Business Week says that mobile phone usage will be Google's undoing. This could be right - a change in how people use the web. We know Google's not threatened by Microsoft or Yahoo.
But is mobile search adoption happening fast enough? Other than the iPhone, most mobile browsing simply sucks, and people don't use their phones to buy online.
That will slowly change, and Google will have to cope with less screen space for ads and search results.
But I do think that Google has many more years of people using large screens to do most of their shopping research and transactions. And they will adapt in time to increase mobile browsing usage.
Lately, they really make you *work* to get low-cost clicks. The complex quality-based bidding formula is not entirely profit-oriented, but some of the reason they’ve been so profitable during an economic downturn is because they’ve managed to squeeze higher prices out of the “low priced” keyword inventory. They’ve taken aim at “lowball bidders” in some categories, and made it harder to bid low, plain and simple. Either you pay more than you used to pay, or your ad doesn’t show up.
People who’ve been neglecting paid search trends also don’t realize all the amazing free and low cost tools that are now available to improve your ability to build, adjust, and refine campaigns on the fly. New advertisers look at the old paradigms (large keyword lists, lowball bids, bid management to ROI) and don’t see that the game truly is about relevancy today. Careful attention to user intent, and providing “scent” right through the buying process, is a big part of what drives successful campaigns.
That pretty much sums it up for the difference between 2005 and 2008.
This means that, very soon, web Advertisers will no longer be able to trust the data they get from publishers or these traffic rating agencies.
I lean to the first bullet: Blame Comscore. As some are pointing out, and as Comscore's aftermarket weakness is showing, this is turning into an acid test for Comscore -- and it's failing.
The funny thing to me is that ANYONE ever believes ComScore any more. Not only have they been demonstrably wrong on query counts, search share, and click growth before, but the people who run Google, Yahoo and other publishers have said as much.
Paid Clicks - Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 20% over the first quarter of 2007 and approximately 4% over the fourth quarter of 2007.
Here's Anand from datawocky describing comScore's methods.
ComScore sets a lot of store on their "panel-based" approach, which collects data from a panel of users, similar to Nielsen's method of collecting data on TV viewing using data from a few households that have their set-top boxes installed. ComScore has been in this business longer than anyone else, and has arguably the best methodology (i.e., algorithm) in town to analyze the data.
I don't think they have the best model, simply because it's been wrong many times before. Here are a few of the ones I've documented in my blog - not a comprehensive list of all of their mistakes, since I gave up whining about this in 2007...
You can find other bloggers who discuss comScore's data in 2007. I believe that comScore has never been very good at analyzing the traffic or click patterns of top 10 web properties like Google, Yahoo and MySpace.
comScore did release a press release two days before the earnings, which seems to provide some cover contra Kedrosky's off-the-cuff "blame comScore":
The data from Comscore, which was not released publicly but provided by Wall Street brokerages, was seen as welcome news for Google after a difficult month in which many financial analysts lowered their expectations for the search company's first quarter.
Comscore last month prompted concern among investors and analysts when it reported weakness in the number of consumers clicking on the Internet giant's search ads in February.
The explanation that the data "was provided by Wall Street brokerages" doesn't make much sense as written - probably comScore secretly provided a CYA set of data TO Wall St... who knows?
Just remember this the next time comScore reports on some key metric.
Gross revenue exactly in line with consensus--$5.2 billion, up 42%. Net revenue $3.7 billion, slightly ahead of consensus. Non-GAAP EPS of $4.84 blew away consensus of $4.52.
I was playing golf last week with a friend who used to be CEO at a big software company, but he's not a search geek. He asked what I thought of Google.
I said Google has at least 10 more good years. They are a powerhouse similar to CSCO and MSFT of the 1990s. Financially, what people underestimate is Google's level of control of their own business. Simply put, Google has an algorithmic way to produce money. This means that when they need to, they can control monetization and produce good results.
A simple example of this is the number of search result pages (SERPS) on which google chooses not to place ads. Google optimizes total site review better than MSFT or YHOO which tend to optimize page revenue. If Google needs to be more profitable, it has a fair bit of leeway to do it.
In addition Google still has macro trends in it's favor:
One thing people underestimate is the increasing importance of search. It's value is not declining, it's usage is not going down. Search is becoming more important to the average internet user than any other function - including email.
Similarly, as everyone well knows, ad budgets of large companies are slowly moving online in proportion to the amount of time people spend on line. Those ad budgets will be playing catch up for the next 5 years, and Google benefits.
Finally, Google's competition is incompetent. Microsoft and Yahoo are so far behind in search that Google's lead is still 2 or 3 years, and growing. It's not just quality of a SERP for a given query, but brand, traffic growth, international penetration, etc.
People will talk about unsustainable growth, declining click rates, the company becoming too big, etc. Certainly those are all reasonable objections, but they are not enough to stop Google from becoming ever more dominant for the next few years.
Google surprised Henry Blodgett and much of the punditry by not falling apart in a weakening economy. I'm not that surprised given the tremendous advantages Google has.
And I think it will keep out-performing for the next 5+ years.
Lots of startups fail, and this one never got product / market fit, despite a huge potential market.
The argument up to now has been simply that there are roughly 3 billion phones out there, and that when these phones get on the Internet, their vast numbers will outweigh PCs and tilt the market towards mobile as the primary web device. The problem is that these billions of users *haven't* gotten on the Internet, and they won't until the experience is better and access to the web is barrier-free - and that means better devices and "full browsers"
Something to think about whenever you hear that the mobile market is so huge - it's the next big thing. Maybe true, but Russell thinks that day is a ways off...
Let me say that again clearly, the mobile traffic just isn't there. It's not there now, and it won't be.
What's going to drive that traffic eventually? Better devices and full-browsers. M-Metrics recently spelled it out very clearly - in the US 85% of iPhone owners browsed the web vs. 58% of smartphone users, and only 13% of the overall mobile market. Those numbers *may* be higher in other parts of the world, but it's pretty clear where the trend line is now. (What a difference a year makes.) It would be easy to say that the iPhone "disrupted" the mobile web market, but in fact I think all it did is point out that there never was one to begin with.
Apparently the mobile market is still mostly a vertical app space (i.e. you should concentrate on a small slice like iPhones only, or perhaps SMS subscriptions in India...)
BTW, This reminds me - I can't wait for the iPhone 2.0 in June...
Robert Wagner 2002
Robert Wagner 2008
Yes, I know he's old as dirt (born in 1930), but MAN! This guy was married to Natalie Wood in 1957 (and then again later on...)
He's been OLD forever - and yet he'd always looked the same. How did THIS happen?
The internet enables the arbitrageur. More and more people are going to make their living doing arbitrage.
Example: a guy who became proficient at acquiring Hermes handbags - specifically Birkin bags, which are scarce and expensive. They start at $10,000 and can be found on ebay as I write this for up to $60,000.
He managed to buy over 130 bags a year, even though there is supposedly a 2-yr waiting list. His book details the various methods he used. Then he'd sell them (mostly on Ebay) for profit.
I posted once that over 1.3M people make their living full-time from Ebay. And those are the people that deal in actual goods. There's probably another 1M internet arbitrageurs who deal solely with virtual goods or transactions.
Eventually a significant percentage of many people's income is going to come from arbitrage.
I've been planning to mess with Google App pretty soon.
This dude ported the Google App Engine SDK to Amazon EC2.
No question that Amazon EC2 is the thing you'd actually use to do anything real, but while Google's price is free (for now), it might be fun to mess with.
Update: Re-reading this post, I realize it'd be much more productive to spend time experimenting with Amazon EC2 more, and really develop something valuable on it. It can do everything Google App Engine can do, and a lot more. It's an open garden for production apps, while Google's is much more closed toy playground. I probably shouldn't get distracted by Google's.
How does he do it? He uses automated content generation on computers - he has a Windows program and databases, and Bayesian techniques to actually generate Word documents. His favorite topics are long-tail subjects like "the outlook for bathmat sales in India." The video below demonstrates his system at work:
He's also patented techniques to generate games (such as crossword puzzles in any one of 600 languages), quizzes and videos. An example automated game in the video: "A 3-D shooter, featuring a 'clever tomato' that can teach Spanish speakers English". I kid you not. It took him about 5 minutes to generate that game.
As far as I can tell, Parker is not using his technology to create rank-able spam affiliate sites. Most of my friends might say: "What? Why hasn't he created a spam blog empire as well? He'd make millions!" But maybe he's smart - he's staying under the Google spam radar :)
He does have a dictionary web site with automatically generated "word of the day" 3D animations (again featuring a 'clever' talking tomato). The domain names shows that Parker is not completely up on the latest in domaining or domain trademark law: http://websters-online-dictionary.org.
But he does have affiliate links and an interesting approach to a site map on that site...
The protesters trying to track down the Olympic torch in San Francisco used iPhones to get updates as the police re-configured the route of the torch.
Sometime around two o’clock I noticed something very odd happening on the outskirts of the protest. A few people — almost all of whom were visibly holding iPhones or similar electronic devices — began sprinting northward along the Embarcadero. I caught up with one man as he paused to scrutinize his iPhone, and asked him what was going on. He said that an underground text-message system had been set up by tech-savvy radical protesters, and if you knew how to access it, you could get minute-by-minute updates about the exact current location of the torch.
Also interesting in this chronicle the photographic litany of various type of people who are protesting China for one reason or another.