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CHAPTER 11: Increasing Online Conversion Rates Be wary if your developer seeks to reinvent the wheel by throwing together his own “homemade” search engine. Product search and the ability of a site search tool to suggest related items can be a complex matter. Amazon.com is one of the world’s top search technology companies. The ability for users to browse their huge catalog without getting lost is an important driver of Amazon’s current profitability, since this increases the average order size. If you want to maximize your conversion rates and you have more than a few pages on your site, you need quality site search. Some low-cost and free site search options are offered by companies like Atomz and Google, but make sure that you investigate fully. The lowest-end products might not be sufficient for your needs. Unfortunately, Google’s dominance in search makes the average manager think that site search is easy. A strong domain-specific vendor or developer (someone well versed in e-commerce) can build good site search relatively easily. But as you stray into open source platforms and custom programming for a variety of more complex types of website, don’t underestimate the complexity you may face. Search is a cost, and searching a large database well may require programming resources as well as a budget for improving site performance, database performance, and server capacity. Factors Outside Your Control Don’t confuse luck with brains. Sometimes, you don’t have total control of how users will behave from day to day. However, while you may not be able to control these factors, you can plan for them. Seasonality Every market has up and down seasons. Housing, taxation, and retail gifts are three of the most obvious examples. Unless you have at least two years’ worth of conversion data at your disposal, it can be difficult to know whether your site is converting well or not, adjusted for season. What appears to be a drop-off or an increase might simply be normal activity. How well do you understand your own business? Hot Sectors If you’ve begun working on a campaign for a product that is just hitting the market and is hard to find, you could wind up reaping windfall profits, because that’s what search is really good for: connecting users with niche areas quickly. GPS phones were hard to find not long ago. One site owner in this area reaped windfall profits as a result. The design of the site had very little to do with the high conversion rates, and the drop-off in ROI that will inevitably occur as more competitors move in can’t be blamed on AdWords campaign techniques or site design. 327 328 Winning Results with Google AdWords Hot sectors will eventually cool off. Users in more mature industries know that they can comparison shop. You need to allow for that. The reason people don’t comparison shop when something is brand new is likely because early adopters come to the table with a status-driven “must have” mentality. If the iPod cost $1,500 and sold out very quickly from retail stores, you can bet that there would be a few bleeding-edgers who would buy from the site that could promise them fast delivery regardless of price. 360-Degree View: Create a Good Conversion Environment The popularity of the TV show What Not to Wear has convinced a certain segment of the population that no matter how comfortable you may be in ripped jeans and a 30-year-old hairstyle, your career could suffer if you wear these to work. I wish more site owners—especially smaller businesses— understood that principle as it relates to the conversion rate on their paid traffic. Online, more than anywhere else, you suffer from a need to prove yourself to skeptical prospects in an environment that feels very “cold” to those prospects. They haven’t met you face-to-face. They may not have heard the positive word of mouth that you’ve generated. They haven’t sampled the quality of your products. They can’t see the line of customers outside your store. In short, unless you take particular steps to position yourself as a business with some kind of status, prospects may assume you’re third rate. A large part of how status is conveyed online is visual. Recall that in the studies by Fogg’s Stanford Persuasive Technology Lab, a “site that looks professionally designed” scores as one of the strongest means to increase “surface web credibility” for an online business or organization.19 That’s obviously a very general goal. “Professionally designed” means different things to different people. In Selling the Invisible, Harry Beckwith argues, “Prospects look for visual clues about a service. If they find none, they often look to services that do have them. So provide clues.”20 Beckwith’s examples include visible company “front men,” which can be real men such as Joel Hyatt (Hyatt Legal Services) and Dave Thomas (late founder of Wendy’s Restaurants), or the pillars at law offices, an accountant’s conservative attire, or a financial adviser’s prosperouslooking leather portfolio. I’d prefer it if we didn’t stick with the dated examples of Beckwith’s choosing, so let’s add the late Anita Roddick of The Body Shop to the example list. Online, though, what people see is not just images, but how those images are presented. They see your design. Good design isn’t cheap, but you should buy as much as you can afford, rather than as little as you can get away with. Leveraging Feel and Brand in Small Retail Operations Let’s look at an example of how small companies can create a brand with a quality feel, in spite of not having a nationwide chain of retail stores or the budget to hire a top ad agency. Jeff Braverman is a savvy businessperson. His site does very well, and has become a leading online provider of nuts, confections, and specialty snack items. There are two primary reasons. CHAPTER 11: Increasing Online Conversion Rates First, Braverman has humanized his site and injected web credibility into it. NutsOnline is “real.” The site contains not only contact information, but a whole history of the family business, a roasted nut stand in New Jersey (Figure 11-15). “In 1929, on the brink of the Depression,” begins Braverman’s heartfelt sales copy, “my grandfather Sol took a bold step.” There’s even a picture of Sol in front of the shop in the 1930s. It would be hard to say that the Braverman family doesn’t care about nuts. Braverman also obsesses about the quality of his site. The checkout process and other details are important to him. If you’re lost and use the site search box to look for almonds, you’ll be served a page with a couple dozen product options. Everything on this website seems to work the way it’s supposed to. Perhaps the most impressive detail Braverman has obsessed over is the look and feel. It looks simple and straightforward, but that doesn’t mean it was easy to put together. Rather than posting stock photos of nuts, he hired a food photographer to take proper photos of the products the Bravermans actually deliver to their customers (an example is shown in Figure 11-16). Nothing keeps it more real than accurate photographic images. But more than that, a professional food photographer knows how to make food look appealing. FIGURE 11-15 Web credibility and personal accountability create a good backdrop for customer loyalty. 329 330 Winning Results with Google AdWords FIGURE 11-16 Jeff Braverman employed a food photographer to convey the quality of his products. Summing Up To improve conversion rates, think in terms of four broad priorities. First, make it smooth. Remove the most obvious barriers getting in the way of the user performing a desired action. Clutter and lack of focus are the subtlest, most insidious barriers. Broken links and nonworking checkout processes will literally kill any chance of a sale. Second, test copy and layout elements that may serve to persuade a skeptical prospect that you deserve her business—but do so with a valid testing protocol. That includes overall page feel; matters as basic as improving product descriptions on a retail site; testing different sizes of “purchase now” or “add to cart” buttons; or expanding on and clarifying too-brief, jargon-laden sales copy on a business-to-business site. Don’t use the “aimless tinkering” method. Rather, employ powerful methods: best practices or A/B/C to start, and multivariate testing only if you have high volumes of sales. Third, make sure that you don’t blow your web credibility when a hot prospect starts to scrutinize you more closely. Have contact information available; spell everything correctly; don’t look desperate by hitting him with pop-ups; keep the material fresh; and so on. This whole area CHAPTER 11: Increasing Online Conversion Rates is now part of Google’s Quality Scoring algorithm, so stay in tune with the zeitgeist on areas such as disclosure and privacy policies. Fourth, be image conscious in the broadest sense: heed Harry Beckwith’s advice in Selling the Invisible. In business, companies have always been judged on superficial matters. Beyond mere web credibility, the visual impact and basic architecture of your site can make the difference between becoming a real player with brand appeal, or just another peddler with a story to tell and stuff to unload. If taking control of your image means you need professional design or professional information architecture advice, you’ll need to go out and find some. Don’t let your business suffer just because you’re afraid of offending your loyal “web person.” There is always someone local, or in your family, willing to give you “web” advice. But are they bona fide professionals? Conversion science can’t fix it if your product or service stinks. At a certain point, your marketing will fail if you don’t deliver the goods. If people don’t seem to embrace your sales pitch or your page layout, it may be time to stop worrying so much about pitching and formatting, and “get better reality.”21 Endnotes 1. Jakob Nielsen, “Do Interface Standards Stifle Design Creativity?” Alertbox, August 22, 1999, archived at http://www.useit.com/alertbox/990822.html. 2. In Survival Is Not Enough (Free Press, 2002), mDNA is Godin’s term for the makeup of ideas in your company; he is following scientists in the tradition of Richard Dawkins (The Selfish Gene, 1976) positing cultural ideas or “memes” as similar to genes, in that they are “replicators.” Memetic (similar to genetic) mutations are seen as a positive by Godin insofar as they prevent companies from stagnating, and closed, hidebound, or hierarchical corporate cultures don’t produce enough mutations. 3. For background try Don Norman, The Design of Everyday Things (Doubleday, 1999). 4. The real answer seems to be that it was discovered and developed by researchers at Xerox’s Palo Alto Research Center. According to Spool et al., these researchers hypothesized and proved several elements of a theory that posited searchers in “a large information space” such as a website as “‘informavores’ on the hunt for information.” See Jared Spool, Christine Perfetti, and David Brittan, Designing for the Scent of Information (User Interface Engineering, white paper, 2004), 1, available at www.uie.com. 5. A grandiose economic philosopher might at this point attempt to caution against the diminution of national potential that might accompany any reduction of the marketing and web production communities to a mere “nation of shopkeepers,” given the growth potential associated with the full capabilities possessed by creative classes of our ilk. Or to state it another way, the danger of putting snobs in charge of marketing, design, and online experience production is that the snobs will dismiss the task of marketing 331 332 Winning Results with Google AdWords to consumers as “creating a big ol’ catalogue, and making it more accurate,” precisely because they think of marketing and consumers as afterthoughts, and do not much care for them. If snobs work on complicated things, then it must follow that they rule over lesser beings and require those lesser beings to work on things less complicated and less sublime. 6. Persuasive momentum is a term coined by Bryan Eisenberg et al. 7. Bryan Eisenberg and Jeffrey Eisenberg, Call to Action: Secret Formulas to Improve Online Results (Wizard Academy Press, 2005), 175. 8. Eisenberg and Eisenberg, Call to Action, 175. 9. For some interesting perspectives, see Holly Buchanan and Michelle Miller, The Soccer Mom Myth (Wizard Academy Press, 2008). 10. Paco Underhill, Why We Buy: The Science of Shopping (Simon & Schuster, 1999). 11. In And Now a Few Words From Me (McGraw-Hill, 2003), Garfield writes: “In the ordinary course of events, the effect of advertising falls smack between Vance Packard’s The Hidden Persuaders and Randy Rothenberg’s scenario of extraneousness; it influences our buying decisions but by no means dictates them. For every ‘Where’s the beef?’ deployment of poison gas there is a benign bicarbonate like Alka-Seltzer, which provided campaign after delightful, memorable, hilarious campaign and lost market share the entire way” (p. 191). Although the discussion in this chapter considers your landing pages and website as a whole, rather than just your ad, the argument seems fair to apply to your entire sales process. The original and current (lazy) critics of advertising, from Vance Packard to Adbusters magazine, probably should have been considering the entire sales process, too. When I see an ad for Harry Rosen’s menswear in the newspaper or on TV, no matter how bamboozled I am by the promotion, I still need to go into the shop and interact with a suit salesman, find a garment that fits, and budget enough money to make a purchase. By rights, then, the “hidden persuaders” critics ought to be going far beyond looking at the ads. They should be following me into the store and watching as I take a follow-up sales call on my home phone six months later. By that time, though, they might have to conclude that I actually like the suit I bought and appreciate the service provided to me by this retailer, including the time the sales rep offered to drive to the airport to deliver my recently altered overcoat. 12. Thanks to Mona Elesseily for contributing to this pocket summary of landing page planning. CHAPTER 11: Increasing Online Conversion Rates 13. “Web Analytics 2.0: Putting the Marketer Back Into Marketing,” keynote address to the Canadian Marketing Association National Convention, May 12, 2008. 14. For this, see Bryan Eisenberg and John Quarto-vonTivadar, Always Be Testing: The Complete Guide to Google Website Optimizer (Sybex, 2008). 15. Jamie Roche, “A Redesign Worthy of Google De-listing,” iMedia Connection, March 13, 2007. 16. B. J. Fogg, Persuasive Technology: Using Computers to Change What We Think and Do (Morgan Kaufmann, 2003), 149. 17. Persuasive Technology, 152. Fogg notes that the 2002 study was a “snapshot,” conducted in collaboration with a private research lab. He is not as clear as he could be about the methodologies or sample sizes of various studies. This area cries out for more funding and more definitive, up-to-date research. 18. Persuasive Technology, 156. 19. Persuasive Technology, 168. 20. Harry Beckwith, Selling the Invisible: A Field Guide to Modern Marketing (Warner Books, 1997), 187. 21. Harry Beckwith, Selling the Invisible, 3. “Get better reality” is attributed to Guy Kawasaki. For a deep exploration of this theme, see Seth Godin, Free Prize Inside: The Next Big Marketing Idea (Portfolio, 2004); Seth Godin, All Marketers Are Liars: The Power of Telling Authentic Stories in a Low-Trust World (Portfolio, 2005). 333 This page intentionally left blank Chapter 12 Online Targeting 1995–2015: Fast Start, Exciting Future I n recent years, the practice of “futurism” has inspired oft-deserved derision. An IBM commercial, wherein the consultant has supplied the cantankerous CEO with “business goggles” that require the user to “put in another quarter” if he wants to see the future, comes to mind. My personal favorite is The Simpsons’ portrayal of the Epcot Center as how “people in 1965 thought things would look in 1987.” In this chapter I’ll be trying to take a look at Google’s future, in particular. Given the size of the company and the pace of their innovation, this is a little bit like trying to film a speedboat race by running after the boats with a Flip video camera around your neck. On one hand, you can only run about 29.7 miles per hour before your quadriceps muscle tears off the knee tendon; on the other, you’ll sink before you even get going that fast. Given the lightweight nature of the video camera, at least you’ll be able to swim back to shore. The only phenomenon that regularly attracts as much scorn as futurism is futurism coupled with bullishness about the contributions the Internet will make to the economy. It is indeed possible to oversell the contributions made by the Internet as compared with progress in other fields. Because I don’t work in those industries, I find the ability of BMW to use more and more robots to build cars with fewer and fewer design flaws more mind-boggling than I find a client’s ability to find a customer. I’m more impressed by the huge increases in the survival rates for some types of cancer than I am in an e-commerce site’s ability to sell a tooth whitening system. But let’s not underestimate the contribution of online functionality to the global economy, either. Internet models can either add layers to the economy or remove them, making it possible for a buyer to work through an intermediary or an aggregated form of information if they choose, or to gain more direct access to information related to a transaction than they might have had 20 years ago. The Internet offers a postmodern form of choice, which means we needn’t feel trapped by a particular unidirectional macrotrend in any given industry (getting rid of intermediaries versus the rise of new intermediaries, for example). Increasingly, we can actually choose more or less of a given attribute (such as how “raw” or “packaged” we want information to be). 336 Winning Results with Google AdWords Halfway into the writing of this second edition, I became deeply involved in HomeStars, a website that offers user reviews of home improvement companies. In this process, which involved far more in-depth planning than my usual routine of marketing project implementation, it became evident to me just how radical the shift is in the way that consumers access information. Those of us who participate in actually shaping new ways of accessing trusted information, and new ways of completing transactions, hold just a piece of the online future in the palms of our hands. It’s all too easy to trivialize the shift in how we spend our leisure time and our workdays, and changes in the forces and communications media that shape our beliefs and choices. Isn’t it all just killing time? Of course not. Frankly, it’s mind-blowing to think about the rapid growth in usage of something like Facebook. The joy of creation is what drives innovators like Facebook founder Mark Zuckerberg to dream up entirely new patterns of interaction that will transform social patterns and information retrieval and advertising as we know them. It’s been a long time since Marshall McLuhan was quoted as saying the medium is the message. We know that’s not literally true, perhaps, but we downplay the rapid shifts in communication patterns at our peril. The focused intellectual curiosity that leads developers like Zuckerberg to build new ways of disseminating and sharing knowledge is no less revolutionary than the innovations in developing a computer operating system and taskflow environment by Apple and Microsoft in the 1980s; no less worthy than the invention of the “back and forward button” dashboard design of the Netscape web browser in the 1990s; and no less economically powerful (potentially) than the laser focus on clean, fast, accurate search and targeted ads perfected by the Google guys in the period 1998 to date. Zuckerberg didn’t need maverick cartoonist Hugh McLeod to tell him how to be creative.1 He just built a system he thought would be interesting for Harvard and other college students to use. But for those of us a fair bit older than Zuckerberg (he’s 24 as I write this), McLeod’s reminder is worth listening to. If you have a vision and it’s something you truly feel strongly about, you can make it come alive. You. You can do it. You don’t need a million dollars or the most elaborate tools or the flashy lifestyle of a Soho artist or Web 2.0 hipster. You can build something that changes the world—by just getting started, and continuing to pursue it. What world-changing stuff am I talking about? In my state of heightened awareness honed by investor pitches for HomeStars, I’ve come across a lot of interesting statistics. Citizen trust in the information found in mainstream media is at an all-time low. Nearly more Americans believe in UFOs than believe that CNN and the Washington Post provide unbiased information. Part of the reason for this is that for all of the admirable big media investment in investigative reporting and thoughtful analysis, the “professionalization” of journalism feels to the public like the media elite talking among themselves or siding with the subjects of their stories.2 Even online “influencers” like “well-known bloggers” are losing their luster. Survey data also shows us turning more to peer groups and trusted sources that we can really verify, to access opinions, hard data, and experiences. Some of the subject matter is of a political or medical nature. Other times, it’s more practical, relating to getting things done, or making a purchase. Some of the buzzwords for describing these phenomena include the “Wisdom of Crowds” (James Surowiecki), or the “pro-am movement” (Chris Anderson). CHAPTER 12: Online Targeting 1995–2015: Fast Start, Exciting Future It’s purely reactionary to claim that the rapid shift in information retrieval and knowledge sharing methods in our Wikipedia era are leading to a dramatic increase in the noise-to-signal ratio. Rather, there has been a massive increase in both noise and signal. This will lead to new challenges in information retrieval that will require, on one hand, ever more powerful and scalable technologies and, on the other, innovative social and organizational solutions, open standards, and new kinds of communities. Dr. Andrew Tomkins, Yahoo’s Chief Scientist, includes in his speeches data about the exponential increases in potentially findable user-generated content (UGC) online. Already, we see glimpses of the enormity of the growth in Google’s search product designs, which integrate ordinary web search with attempts to search all kinds of separate and distinct databases. These include your computer desktop, your instant message chats, and your email. Eventually, voice communications and video pattern recognition will be part of that searchable universe; today, one startup is already using voice-to-text technology to annotate some YouTube videos with textual metadata. Your car trips and air travel will perhaps be logged in detail, and much more besides. The zeitgeist of “what’s my status now?” currently embodied in the unreliable but popular microblogging service Twitter, is going to be built into our lives from a variety of angles. You won’t have to Twitter to tell your “followers” what you’re up to now. A variety of technologies may well do that for you—with or without your knowledge or permission. Tomkins remarked in one recent speech that the total amount of UGC being produced today is not that far removed, in order-of-magnitude terms, from the maximum possible amount of UCG that could be logged if everyone on the planet sat in front of their computer and just typed away, 24 hours a day. (Sort of feels like what I’m doing right now.) I believe Dr. Tomkins! There has been an explosion in the production of information that is feasibly findable and classifiable. When Google says their mission is to make the “world’s information” universally accessible, they’re not kidding. That will open up new opportunities for marketers, and lead to serious privacy debates. A real value will come to be placed on sharing data with just your immediate circle, your wider trusted circle, or the public at large. As an Internet user, and as a user of various applications and technologies, marketers will want to pay you for your willingness to share more of your personal information. Survey-based data mining and database marketing is old-school and well known to many marketers, but in a new era of surveillance-style data mining, will companies like Google be able to draw a line in the sand and resist the general trend towards deeper snooping? Marketing companies that failed in part because they were out of step with the respectful antiintrusion ethos championed by companies like Google—spyware firms such as Gator/Claria, for example—may come to seem nearly quaint by comparison with the full-scale surveillance capabilities of the larger communications and media companies, from Google, to Microsoft, to Facebook. But depending on how things evolve, these big companies might be able to find a way to thrive precisely by enacting systems of respectful “permissions,” attempting to balance profitability with users’ willingness to share only with those they trust. While the past decade or so has seen many innovators focus on finding what you need online, the coming decade will feature a growing focus on how to verify and productively use that information, and how to connect with trusted peers and virtual friends whose opinions we truly value. The first wave of this trend was clumsily called “peer to peer” (or P2P) search, but 337 338 Winning Results with Google AdWords we weren’t quite ready for it yet. The next wave will tackle the peering and sharing issue with renewed vigor. The old media will let out a few remaining squawks about the dangers of trusting “online information,” but by and large, they’ll continue to diversify their holdings into the kinds of media they once feared and attacked. No, online innovation isn’t always rocket science, but it can create cracks in old armor that eventually transform whole industries. Online stock trading precipitated huge changes in the retail securities brokerages, for example, driving commissions way down on routine transactions. Online marketplaces using a variety of exchange models have put significant pressure on old models. It isn’t just people’s used junk anymore, or even just ordinary retail. Did you know that eBay Motors is perennially one of the top two revenue-generating product categories on eBay? That’s because folks hate dealing with traditional face-to-face automotive purchase processes. And that trend has only just begun. You can look at such developments any way you like. You can yawn, cringe, or just try to adapt and profit. The growth in e-commerce surely can’t be hurt by the backwardness of offline retail. More often than not, consumers come to a store ready to buy, armed with product information. Because many interactions with both the salespeople and the categorization systems in retail stores are often an information-poor embarrassment compared with (at least a well produced) website, the vanguard of hybrid retailers who welcome digital search and persuasion right into their offline spaces will be poised to “keep it real” with a new, information-hungry breed of consumer. Businesses that don’t get the Web—and even those that don’t understand how consumers’ hunger for information, transparency, and context is being driven by their ability to search online—are going to face a lot more dissatisfied customers in the coming years. Inertia can be costly. As entrepreneurs create new ways of putting buyers and sellers together online, thousands of new business practices are emerging today that will need to be studied by economists decades hence. Revolutions in fields like high finance, where pioneers invented ways of packaging and pooling almost any financial asset or risk category to be bought and sold, have unleashed massive efficiencies on the global economy, and are duly studied. Massive losses in wealth brought about by over-eager application of “sound” financial maneuvers will no doubt lead to checks and balances that ought to have been in place in the first place. It seems that painful reckoning episodes are a prerequisite for coming to grips with the potential for any powerful multiplier of wealth and efficiency to turn sour. Many of the changes wrought by Internet entrepreneurs are humbler than the big trades overseen by Wall Street Masters of the Universe. But when you add them all up, some powerful math is lurking behind what seem to be modest changes in how consumers behave and how businesses interact. The improvements in our ability to communicate, target, and transact business are far reaching. Reductions in “economic friction” predicted by writers in then-avantgarde publications like Wired and Business 2.0 in the mid-to-late 1990s are now coming to pass. The real challenge becomes how to manage these surges in economic productivity so that they don’t consume us. Many have already arrived at the point where “always on” is more of a curse than a badge of honor. In other words, if a little bit more information or a little bit more efficiency is helpful, how do we know when to stop? Is it OK if I get the third-best price on a printer, or the fourth-best available mortgage rate? Might there be some more, just a few more, CHAPTER 12: Online Targeting 1995–2015: Fast Start, Exciting Future profitable keywords lurking in the nearly infinite dictionary of AdWords inventory? Or should we strive for balance in our pursuit of business growth? More than the economy, these changes are about widespread access to specialized communities and freedom of information. Citizens and consumers have unprecedented access to information and sources of enlightenment that were once the province of a few. Many will not have the initiative or the educational background to take advantage of those opportunities. Someday, proponents of Internet community, Internet research, and Internet business will need to take a breath and go back over the knowledge utilization literature to remind themselves that the availability of information effects change in less than obvious ways, and sometimes not at all. Experts argue that rather than directly informing decisions, a growing body of evidence is often brought to bear on a specialized field over a period of years or decades and informs decisions in the background by replacing what was once thought of as common sense with a new kind of common sense.3 The Internet has become synonymous with sweeping economic change. And so should it be. As you read in Chapter 2, search-centric companies like Google and Yahoo—and the payper-click model—have surged ahead of traditional online advertising brokers. Things may look quite different in a couple of years, but for now, the proportion of Google’s revenues derived from advertising is closer to 100% than it is to, well, 95%. The world’s leading search company is the world’s leading online advertising vendor. While the successes of these new leaders aren’t possible to be ephemeral, it is likely that the dominance of a relatively narrow form of online advertising—Google AdWords and Yahoo paid search results charged “by the click”—will give way once again to a wider variety of targeting methods. Just as email, banners, and other forms of online targeting lost ground and suffered bumps and bruises, paid search faces key challenges such as click fraud, bidding wars, and low volume. As a result, the leaders will be forced to innovate. The exciting thing for companies like Google is that they’ve made a name for themselves by providing a highly efficient platform within which advertisers can manage targeted, measurable campaigns. As the search metaphor insinuates itself into various aspects of people’s lives—online and off—advertisers will be able to reach more customers in more ways using an AdWords-like bidding platform. Thus your efforts to learn the ins and outs of AdWords will be applicable to future developments in marketing and advertising generally. Google AdWords: Emerging Trends While it’s interesting to speculate on longer-term transformations in the marketing landscape, from a practical standpoint, most of us need to keep an eye on near-term developments that may affect our campaign strategy. What lie directly ahead for Google AdWords advertisers are advances in campaign management and ROI tracking. There have been subtle shifts in Google’s philosophy on providing advertisers with additional tools to manage their campaigns. In the early days of AdWords, I was told that Google believed strongly that in certain areas, especially reporting and tracking ROI, third parties were better suited to help their advertisers. Over time, this shifted to “we’ll try to offer our advertisers more tools that will help them manage their campaigns in less time.” 339 340 Winning Results with Google AdWords The advent of an increasingly integrated, ever-more-powerful (and free) Google Analytics platform ushered in an era of a “total Google marketing experience.” Google’s main competitors, Microsoft and Yahoo, have followed suit. Yahoo, which already offered conversion tracking and analytics following their acquisitions of companies like KeyLime Software, recently acquired another analytics and bid management platform it is bent on integrating: IndexTools. For their part, Microsoft has begun to roll out their own Google Analytics competitor, code-named Gatineau, which will help paid search advertisers access demographic campaign performance information, among other things. As noted in Chapter 10, the “bid to ROI” goal automation previously only supported by third-party players may now be addressed adequately for many retail advertisers by Google’s CPA Bidding tool, which attempts to set your bids to keep your cost per acquisition in line with your target dollar figure. Google Projects to Watch Since they’re a primary supplier of traffic to your business, it probably wouldn’t hurt to be curious about Google’s future direction. For search advertisers and searchers alike, Google Search has become a primary obsession. In the parlance of advertising guru Kevin Roberts, Google both inspires love and commands respect, making it a “lovemark.”4 Google’s size and power seem destined to erode some of the “love” from that designation, as is seemingly inevitable in the lifecycle of technology companies, with notable exceptions like Apple. Let’s take a moment to speculate on how some of Google’s various projects could affect advertisers down the road, and on how they might affect Google’s competitive position in the race for online user loyalty (what were quaintly referred to as “the portal wars” back in the 1998–2001 era). The immense breadth of Google’s engineering and product development teams means it’s an exercise in futility to attempt laser accuracy here. Projects will take on shifting degrees of significance, of course. Google Chrome To date, Google arguably had only one major shoe left to drop in the creation of software representing foundational elements of home and office computing. They already had a search engine, a blog platform, an office suite, instant messaging, and web-based email, to name just a few. But no browser. Many assumed their financial and moral support for the Mozilla Foundation and the Firefox browser would be as far as Google went. Instead, Google rolled out a powerful new web browser called Chrome. It offers several interface innovations and functionality improvements such as tabs that are shielded from malfunctions in other open tabs, but what is probably most important about it is the “guts” of its architecture.5 First of all, it contains new code elements that had grown tired in rival browsers Firefox, Safari, and Internet Explorer. Second, it offered a more comprehensive architecture that resembled a whole operating system, in that a wide variety of web or desktop applications can be operated within the Chrome environment. Third, its updated code base is compatible with Android, Google’s new operating system for mobile devices. Finally, Chrome’s code is open source! Google has welcomed other browser developers to make use of its code to improve their products. CHAPTER 12: Online Targeting 1995–2015: Fast Start, Exciting Future Geeky stuff aside, what’s the main motivation to switch? Chrome’s engineered for speed. Power users are particularly impatient with slow-loading web pages, so they’ll likely be the first adopters. To date, Google Chrome’s market share has failed to crack 0.75%, though it enjoyed over 1% market share in the first few days of widespread tire-kicking by new users. Time will tell whether Chrome gains share, and how it will fit in with Google’s overall strategy. But insofar as it is built for the future, it is a powerful force to be reckoned with, and the best proof yet that Google plans to trade blows with Microsoft for as many rounds as it takes. In the browser wars, of course, the only cost to the user is a few seconds of download time, and a brief learning period. Accessing a superior product’s speed doesn’t come with the same financial tradeoffs as, say, considering a new Porsche. Google Product Search and Google Checkout Despite a slow start, Google’s shopping engine, Froogle, brought many retailers on board to upload listings through a feed service. However, the service never reached rampant popularity, and it seems that Google has revamped the overall strategy for product search, renaming Froogle to Google Product Search. Google Product Search is integrally related to Google’s growth in merchant services through Google Checkout, and judging by the home page navigation, a grander “giant database” project called Google Base is considered the granddaddy of Google Product Search. Google Product Search is billed as being “in beta,” which forebodes considerable testing and tweaking going forward. Google Product Search results continue to be integrated into some search results. The significance for retailers should not be lost: don’t expect to rank product pages in the organic results. Buy paid clicks, and participate in Google Product Search by uploading your feeds. Feed management is a technical task that should be taken on by a qualified developer or even a third-party consultant. To manage competing feed engines, retailers may need an ongoing bid strategy, among other things. Orkut: The Cool Kids Moved On? Named after Orkut Buyukkokten, the Google engineer who spearheaded its development, Orkut is a social networking site that allows friends and “friends of friends” to communicate, form groups of interest, and much more. In that regard, it resembles similar sites like Friendster, LinkedIn, and Facebook. The reality is, many folks kicked the tires on Orkut when it first came out, but in North America it simply doesn’t have a critical mass of users. Like many, I haven’t logged into my Orkut account in ages. I consider Facebook and LinkedIn to be vibrant, current platforms—I use one or the other almost daily. In principle, Orkut is separate from other Google initiatives. When it rolled out, though, observers believed that the extensive personal information Orkut collects could be part of the trend towards Google developing a large “user base” like the one Yahoo has built. Microsoft, we know, uses Hotmail and Passport user data to offer demographic targeting options to its advertisers. For example, a Microsoft adCenter advertiser can elect to bid 25% higher than their base bid on paid search traffic that appears to be coming from (say) women between the ages of 25 and 34. At present, the demographic targeting options in Google AdWords are relatively 341 342 Winning Results with Google AdWords weak (they are based on some reported data from some content partners in the content targeting programs), but given Google’s increasing diversity of demographically rich properties, it wouldn’t be a surprise if Google approached or surpassed Microsoft and Yahoo on this front. To date, they have been cautious about how they collect data, and how much of it is handed over to advertisers. In any case, it seems likely that Google will someday offer advertisers access to deeper demographic targeting options. Projects like Orkut not only create a potential revenue stream for Google, they give Google “users,” along with all that entails. Google is stealthily increasing its global footprint. But it has to be unsatisfied with its current lack of traction in the social space. I’d expect all of Google, Yahoo, and Microsoft to make bold moves in this space, including acquisitions, in 2009. Friendster (independent), LinkedIn (independent), and Bebo (part of AOL) seem like major acquisition targets as of this writing. In October 2007, Google spearheaded an Open Social alliance to create a commonly shareable application framework that would allow third-party developers to create applications that would work across any participating social network. (In Open Social speak, an “application” is called an “application,” and a “social networking site” like Facebook or Orkut is called a “container.”) This has potentially explosive implications. As is so often the case, Google appears to be looking ahead in the chess match, building something bigger and just as open source friendly as Facebook, while leaving the door for it to take sides in which proprietary version of open source (that’s an oxymoron that has a long history in technology) gains ascendancy. Particularly galvanizing to observers, but potentially troubling to Google competitors, must be the similarity in philosophies between Google’s Open Social alliance and the open social networking system created by Marc Andreessen’s Ning. Andreessen, cofounder of the Netscape browser, sided with Google in its launch of the initiative, taking nonparticipating sites to task for not joining.6 (MySpace, Bebo, and Six Apart joined in November, Yahoo, mentioned directly by Andreessen in his post, finally joined in March 2008.) Recently, Ning raised $60 million in a fourth round of funding, placing the company’s value at $500 million. A startup valued so highly at a relatively early stage? It makes you wonder if continued growth in Ning’s own “applications and containers” means that it is expecting an acquisition for billions by Google or its closest competitors. To date, Ning users have created over 300,000 “containers.” In essence that means 300,000 developers have rolled their own “mini-Facebooks” to create custom social networking sites of their own. The “social graph” is a snazzy term that refers to the deep demographic data that can potentially be gleaned from observation of user social behavior. Owners of social networks can collect a vast amount of data about not only likes and dislikes, but about the propensity of one’s behavior to be affected by the behavior of friends and contacts at different levels of intimacy. While the research is in its infancy, the potential goldmine of data has not been lost on Silicon Valley and investors in technology startups. It’s a certainty that Google will be among the companies aggressively pushing into this space. YouTube A more clear-cut case of Google owning a popular website with engaged “users” is YouTube. YouTube is by far the top streaming video site in the world, and in many markets is in the top five of all websites. CHAPTER 12: Online Targeting 1995–2015: Fast Start, Exciting Future Google acquired YouTube in October 2006 for $1.65 billion in an all-stock transaction. Its own offering, Google Video, was well behind in the race for user eyeballs in the online video streaming category. At the time, the acquisition was controversial. As with a number of today’s most popular Internet brands, the mainstream press hurled a steady volley of accusations of wrongdoing and illegality at the popular site. (PayPal, for example—now a division of eBay—was painted as a dodgy scheme destined to be shut down at the hands of financial regulators.) Because of the large number of unauthorized copies of proprietary video content posted on the site, many observers speculated that Google overpaid for a business that would be reduced to a fraction of its present size when YouTube became more aggressive in removing pirated video clips. Mark Cuban, owner of a library of video content, was among the pundits predicting legal doom for YouTube.7 As so often happens in the technology business, size and scale rule. YouTube’s popularity combined with Google’s resources left it in the driver’s seat as the “go-to” place to post video content, an activity that began to take off in many circles. The fact that blogs, social networks, and large-scale publishers used YouTube to embed streaming video into their published content helped YouTube grow by leaps and bounds. The resulting explosion in archived video content meant that an aggressive policy to remove unauthorized material still left YouTube with massive amounts of content. In January 2008, 78.5 million viewers watched a mind-boggling 3.25 billion videos through YouTube.8 Google owns about 34% market share in streaming video, far ahead of the #2 player. At $1.65 billion, Google had itself a bargain, especially when compared with Yahoo’s $5 billion acquisition of Broadcast.com in 1999, a deal which should be characterized as “right idea, wrong technology, wrong time.” As always, Google proves that it’s better to be lucky than good; it has been both lucky and good too many times for it to be just luck. Google Labs An interesting repository of half-baked Google experiments is Google Labs (labs.google.com). They certainly don’t share everything they’re working on, but it’s refreshing that they do sometimes show off “not yet ready for prime time” features. Some of Google’s most important features, such as Google Maps and Google Scholar, are listed under (or got their initial introduction to the public through) Google Labs. Google continues to play the game of downplaying major initiatives by calling them “beta” or “experimental,” but no one is fooled. A lot of the “experiments” listed under Google Labs will play a big part in the future of search. Google maintains a record of which applications “graduated” from Google Labs, and currently displays it on the home page of Google Labs (see Figure 12-1). As of this writing, there are 17 graduates, including GOOG-411, a free, voice-activated directory assistance service that went from “labs to live” in record time. Google Maps was one of the graduates. Only recently a mere upstart challenging leaders like MapQuest, Google Maps is now a staple of many Internet users. It’s also very much integrated into search results, depending on the user’s query. Google’s pace of development of Maps has been admirable. They’ve integrated “pedestrian-friendly” or “public-transit-friendly” estimates 343 344 Winning Results with Google AdWords FIGURE 12-1 Many projects that lurk quietly in Google Labs ultimately become important Google services. of travel times in some cities, for example (see Figure 12-2). And they’ve integrated the satellite view from Google Earth, if you prefer to view that. Google Suggest is a feature that displays more specific phrases as you type, based on search frequency data. This is operational, for example, in the Google Toolbar Extension for Firefox. Marketers can actually use Google Suggest as a keyword research tool. Curious about the most popular three-word phrases that begin with “mortgage application”? Google Suggest can tell you. Savvy developers customize their research by accessing Google Suggest through the Google Search API, which allows a “data dump” of a certain number of Google Suggest results. This might allow you to do custom keyword research and organize the information in a usable format. Keep in mind that large-scale use of any Google API is likely to cost you “tokens,” which cost money above a certain number of free tokens allotted for ordinary research use. Google Suggest is not particularly robust for research purposes, in any case. For users, it may be of some interest, but it is not hugely beneficial in my opinion. Google doesn’t make any claims about the accuracy or completeness of Google Suggest—hence the term “suggest,” I suppose. I suggest that you check back into Google Labs from time to time, just to see what they’re up to. CHAPTER 12: Online Targeting 1995–2015: Fast Start, Exciting Future FIGURE 12-2 For some places, Google Maps lets you choose whether you want directions “by car,” “by public transit,” or “on foot.” The Ecosystem: Google’s Competitors and Partners Advertisers go where the customers are. Today, Google and a couple of other companies are leading options for your online ad campaigns. Relative stability in Google’s immediate ecosystem makes it easier on most of us. But that stability can’t be counted on. Google’s ability to compete as well as cooperate will affect your relationship with them in the coming years. Google vs. Everybody Else It wasn’t long ago that a “party” connected with a technology company was a sedate beer bash onsite, conducted among hardworking, nerdy engineers, on a Friday afternoon. Dot-com bubbles I and II created a whole new image for the technology sector: $150 haircuts, exotic cocktails consumed with celebrities in trendy nightclubs, and other such fleeting trappings of fame. Such imagery has proved to be a distraction for many of the sector’s weakest startups, but it’s also created irrelevant new informal standards of conduct for technology companies. Somehow, paradoxically, technology 345 346 Winning Results with Google AdWords companies can be taken to task by outsiders for being too controlled by “nerds” or “dorks.” If blogs like Valleywag had their way, every software developer would be as trendy and socially confident as semi-employed bloggers. Perish the thought. If you read the news, you see a lot of negative stories about any new, brash company. Google is no exception. I have often been critical of Google, but I also try to give praise when it is due, which is also often. No matter what any analyst says, the decisions taken at companies like this may often be based on careful thought processes that aren’t shared with outsiders. We might misinterpret certain messages. If Google seems too cold, aloof, and “maddeningly geeky” in some cases, it’s probably because top management cares passionately about developing the next great product. Google’s mantra has been “serve the user.” They’ve made powerful statements that their focus is on the user experience even if it means not always maximizing revenue. In that regard, Google has had the foresight to build a beloved online destination with staying power. Their relationship with advertisers and other partners has been less cozy. Like parts of Yahoo in its early days, Google’s youth and (sometimes) arrogance has meant that customers haven’t always been dealt with as professionally and consistently as they could have been. Google took years to develop more consistent billing practices, for example; financial background checks for invoicing relationships sometimes got caught in the bureaucratic shuffle. More recently, the “geeked-out” Quality-Based Bidding algorithm seems to downplay the urgency faced by seasonal advertisers. Campaigns that take weeks to ramp up and to start working normally don’t fit well either with the “up in minutes” image of Google AdWords or with the media buying objectives of large advertisers. What’s supposed to be exciting about AdWords is that the system treats you with respect even if you run a niche business that only receives a handful of clicks for a high-ticket item. But in reality, “small” advertisers (small in quotes because even a large, prestigious company or organization counts as small in some Googlers’ minds until its AdWords spend reaches a certain level) may get less personalized attention than big spenders. From such indications, it’s hard not to conclude that Google is a search engine company in the same vein as those that came before it. The revenue stream is seen as just that: a tap that flows and keeps the lab running. Advertisers are a necessary evil. Isn’t that a strange way to feel about a client base that makes up 99% of your annual revenues? Maybe, but advertisers have an awesome platform to work with, in spite of the power imbalance that has arisen as Google approaches monopoly status. At its heart, Google remains a traditional Silicon Valley powerhouse with an engineering culture. Many of the eye-opening tales that have leaked out into the press appear to have been reported reasonably faithfully.9 Empathy for paying advertisers can be cultivated over time, but there are questions to be asked as to whether Larry Page and Sergey Brin can foster this kind of deep empathy with consumers and partners. We know little of their management style or personal interactions with employees, but it seems erratic, introverted, and aloof by contrast with visionary leaders like Apple’s Steve Jobs, or even Microsoft’s Bill Gates. Yahoo’s Jerry Yang long ago developed the sort of rounded edges and steadiness that has kept that company pointing in the right direction. None of these billionaires needs to go into work every day, so CHAPTER 12: Online Targeting 1995–2015: Fast Start, Exciting Future their motivations must come from somewhere—either the internal drive to dominate a market or external feedback from customers and partners. Can the paradox persist? Google as one of the world’s leading brands, yet their leaders remaining so enigmatic? Whatever might happen, we know that Larry Page, Sergey Brin, and Eric Schmidt are likely to remain firmly in control. In spite of the appearance of a democratic culture, power at Google is concentrated in the upper ranks, a state of affairs sealed by a dual share structure that gives ordinary shareholders little control over the company’s direction. Top management and investors in more traditional firms likely would have blanched at some of Google’s experiments. Aspects of the initial public offering and other aspects of Google’s relationships with economic power structures have been treated as more opportunities for innovation. Some, me included, feel that a company like Google can make important contributions by challenging conventions in areas like investment banking. But when every area of the company’s operations, including billing and clickthrough reporting, seem to be treated as “cool hacks” rather than mission-critical bedrocks of client relations, it’s not hard to imagine future crises of confidence if and when tales of the most gravity-defying inventions leak out. As with Apple and Microsoft, future performance can’t depend on top management alone. These companies maintain high standards in hiring across the board, and make frequent bets on recruiting top technical, management, and sales talent. How Yahoo and Google grapple with their hiring and organizational decisions will be part of what determines their financial fate. Yahoo, for its part, has struggled with title inflation and an excess of unproductive management positions. Google has been notable for a nearly pathological obsession with raw test scores and raw intellect. Yahoo’s recent mediocre financial performance and relatively slow pace of innovation have been part of a rather traditional story of bloat and complacency leading to corporate stagnation. By contrast, Google has yet to stagnate, and its most marked HR characteristic—hiring people with genius-level IQs—has yet to be proved as an Achilles’ heel, in spite of dire predictions by observers. Perhaps we are all aware of the studies that show that people with very high IQs have social adjustment problems and even financial difficulties in comparison with ordinary people with merely above-average intelligence, and we expect that phenomenon writ large to afflict Google in some way. But perhaps such scenarios were more applicable to a time and environment where charm and persuasion were at least as economically important as creating outstanding technology products. Perhaps being charming and persuasive oneself is not highly correlated with the abstract thinking abilities needed to write the code to create the platforms in which users can themselves express their charm and powers of persuasion (while, hopefully, becoming more informed as a side effect). Perhaps it’s no coincidence that one of the top current architects of Google AdWords quietly boasts of his “$10 haircuts”—less trendy, even, than the “expensive” haircuts available from Google’s in-house barbershop. From the standpoint of economic progress and quality products, we can all hope that the parties thrown by companies like Google, Microsoft, Yahoo, and Apple will continue to be equally boring. They should be at work creating the frameworks so the rest of us can enjoy better parties. Hopefully, like it’s 1999. 347 348 Winning Results with Google AdWords eBay and Amazon eBay and Amazon are the two largest e-commerce companies in the world. Unsurprisingly, their fortunes are deeply intertwined with Google’s. eBay advertises heavily on Google, both directly and indirectly through affiliates. But it also competes with Google, and future product development by both companies threatens to create even hotter competition. Take online classifieds. eBay has bought a 25% stake in popular classifieds site Craigslist and has also created Kijiji, its own international local classifieds service, now growing quickly in North America. In June 2005, Google acknowledged that it was working on a new offering: a payment processing service that competes with eBay’s PayPal service. At the time, Eric Schmidt denied that the payment processing service would compete directly with PayPal, but that depends on how you define “directly.” Google Checkout directly competes with PayPal as a merchant processing service, but not for other kinds of user-to-user money transfers. Google’s pricing on the service undercuts PayPal’s. eBay completed an acquisition of Skype, the IP-based voice calling and text chat service that has grown to become one of a handful of widely adopted “standards” among users, in October 2005. (Although the quality is not equivalent, Skype allows companies to set up multiuser conference calls for prices as low as free, as compared with five to ten cents per user per minute, for traditional conference calling. Because more and more users have Skype installed, customizing and initiating calls becomes quicker and quicker.) Although revenue generation has lagged, Skype has made fantastic progress since the acquisition. In the first quarter of 2008, Skype added 33 million new users, bringing its user base to over 300 million. All of Google, Yahoo, AOL, and Microsoft offer instant messaging and some variation on IP-based voice chat. Google Talk now allows multiple-user voice chats, for example. But Skype is much farther along. Skype’s recent success almost makes it less likely to be snapped up by a company like Google, because it would be nearly impossible to set a mutually agreeable valuation on a company whose installed base approaches half a billion users. Aside from the erroneous media and Wall Street stereotype that the Skype acquisition was a failure for eBay, there is nothing to indicate that eBay will in fact divest itself of this killer app and emerging standard. There has been some speculation of a Skype IPO, which would enrich eBay and keep Skype growing at a fast enough pace to challenge telecommunications companies and Internet technology firms like Google for global telecommunications leadership. eBay versus Google seems to be a moderately competitive relationship. But until the telecommunications and payment processing battles heat up further, both sides have more reasons to work for one another than they do to work against one another. Amazon and Google appear to have a strong relationship. Even here, though, both have launched initiatives that could threaten one another. In the world of books, Google has gone through several experiments with projects called Google Print and now Google Book Search. One promising element of Google Book Search is My Library: the ability to create your own personalized library (see Figure 12-3). You can annotate books with reviews, and share your favorites with friends. Google Book Search offers CHAPTER 12: Online Targeting 1995–2015: Fast Start, Exciting Future FIGURE 12-3 My Library in Google Book Search a comprehensive approach to finding material. Some public domain information is available fully digitized; otherwise, Google Book Search can tell you where to buy it or borrow it. Authors may gain exposure for their work by voluntarily submitting their copyright material to be archived here, also. Combine these elements with a new payment processing technology, and it’s not a huge stretch to imagine a world in which Google goes into the “book business.” Indeed, many of the existing e-book and print-on-demand publishing facilitators such as ClickBank, CafePress, and Lulu are pretty cumbersome for authors. Surely, like Amazon, Google can do better. Amazon has some of the most sophisticated search technology in the world. It uses this to help users navigate its site and to find related products. With a brief effort in the form of its A9 search engine, Amazon showcased its search expertise for a general audience. Users never embraced A9, however. Its market share never reached any significant level. To cement that insignificance while taking Google’s VP headcount up another notch, the creator of A9, Udi Manber, left Amazon for Google in February 2006. Because A9’s ranking technology actually ran on Google’s index, consider it a showcase effort in a fairly elaborate job application process that had the intended effect: getting Manber a top job at Google. 349 350 Winning Results with Google AdWords Reading these particular tea leaves, I don’t sense much animosity between these two companies. It seems most likely that both will keep a hands-off attitude towards any initiative that would seriously threaten the other. They currently have many interests in common. Google AdWords derives revenues from Amazon Associates affiliate advertisers who run ads promoting products and books on Amazon. Since affiliates take the risk of running the ads, Amazon gets free referrals for nothing. Google Search also ranks many Amazon.com pages well for free. Both companies derive ad revenue by showing AdWords ads on many pages throughout the Amazon site and on Amazon-owned Alexa.com. Google versus Amazon seems to be more a story of cooperation than competition, then. Portal Wars: AOL, Yahoo, MSN, IAC Third-party observers generally get it right when describing Google’s battle for supremacy in their key markets: on one hand Google has emerged as the dominant brand in search, and repeatedly makes it to the top of the list of the most valuable brands in the world in any field; yet Google has stiff competition for leadership in online media, technology, and “everything else it does.” No one will dispute, for example, that AOL is now a shadow of its former self. But in terms of “web property” measures in the United States, AOL—with 111 million unique visitors to at least one of their properties—remains at #4, not too far back of Google, at #2 with 137 million.10 (Including Time Warner properties, AOL Time Warner would be closer to #1.) Yahoo is still nominally in the lead, with 139 million unique visitors to its properties. High-level measures of “unique visitors” per month certainly don’t speak to pages viewed, time spent, or revenues generated, but the point is that these Google competitors are very large, and have proprietary content and technology as well as a huge number of direct relationships with users and advertisers. Although Google is a clear winner in its core areas, and is gaining strength on many fronts globally, there’s still some healthy competition left in search, online content, and online applications. Google’s closest competitor is Yahoo. They compete as the top two players in paid search. They also hold down the top two spots in terms of search market share, which isn’t unrelated to their positions as leaders in revenue derived from search. Increasingly, though, as Google attempts to “take over the world,” they compete with Yahoo on many fronts, as portals that want to attract as many users as possible to their brand and their network of online services. Predicting where things will wind up or where the new hot product category or feature will take us is difficult, but it seems clear that due to the presence of the other, neither company can get too comfortable. In online email, Google entered the space boldly and continues to give Yahoo fits by offering more features and more storage. Advantage? Still a strong advantage to Yahoo, as the incumbent that still has a product that integrates well with calendars, address books, instant messaging, and personalized home pages. Gmail appears to have the cool factor nailed: most of my colleagues and technophile associates use it as a backup or primary email account. But make no mistake: audience measurement services such as Hitwise show Yahoo Mail still holding a commanding lead, more than double the market share of Microsoft’s Hotmail and more than ten times the market share of Gmail. Google’s Calendar product was released in due course to sync up with CHAPTER 12: Online Targeting 1995–2015: Fast Start, Exciting Future Gmail; it’s cool, too. The battle continues for users to adopt one company or the other as their day-to-day standard for these interrelated services, much as they once (largely) settled for the dominant Microsoft-based solutions. Relationships with wireless carriers and device vendors will be part of this ongoing battle for user attention. In desktop search, Google seems to have grabbed user attention. The product is best in category and installs easily, making slow, inefficient Windows desktop searches a thing of the past. Yahoo and several other companies have released similar products, but none are getting the same attention as Google’s. Believe it or not, social media was only in its infancy in 2005. At this point, none of Yahoo, Google, or Microsoft owns any critical mass of the leading social networking properties outright. I take Facebook, MySpace, LinkedIn, and perhaps a handful of others to be the leaders. Facebook is still majority-owned by its founders and early investors, with Microsoft and some others coming on board later to take small (and extremely expensive) stakes. Fox (News Corp.) owns MySpace outright. LinkedIn remains independent of any of the majors. And Bebo was recently bought by AOL. Popular microblogging service Twitter (founded by Evan Williams, the founder of Googleowned Blogger) is still a well-funded startup with no revenue model but a huge, engaged user base. Any prediction here will look stale by the time you read about this, but the trajectory is clear enough: low revenues, many users, and strong ties with the technology and investing communities probably translate into Twitter becoming an acquisition target for one of the majors. In the worstcase scenario, its recent performance problems would hamper it sufficiently that it has to take a buyout offer (mostly in stock) from a complementary startup, such as Facebook or Ning. The current situation is unlikely to remain stable. Google, Yahoo, and Microsoft are all likely to develop leadership in social networking independently, via further development of their existing properties (instant messaging, photo and video sharing, email, group discussions, search) and through knitting those properties together. They’ll also be motivated to make major acquisitions, if the math seems favorable. In industry shorthand, Google came to be known as a technology company trying to expand into media; relative to Google, Yahoo is viewed as a “lifestyle-focused” technology and media company that all too often doesn’t measure up on pure technology. Google CEO Eric Schmidt led two major technology companies before taking the Google post; Terry Semel, Yahoo’s previous CEO, reportedly didn’t even use email before taking the digital helm at Yahoo. More recently, Yahoo—under the uneven but deeply grounded leadership of cofounder and now-CEO-again Jerry Yang—has begun to give more space to contemporary software development and emerging technology in its vision. Under the stewardship of new CTO Ari Balogh, a commonality of vision is emerging among Yahoo engineers. An embrace of open formats and interoperability with the developer community and users is putting a fresh new spin on the company. This capability was arguably always there. The departure of “don’t-get-theweb” executives like Semel and Lloyd Braun is a breath of fresh air for Yahoo; the openness of the new vision should help them attract new talent and fresh respect from the ecosystem. An enormously influential player is Microsoft, also a technology company if you had to reduce the description to a single word. It is their turf that Google is now stepping into on many fronts, so the spotlight battle has shifted from “Google vs. Yahoo” to “Google vs. Microsoft” 351 352 Winning Results with Google AdWords now that Microsoft is investing on many fronts in order to strike back against massive Google encroachments on its territory. It’s not so much that Google may steal market share away from Microsoft in the area of office software, through the release of Google Docs and Spreadsheets, for example; it’s a matter of a war for talent and partnerships. Google has graduated to young adulthood, and is moving towards a status of becoming the “it” company boasting ownership of infrastructure and relationships on a scale once dominated by Microsoft. Ultimately, despite all the background noise of new features, hacks, and promotions, observers of the search scene will want to know which company is leading in terms of paid search revenue and in terms of search usage. And that’s where Google, for now, seems likely to hang onto its lead in what is fast racing towards becoming a $50 billion global market. Competition has not been kind to fifth-place portal wannabe IAC Interactive, the Barry Diller– led holding company that has been buying and selling assets and changing its name frequently since its Shopping Channel days. Some of IAC’s major properties, such as LendingTree, stumbled badly in the face of the subprime lending crisis and the associated economic slowdown. Ask. com couldn’t gain search market share and has been rebranded to a search service focusing on women’s lifestyle topics. As its competitors have grown in size and clout, much of IAC has actually shrunk. Even within its core categories, it risks being reduced to a rump. At the time of this writing, Yahoo and Microsoft have called off merger negotiations following a drawn-out process that saw Microsoft placing a formal bid for Yahoo that rose as high as a $48 billion valuation. At Yahoo’s annual board meeting August 1, 2008, the statusquo board, including CEO Jerry Yang, were resoundingly confirmed by a strong majority of shareholders. Maverick investor Carl Icahn, who had threatened to launch a proxy fight to unseat the existing board, could not muster the support of other disgruntled shareholders; nor could he count on Microsoft renewing its appetite for a full takeover. Prior to the board elections, Microsoft tried one final offer that involved a complicated but piecemeal attempt to acquire just the search portion of Yahoo’s business, an offer Yahoo summarily rejected. Icahn, finally, more or less fell in line, promising to press for renewed attention to hiring a CEO with more operations savvy than Yang. Around the same time, oilman T. Boone Pickens—a major shareholder—sold his shares, declaring Yahoo’s board to be “pathetic.” Were a blockbuster full takeover to go through, we would open a new chapter in web history; fortunately for me, it’s one I don’t have to write at the moment. Yahoo is still Yahoo. The sun still rises in Sunnyvale. Think Small to Get Big: What Search Marketing Will Look Like in 2015 Throughout this book, I’ve emphasized the features of search marketing that give businesses of all sizes unprecedented access to niche markets. Large businesses will need to adapt to think more about micromarkets. This is a trend they’ve been following anyway. The number of products and choices has exploded in most industries over the past 30 years. In that respect, search marketing has blossomed in tandem with the postmodern global economy. Increasingly, consumers and CHAPTER 12: Online Targeting 1995–2015: Fast Start, Exciting Future businesses want products, services, and information to be available on demand. Conducting a search is the quintessential form of expression of such increasingly impatient demands. As large businesses adapt—sometimes too slowly—to emerging demands, small-growth businesses can get big fast. Many will grow faster than their ability to manage that growth. Today, most of us think of a search in terms of a fairly consistent practice: typing keywords into a box, using a search engine site like Google.com, within an operating system like Windows or Macintosh, on a browser like Internet Explorer, Mozilla Firefox, Safari, or now, Google Chrome. Of course, the present-day reality isn’t that narrow. Many consumers are becoming adept at shopping search, news search, local search, and other forms of specialized searching. Some install toolbars in their browsers. Many consumers are searching on mobile devices, reading commands into their cell phones, and getting information from voice-recognition services provided by companies like Google. Luxury cars now come with navigation systems. Within five years, most new vehicles are likely to come with sophisticated local search capabilities. The availability of new forms of targeting will give advertisers new access to a variety of new forms of “searcher” behavior. Don’t be too restrictive in your definition of a searcher. It’s unlikely that the next generation of searchers will restrict themselves to the forms of information retrieval that are most recognizable to us today. The Revolution in Media Buying I’ve argued in this book that the automated advertising auction systems developed by Overture and Google put significant pressure on online media buying. Yet traditional media buying has yet to be revolutionized. As AdWords-like methods spill over into offline advertising buys, advertisers will likely be able to bid on a variety of targeting options in late-night cable TV, product placements, billboards, newspaper ads, and more. This will change some of the skill sets required of those in the advertising business, but it will likely benefit both publishers and advertisers. Just as Google Search can monetize less-desirable ad inventory by making it available at sell-off prices, offline advertisers might benefit from an automated system that creates more bidding wars on (let’s say) desirable billboard locations, while allowing them to command at least some minimum amount for less-desirable properties. Advertisers could simply log on and bid for the inventory they desired, provided of course that they had already fed in their graphics and were a trusted paid-up member of some sort of ad buying program. Google has launched some new targeting options that make it clear they’re bent on expanding their role in the world of online advertising. The content targeting programs have been expanded to allow advertisers and publishers to transact on a variety of ad formats. Notably, the flexibility of the targeting is improving. Advertisers have the option to target their ad placements and bids to specific websites (such as www.nytimes.com), rather than being purely at the mercy of Google’s matching technology that up until now has decided which pages (not sites) make the best match for your ads. Forms of demographic targeting are gradually inching their way into the AdWords system. The footprint of this measurable, accountable digital advertising auction continues to grow. 353