senior vice president for people operations at Google, confessed that Google has tweaked, and, in some cases, massively overhauled its recruitment process.  Take, for example, Google’s famous early predilection for college G.P.A.s. According to Bock, based on actual performance, “G.P.A.s are worthless as a criteria for hiring, and test scores are worthless — no correlation at all except for brand-new college grads, where there’s a slight correlation. Google famously used to ask everyone for a transcript and G.P.A.s and test scores, but we don’t anymore, unless you’re just a few years out of school. We found that they don’t predict anything.”

Google has also slowly backed away from its ironclad requirement that every hire have a degree. Bock revealed, “The proportion of people without any college education at Google has increased over time as well. So we have teams where you have 14% of the team made up of people who’ve never gone to college.”

Sometimes, interviewers fall into the trap of over-playing their own cleverness and “expertise.” We spend more time trying to stroke our own ego by staging an impromptu show of power during the interview than in really listening to what the interviewee is saying. Google found that tricks like brainteasers, while they may make the interviewer feel clever, are worthless in screening out duds. The much less flashy but tried-and-true list of standardized behavioral questions (“Give me an example of when you…”) is a far better predictive indicator.

Finally, Bock admits that screening for leadership positions is the most difficult challenge, because leadership is something that defies easy definitions. “We’ve found that leadership is a more ambiguous and amorphous set of characteristics than the work we did on the attributes of good management, which are more of a checklist and actionable.” So you can ask questions, probing for effective leadership, but because leading people tends to fall into the category of ill-defined problems, you often have to do the best job you can in the hiring process, and then track performance religiously. In this case, “slow to hire, quick to fire” is a good principle to follow.

I found Bock’s last words, on the role of Big Data in management decisions, including those involving people’s performance, revealing: “Big Data — when applied to leadership — has tremendous potential to uncover the 10 universal things we should all be doing. But there are also things that are specifically true only about your organization, and the people you have and the unique situation you’re in at that point in time. I think this will be a constraint to how big the data can get because it will always require an element of human insight.”

Search: The Boon or Bane of B2B Marketers

First published February 21, 2013 in Mediapost’s Search Insider

Optify recently released its 2012 B2B marketing Benchmark Report. While reading the executive summary, two apparently conflicting points jumped out at me: “Google is the single most important referring domain to B2B websites, responsible for over 36% of all visits.”

And: “Paid search usage showed a constant decline among B2B marketers in 2012. Over 10% of companies in the report discontinued their paid search campaigns during 2012.”

OK, what gives? How can search be the single most important referrer of traffic, yet fail so miserably as a marketing channel that many B2B marketers have thrown in the towel?

The fact is, B2B search is a dramatically different beast, and many of the unique nuances that come with it are likely to lead to the apparent paradox that the Optify study unearthed. Here are some possible reasons for the anomaly:

B2B search has a really, really long tail. Many B2B marketers are dealing with a huge variety of SKUs, with a broader distribution of traffic across keywords than is typical in most consumer categories. This makes keyword discovery a monumental task. But more than this, the revenue per managed keyword (assuming you can accurately measure revenue — more on this below) is quite often very small. This creates a cost-of-campaign management issue.

When the “long tail” of search was first introduced, many search marketers embraced it as a cost-effective way to manage campaigns. The assumption was that long-tail queries, being quite specific, would yield higher ROI than shorter, more generic queries. And while the traffic (and subsequent revenue) per keyword would be very small, cumulatively a long-tail campaign could deliver impressive returns.

This is true, up to a point. But long-tail campaigns require significant administrative overhead. A query that gets one search a month requires as much set-up as one that gets 1,500 searches a month. Even if you use broad match, you’re constantly tweaking your negative match list to filter out the low-value traffic.

While a long-tail approach seems like a good idea in theory, in practice most marketers end up culling most of the long-tail keywords from the campaign because the returns just aren’t worth the ongoing effort.  This would not bode well for B2B marketers considering search as a channel.

A B2B search vocabulary is difficult to define. Compounding the long-tail problem is the issue that many B2B vendors sell complex products or services. With complexity comes ambiguity in language. It’s hard to pin many B2B products down to an obvious search phrase you can be sure searchers would use. Often, many B2B prospects only know they have a problem, not what the possible solution might be called. This makes it very difficult to create an effective search campaign. There is a lot of trial and error involved.

And, because prospects aren’t searching for a familiar product from vendors they know, it becomes even more difficult to create a compelling search ad that attracts its fair share of searches and subsequent conversions. In a marketing channel that depends on words to interpret buying intent, ill-defined vocabularies can make a marketer’s job exponentially more difficult.

B2B ROI has to be measured differently. Finally, let’s say you get past the first two obstacles. Ultimately, search campaigns live and die on their effectiveness. And this requires a comprehensive approach to performance measurement. As any B2B marketer will tell you, this is much easier said than done. B2B markets tend to be more circuitous than consumer markets, winding their way through several stops in an extended value change. This makes end-to-end tracking extremely difficult.  And if value isn’t easily measured, search campaigns can’t prove their value. This makes them likely candidates for an unceremonious axing.

So if That’s the Bad News, What’s the Good?

If the deck is stacked so fully against search in the B2B world, why was Google the primary referrer of traffic in the Optify study? Well, search for B2B can be tremendously effective; it’s just hard to predict. This makes B2B a prime candidate for a broad-based SEO effort. Content creation creates a rich bed of long-tail fodder that search spiders love. Organic best practices combined with a dedication to thought leadership can create content that intercepts those prospects looking for a solution to their identified pains, even before they know what they’re looking for.

In the case of B2B, especially in complex, nascent markets, I generally recommend leading with SEO and content development. Then, monitor search traffic and let that help inform your subsequent PPC efforts. It may turn out that paid search isn’t a major play for your market. The B2B Beast can be tamed by search; it just takes a different approach.

Is it Time to Relabel ” Marketing?

First published September 15, 2011 in Mediapost’s Search Insider

Last week, I asked the question, “Is the word ‘search’ the right label for what we do on Google, Bing, Yahoo and other engines?” When Internet search debuted in the early 90s, it was probably pretty accurate. But today, the concept may have passed the label by.

And, if that is true, then the same is probably true for “search marketing.” The main gist of my argument last week was that the word “search” implies the expenditure of a significant effort with no guarantee of a successful outcome. But today, more than ever, we look to these engines to connect us with information and functionality. We want to “do” things when we click through to the other side of the search results.

I also said that it was difficult to find any one label that covers all our intentions when we turn to a “search” engine. In the beginning, when the Web was one large bucket of ill-formed data, “search” worked as a universal label. But that’s not true today. Now, the Web is becoming increasingly structured, and a search engine that excels at bringing order to unstructured data often falls disappointingly short when it comes to actually getting stuff done. In trying to be the universal Swiss Army Knife of the Web for many common tasks, Google (or Bing) doesn’t do any of them particularly well, we’re starting to find.  For many tasks, a dedicated and specialized app often does a far better job of meeting our expectations.

Again, this starts to define the conundrum currently facing search marketers. When the label we used was “search,” our job was simply to make sure our sites were “found.” Within the parameters defined by “searching” (to explore in order to discover), our job was straightforward: reduce the exploration effort required on the part of the searcher by moving our sites into a more “discoverable” position.

But what if we substitute some of the other labels I suggested last week for the word “search”? Suddenly, our job becomes much more complex.

Let’s start with “connection.” In this case, buyer s already have an idea that the right online destination exists, so they also have a preconceived notion of what they would find there. In game theory, this is called “expected utility.” In this case, our job is not simply to make the site easy to find, but also to make sure it’s a relevant match for our prospect’s expectations. If it isn’t, we may capture the click but miss the conversion. And that puts a whole new spin on search marketing. To understand how to create a “connection,” we have to understand what happens on both sides of the click: pre-connection and post-connection.

This requires us to delve into our prospect’s “frame of mind.” Again, the words used here provide a clue for what’s required as a marketer. A “frame” colors our entire view of things. There’s even a term for it in psychology: the “framing effect.” It’s categorized as a cognitive bias, which means that our frames determine our reality. To be successful “connection” marketers, we have to be familiar with our prospect’s “frame” of reference. When we are, we can provide a relevant and persuasive post-click path.

But “connection” wasn’t the only alternative label I proposed. What about “action” or “fulfillment?” Again, both ask us to substantially stretch our horizons as a marketer.

“Action” is an even more determinant label than connection. If we’re looking to take “action,” each step interposed between the end goal and the prospect is another level of frustration. Here, our job as “action” marketers is to remove as many of the steps as possible between intent and action. Actions are usually well defined and specific. We should be equally as specific in the alternatives we provide our prospects. Our calls to action should be a clear invitation to “do” things.

“Fulfillment” is a little tougher nut to crack. To be “fulfilled” can take several forms. Is there an emotional component? How would the prospect define “fulfillment”? Is the post-click result a step towards fulfillment, or does it take a prospect all the way there? A successful “fulfillment” marketer should be part psychologist and part clairvoyant.

Given the challenge we have in even attaching a label to what it is we do, it’s no wonder that recent analyst reports are all reporting a common theme: the best search marketers are expanding into other services. We’re expanding beyond “search” into “social,” “mobile,” “local,” “display” and other channels. It’s not so much that “search” is passé, rather it’s that “search” isn’t really the right label anymore. I’m not sure that “social” or “local” are any better. Personally, I think the perfect word, whatever it turns out to be, should clearly identify “why” people are online rather than “what” they’re doing online.

If I Had $4 Billion: Part Two

First published September 15, 2005 in Mediapost’s Search Insider

If you were Google, you had access to $4 billion in cash, and you were taking on Microsoft on their home turf, what would you do?

That was the question I posed to you two weeks ago. Thanks to the many who replied. After sorting through the self-serving e-mails from various CEO’s suggesting that Google should buy their companies, there were some very interesting strategies put forth. Let’s see if they’re listening in Mountain View.

First of all, many of you zeroed in on the operating system as the core of Google’s strategy. Jim Barkow offers up GoOSe..the Google OS: “At the core to their (Google’s) search platform is a very quick file system that was first developed when they couldn’t find one in the market (Linux, MS, etc.) that was fast enough. Interesting that after a long promise, Microsoft supposedly abandoned their plans to ‘upgrade’ their file system for Longhorn and Vista.”

Ironically, on the same day the original column ran, Brooke Dixon pointed me to a post on Gizmodo showing a screen shot of a bare bones Google OS based on GNU/Linux. It would come in three versions: corporate, embedded, and portable. It would allow users to boot and use a stripped-down OS that does what Google does best–manage files.

LionVision joined the chorus with Glinux (or Googlix), offered for a pretty compelling price point. “So Google could GIVE AWAY FOR FREE an OS as well-groomed and clean as apple OSX with all the new cutting edge apps integrated at the OS level. IM and VOIP and Email and Search working from the very roots.”

The Kelsey Group’s own VSG (Very Smart Guy), Greg Sterling, pointed me to a post by Robert Young titled “Google, the Ultimate Deflator” that follows the same reasoning–making the Microsoft OS superfluous by migrating users to an integrated set of Web apps.

Hmmm…an Internet appliance that relies on the computing horsepower of a Web server to do the heavy lifting?

That sounds familiar.

As many pointed out, several have been down this path before, including Oracle’s Larry Ellison and Sun Microsystems. In fact, if memory serves, Microsoft has also been down the road, and put several million into Web appliances and Web-based application service provider technology. Perhaps with broadband proliferation, the idea’s time has finally come.

If this is the case, expect to see some of that $4 billion spent acquiring technology that could create a suite of online apps that would form the foundation of Google’s total solution. Simon Collins suggested likely targets could be contact minders like Plaxo or Linked In, then possibly extending to online data storage, giving users the alternative of a virtual desktop.

Both Nikos Pharmakidis and Andre Morgantetti suggested that Google should take the logical next step down this road and bundle a stripped-down OS and a computer and sell it at a rock bottom price. It’s the cell phone approach to market control. Give away the hardware and make your margins on monthly service fees.

The problem with Google going head to head with Microsoft for the OS is that you’re attacking the Giant right where he lives, so expect a long and heated battle. Others have tried for many years now–and at last count, Apple and Linux combined have managed to capture less than 10 percent of the OS market share. If I was Google and this was my strategy, I wouldn’t be thrilled with my odds. It’s also heavily dependent on users adopting a new way of doing things, so there’s a king-sized chasm to cross.

By the way, speaking of Apple, a few thought Steve Jobs, Larry Page, and Sergei Brin would make an interesting threesome. John Nesbit offered this bold prediction: “Google uses their cash to buy Apple–they are culturally similar in their approach to problems–and then with the new Intel chips that run the Apple OS due out next year they launch a new OS called ‘GO’–Google Operating System”.”

Other readers suggested that rather than attacking Microsoft where they’re dominant, you hit where they’re not the 800-pound gorilla. For example, mobile computing. Shaun Abrahamson says: “Mobile is probably one area where Uncle Bill is not dominant and this might be the place to take the fight, for the next gen of much more dependent users who have devices with them all the time.”

John Reilly sees Google’s battleground shaping up in super MP3 players. “Think of it this way. If you’re an iPod user, wouldn’t adding wireless search, social networking, and other communication functionality be spectacular?

And for Google (and its advertisers), what better way to bring ads and awareness to an already engaged audience?”

Toren Ajk agrees: “We have just begun to tap into the power of devices such as cell phones, MP3 players, game consoles, Tivos, etc. These are no longer business-originated activities (the area Microsoft has chosen to dominate). Entertainment is the primary function of these devices, be it active communication or passive absorption. This is a fundamental shift which makes access the key choke point. These devices don’t need to run through Windows in order to deliver their value, entertainment, to the end user.”

And, as Toren points out, if access is the new choke point, then other recent Google acquisitions may hold the key to their strategy. Pete Neumann warns: “What should be keeping us all awake at night is the fact that Google is buying up the secondary choke points–the onramps to the Internet: dark fiber, wireless networks, broadband over powerline (ConCurrent).”

Roy Moskowitz envisions a low-cost wireless broadband service, bundled with a Google-branded browser. “$1.00 a day and $10 a month for the privilege of being served ads on the Google browser when we connect sounds about right for the service. In contrast, T-mobile charges Starbucks customers $10 for an hour that must be used the same day.”

A few mentioned Google’s interest in NeoMedia as a clue. Their Paperclick technology uses handheld devices to link the world around you to the online world. Capture a barcode or quickly enter a word you see on a product box, billboard, or in-store display, and you’re suddenly linked to a Web site where you can purchase, register, get a rebate or watch a product demonstration.

Jim Barkow, who has friends deeply embedded in Google’s Mountain View brain trust, offers this advice: “Google has an army of the most talented, dedicated, and focused engineers around–and have spent the last few years making sure it was that way. Without a doubt, what they’ve launched so far is not the real goods of what they’ve been working on for the past two years.”

When it’s all said and done, perhaps Terry Weakly should have the last word. “Cash it in and go home…to a really nice home! Let someone else slug it out with Microsloth.”

I’m sure you’d have some takers in the Googleplex Terry, but getting the approval of Google shareholders might be an issue.

Is There a Free Lunch in Search?

Originally published July 7, 2005 in Mediapost’s Search Insider

I’m pretty sure Yahoo! owes me a free lunch. Perhaps even a dinner. Their new Mindset beta looks suspiciously like a prediction I made two years ago. I thought it would take them three years to get it out. But Yahoo! managed to beat the prediction by a year.

Fearless Predictions… In an article entitled “Search: 2006,” written almost two years ago I made some predictions about what the search game would look like in three years. One of them was the introduction of a new feature by Yahoo!:

“Another innovative new feature is Yahoo!’s Smart Search technology. Extensive user surveys have found that searcher’s feelings about sponsored links changes dramatically, depending on the type of search they’re launching. Generally speaking, the further away they are from a buying decision, the less they like anything that looks like sponsored search results. Yahoo!’s new Smart Search uses the characteristics of each individual search and the searcher’s past history to dynamically build search results based on a user’s predefined preferences. If the search is a less commercial research type request, there will be few (or no) sponsored results showing. If a searcher is looking for the best airfare from St. Louis to New York, Smart Search launches a heavily commercialized search page, complete with instant links through Yahoo! shopping for one-click purchases.

Smart Search marks a continuing attempt by the search industry to keep the user base happy while not jeopardizing the search vendor’s ability to monetize their search traffic. Obviously, Yahoo! would prefer to offer commercialized results for every search to maximize their advertising revenue, but Smart Search is Yahoo!’s response to increasing customer demands to be in control of the level of commercialization on their search portals. To date, no other search portal has put this much control in the user’s hands, and everyone is watching Yahoo!’s experiment to see how successful it is.”

A Striking Resemblance… Now, back to today. Yahoo!’s new Mindset Beta allows the user to adjust a slide rule and tweak the amount of commercialism in their search results. Actually, they go one better than what I suggested. I envisioned being able to adjust the number of sponsored ads that appear. The Yahoo! Beta actually changes the commercialism of the organic search results.

This is an interesting concept. I’ve been climbing on soapbox after soapbox for almost two years now, saying how search is likely to be used during the consideration or research phase, when we’re gathering information, not the actual purchase phase. We may not want results aimed towards generating a purchase.

Now, just as I predicted, Yahoo! is experimenting with putting the control in the user’s hands. At this point, your sponsored ads don’t change. I’m not sure what Yahoo!’s plans are for this in the future.

Tailor Made Search Results In playing with Mindset, I found the interface pretty cool. You slide the selector, and your results update before your eyes. Not everything in their index is included in this beta, but there’s enough to give you a definite feel for the potential. For example, I did a search for Seattle. If you slide the bar all the way to “research” you get sites like Seattle University, Wikipedia’s article on Seattle, the University of Washington, and the official site for the Port of Seattle. If you slide the bar all the way to “shopping” you get Seattle theatre sites, restaurant guides, and for some reason, a Seattle Web cam site. Not sure what that has to do with “shopping,” but it is a beta.

So, a feature that puts the commercialism of the results in the hands of the searcher? It didn’t end up being exactly what I predicted two years ago, but I figure it’s close enough for a free lunch. I’ve got a call in to Jerry Yang. I’ll let you know if I collect.

Can Search Help Customers be Heard?

First published on March 31, 2005 in Mediapost’s Search Insider

I’m on vacation right now with my family. In fact, as most of you are reading this, I’ll be flying back from Orlando. While here, I saw a television ad that got me to thinking. The ad was for a real estate company, and the premise was this: Wouldn’t it be nice if every company we did business with had a customer satisfaction rating posted prominently? Right up front, you could see if the business you were dealing with rated a 97 percent or a 43 percent.

While the ad’s message was that this particular real estate company did post their approval rating for every potential customer to see, the thoughts this stirred up in me were a little deeper and more fundamental.

We all know that the Internet is transferring power from the marketer to the consumer. In fact, the use of the label consumer is probably no longer valid. Ray Podder, a brand strategist, hates the use of the term. It conjures up images of a vast mindless herd of Pavlovian dogs eagerly consuming whatever marketers shovel our way through advertising. Ray recommends using the term “empowered customers” instead. So, in this column, I’ll follow Ray’s lead and use his wording.

The Internet and the proliferation of self-publishing options give us the power to build or dissemble brands instantly. Suddenly, the intended market is sharing the straight scoop on products, without corporate filters or advertising spin getting in the way. We share our real life experiences from our perspective, not from a Madison Avenue idealized one.

But to get back to the commercial I saw, so far no one with enough market traction has taken up the task of aggregating this information into an easy-to-digest rating system. There is no “seal of approval” that comes from customers. But for the first time, the potential is there.

There have been a few players who have attempted to do this. Trip Advisor is one that shares real-world ratings of hotels and other travel related services. And Epinions.com has also offered readers the opportunity to post reviews on a number of products. But neither service has tapped into the online market to any great extent. According to Alexa, Epinions.com is ranked around 1,000 for site popularity. It hasn’t gained the critical mass needed to turn it into a hot online property. And considering that it’s been around for some time, it may never get there.

This, by a long and circuitous route, leads me to the topic of this column. How about search engines? Can they provide customers with a podium to be heard from? They’re already the most popular sites online, so critical mass and traffic certainly won’t be a problem.

Search engines rank sites by their own criteria of what makes a good site or a substandard one. They’re already in the business of aggregating information and using it to rank alternatives for the user. They are generally considered objective and non-partisan. And they’ve already drawn a line between their advertising and the editorial section of their page that is recognized by most users. And as they continue to become more vertical (Ask Jeeves’ recent acquisition will certainly heat up this race) it seems they’ll be looking for a competitive advantage to offer their users. This seems to be a compelling one.

We are on the nexus of the switch to the customer-controlled marketing model. At this point, most empowered customers are totally unaware they wield this much power. Only the adventurous few who have staked their territory online have learned how the Internet gives each of us a powerful voice that can reach millions. In a few spectacular and oft quoted examples, online buzz has synergized to the point where new product introductions took off. Online takes word-of-mouth to a whole new dimension. Like many thing in our fragile society, the relationship between marketers and customers is on the verge of a fundamental and earth-shaking shift. Advertisers, don’t tell us how we’re supposed to feel about your products. We’ll tell you, and you’d better listen!

As a relevant aside, we’re starting to hear more and more from companies who are fighting customer launched attack sites who have achieved higher rankings on search engines than the official site for the brand. In this case, the balance of power has swung from the advertiser to the customer. This is unfamiliar territory for the corporate world.

But to this point, there’s no online destination with enough market penetration and critical mass that is dedicated to acting as the focal point for customer opinion. In fact, most customers turn to search engines when looking for published information on a product and sift through blog and forum postings. If they’re already turning to search, why not close the loop and help aggregate the information they’re looking for? Why not find a way to measure online buzz, both good and bad, and present it to us in an easily understood way?

This makes even more sense when you consider that search will aggressively try to place itself at the intersection of all online customer behavior. The areas they’re currently looking to control include shopping search and local search. Both have huge potential wins from a revenue potential. If customers could also find an easily digested capsule of popular opinion to help in the making of their decision, I believe it would present a compelling package.

And that places Ask Jeeves in a unique situation. As a recent acquisition of IAC, they join the corporate family of Citysearch, Expedia, and Match.com. Suddenly, Ask Jeeves is in the ideal position to pursue a vertical strategy. And a vertical search destination would be a great place to start a customer rating system. In fact, Citysearch already has both reader and editorial ratings for restaurants and other tourist destinations. After gaining a foothold here, it could be expanded to all the Ask Jeeves search properties.

There’s no doubt that customers will speak, and speak loudly online. But will search engines provide them the forum to be heard?

Online is Not the Place for the Road Less Travelled

First published Feb 17, 2005 in Mediapost’s Search Insider

We are all creatures of habit. We travel in well-worn grooves, interacting with the familiar and generally eschewing the unfamiliar. Of course, not all people are alike, but generally speaking, we as a species don’t like breaking new ground. Occasionally we will nudge ourselves out of our rut to try something new, but pretty big win had better be in store for us.

In the early days of the Internet, everything was new. Every visit online was forging new horizons. We made new discoveries daily. We had no choice. If we chose to go online, we were forced to venture into the unfamiliar. While this is still true to a certain extent, those days are rapidly disappearing.

We are civilizing and settling the online world. We’re staking out the familiar territory. We’re finding and bookmarking our favorite destinations. And suddenly, there is a value assessed to well-traveled online properties. Brand loyalty builds.

Search as our navigator This is nothing revelatory or earthshaking, but it does have some direct implications for search marketing. There is a sweet spot for search, and it has to do with the size, scope, and nature of our identified and familiar online world. Whenever we have to venture into the terra incognito that lies beyond those boundaries, we turn to a search engine.

And, because we are creatures of habit, we turn to our favorite search engine. We trust that engine to quickly identify new sites that we feel comfortable exploring. Search acts as a navigator and guide. And generally, we only go to search when a familiar destination doesn’t immediately spring to mind.

So, in a consumer interaction, there are distinct phases where we are likely to turn to a general search engine like Yahoo! or Google. If we are booking a trip, most of us will go directly to Expedia or Travelocity. That’s familiar ground to us and we know that it will deliver what we’re looking for: a quick way to compare a number of different airfares, hotels, or other options.

We don’t go to Google each time and search for the lowest airfare to our destination or a hotel. We don’t need a navigator, because we already know the way. There are sites we know of that are better able to find the information we’re looking for, because they were built for that specific type of search.

Stepping into the unknown But let’s say we want to do consumer research in an area where we don’t have a reference and comparison site such as Expedia. For example, let’s say we’re looking for a new mountain bike. We may be familiar with a brand or two, but we’re looking to broaden our options for consideration. So, we turn to a general search engine to help quickly identify new landmarks to help navigate this unfamiliar territory.

As soon as we can, we try to find vertical reference sites in the market we’re researching, because we know they’re built to provide richer content and more searching functionality for that particular product than a general, one-size-fits-all search engine. We use the navigator to find the reference landmark.

Why so many consumers use generic keyphrases Often there is back and forth between the two. In the case of the mountain bike, perhaps the vertical reference site allows us to find new models, which we then turn to our favorite search engine to find more information on. This may or may not happen and it’s one reason why the comScore study released in December found that many consumer searches on general search engines never progressed beyond generic key phrases.

Another example we saw of this behavior became apparent in a focus group we conducted early in 2004. In it, we gave 24 participants a budget to spend and asked them to start researching their purchases online. About half the group wanted to purchase a consumer electronic (CE) item and either the first or second place they went was the site of a very well known CE retailer. They did the majority of their research there and only occasionally turned to a search engine to broaden the options or look for new online destinations.

Exploring our target consumer’s online market landscape As search marketers, we need to spend more time understanding the territory that our target consumers travel through. If we’re trying to intercept them, we need to know their online destinations, both familiar and unfamiliar.

We must know when they’re likely to turn to a search engine and when they might go directly to a site they’re already familiar with. The fastest way to find the intercept point is to examine the traffic patterns and then decide where you can stake a presence in a prime intersection. But all too often, we try to stake our claim to online territory, never knowing if our customer might even come that way.

The 70/30 Rule of Search

First published on Jan 20, 2005 in Mediapost’s Search Insider

In nature, there are the Fibonacci numbers. This sequence (0,1,1,2,3,5,8,13…) and the Golden ratio (Phi or 1.618034) derived from it, occur with amazing frequency and can be found in flowers, the shells of mollusks, leaf arrangements, and even the proportions of the human body. I’m beginning to believe that search marketing has its own naturally reoccurring ratio, and I’ve dubbed it the 70/30 Rule.

I can’t help thinking that many of us are missing the boat when it comes to search marketing. Perhaps not the whole boat, but 70 percent of it. Every day, new research is coming out which points to there being a vast, untapped potential in search. We’ve picked the low hanging fruit, but there’s a whole tree full of rich marketing results that we have to reach a little further for. And when analysts like Safa Rashtchy and the gang at JupiterMedia point to doubling, tripling, and quadrupling revenues from search over the next five years, it’s based on assumptions that marketers will figure out ways to better tap into the full potential of search.

As I write, I know there’s a posse of irate search marketers who are whispering, “How dare he refute our expertise in this area! Low hanging fruit, indeed. The nerve!” As back up to my observation, here are just three examples that come to mind of where the 70/30 rule seems to apply.

Seventy percent organic 30 percent sponsored A little while back I was presenting a session at Search Engine Strategies about balancing organic and paid search strategies. I had a typical search results page from Google up on the screen. I asked the audience which section of the page they normally look at first. Almost every hand in the audience went up when I got to the top organic results. This was no great surprise. From our research into search user behavior, I was pretty sure this would be the case.

Then I asked who in the audience dedicated at least 30 percent of their search marketing budget to organic optimization. Very few hands went up, probably less than 3 percent of the audience.

Does anybody else see the disconnect here? This is not a new message. Study after study has shown that about 70 percent of all search engine clicks happen on the organic results. Yet sponsored search continues to take the spotlight and the lion’s share of the budget, while for many, organic optimization seems stuck as a little understood and even less trusted tactic only fully utilized by online casinos and porn merchants.

Companies using search have to understand their consumers are going to look and click on organic listings more often than sponsored, and you can’t just ignore the fact. Yes it’s harder, yes it’s not guaranteed, and yes it may require some changes to your site, but 7 out of 10 people can’t be wrong!

Seventy percent researchers 30 percent purchasers When is a consumer likely to use a search engine? When they’re ready to buy? No! It’s when they’re researching the buy. And most likely, they’re very high in the consideration phase, just checking out the competitive landscape. This varies with the type of purchase, but usually the search sweet spot is for a product where there is little familiarity, where there is a significant amount of consumer research and consideration, and where there is a lead time of a month or two before the purchase. This is not true all the time, but it is true about… well, look at that… 70 percent of the time!

Driving consumers to a hard purchase conversion and leaving them without another option is not going to be a successful online tactic for the majority of your consumers. We have to understand the mindset of the consumer when they’re likely to use a search engine. If you always aim for the easy conversion, or the low hanging fruit, you’re probably missing 70 percent or more of your market. Take some time to gain a better understanding of the consumer and what they’re looking for. Adjust your search marketing strategies accordingly. Extend your reach beyond the low hanging fruit.

Seventy percent by luck, 30 percent by design Recently, JupiterMedia released findings of an extensive survey with search marketers. In it, they found that only about 25 percent (close enough to 30 for me) of the respondents actively used landing pages and other on-site tactics to increase conversion rates.

The majority of a search marketer’s time is spent in trying to influence position on the search engine results page. This is true whether you’re working on the sponsored side or the organic one. As marketers try to squeeze more return from their marketing investment, there are three points at which they can influence the ROI equation.

They can reduce the investment by intensive bid management or tapping into the organic potential of search. They can increase impressions and click-throughs by extending the keyword basket or improving their position on the page. And finally, they can increase the conversion rate on the site by making sure the search visitor finds what they were looking for and that an appropriate conversion path is present.

It’s the last of these three that offers the marketer the greatest degree of control, yet it’s the one most often overlooked. Usually, we have complete control over what happens on our own site. But often, we have never really asked our visitors what they’re looking for. We haven’t tapped into the existing (and extensive) body of knowledge on usability design when it comes to Web sites. This is one area that could have huge payoff not just in search, but also in all areas of online marketing.

Fibonacci redux For each of the three examples of the 70/30 Rule I’ve given, I know others exist. And I’m not sure that it’s wrong that marketers have previously gone for the obvious wins in search. But I worry about the lack of motivation to go after the wins that require more work.

We can’t move forward as an industry until we start doing the research required to better understand the 70 percent of the market we’re missing. The big winners in business have never been the companies that go for the easy wins. They’re the ones that figure out how to pick the fruit that’s just out of their competition’s reach.

Is Search in a Rut?

At the fall Ad:Tech in New York, there was an abundance of search on the session list. There were search sessions on selecting an agency, selecting search terms, understanding the search consumer (which I participated in), paid search campaign optimization, organic search, local search and even some performance art lampooning search. After the nearly total absence of search from the spring Ad:Tech show, it was a great rebound.

Or was it?

The sessions were hardly standing room only. In many, there were more empty seats than full ones. A sadly defining moment was when Piper Jaffray analyst Safa Rashtchy raised his expected revenue for search in 2007 by almost 10 billion dollars. This should be huge news. Those of us in the industry did a double take. But the announcement echoed hollowly through an almost empty room. Apparently, the marketing industry didn’t really care.

In a quick conversation with organizers of the show, they expressed frustration at the lack of interest in search. As an industry we had lobbied hard to have a presence at the New York show, and Ad:Tech accommodated. They filled the roster with 9 different sessions that touched on search. But other topic areas drew much bigger crowds.

You Can Dress Search Up, But You Can’t Take Her Out.

I hate to point this out, but search just isn’t sexy. It’s the marketing you have to do, not the marketing you want to do. For those of us that are passionate about search, this is hard to understand. “What do you mean you don’t find my girlfriend attractive? ”

Perhaps the problem is that we tend to be a little myopic in our view. We’re immersed in the day-to-day detail. We can actually get excited about algorithmic changes and new file types being indexed. This is hardly the stuff of great cocktail conversations. There are not many 20-something-year-old marketers who would use their knowledge of dynamic URL rewriting as a pick up tactic at the post-show networking party.

An Hour to Learn, a Lifetime to Master

The other problem is that search is like golf. It’s not that hard to do it halfway right and get results. Grasping the basic concepts is pretty easy, at least on the sponsored side. Most marketers think they’ve got search nailed and there’s nothing more to learn.

But like golf, there’s a whole other dimension to search that almost no one has scratched, and it’s incredibly hard to master. Very few companies have an effective search strategy that spans both organic and sponsored channels. Even fewer have tapped into what I call the missing 40 percent of search strategies, truly understanding the mindset of the search consumer and effectively starting a relationship with them.

The other frustration in trying to paint a more enticing picture of search is that the truly intriguing developments are happening in the research labs of Google, Microsoft, and Yahoo! It would be fascinating to get these engineers to open up about where they want to take search, but no one is talking. They can’t, because the balance of power in a multi-billion dollar turf war is at stake.

Looking From the Outside In?

Perhaps the answer for Ad:Tech is to look at search from the outside in, rather than the inside out. More and more people from outside search are looking in and trying to understand how they can leverage this extremely effective marketing channel. “We know people use search, so let’s figure out how we can use that to our advantage.”

I know of brand strategists, academics, market research consultants, and consumer behavior experts that are starting to pay attention to the search phenomenon. They’re bringing fresh insights and approaching search from a much more strategic perspective. This outside interest is also indicative of the disappearing distinctions between search and other online ad delivery channels.

As you know, the lack of strategic thought in search is one of my greatest frustrations with our industry. Quit talking about A/B testing, bid gaps, and link building! Tell me about how, when, and why my target consumer will use search. Tell me how to effectively capture that consumer in a prospect pipeline that begins to build a rich relationship. Take a step back and show me the big picture, and how search integrates with it. And tease me with some really insightful discussion about how search will become the functional engine of advertising delivery online, delivering just the right message to the right person at the right time.

I’m not sure what the answer is, but I do know that the marketing industry is a long way from knowing everything there is to know about search. I would hate to see search be conspicuously absent from the spring Ad:Tech line up.