Open = Good
Google pushed for net neutrality but made wireless connections an exception. Why would they do that? Could it be they are invested in disrupting that market elsewhere?
The Rise of Brand as a Signal of Trust
As Google started to reach the bulk of potential returns based on direct response they started to lean on brands as a signal of quality & recommend brands more in their search results. When you search for Amazon you might get 8 or 9 links from the official site & even on some generic keywords Google recommends associated brands.
Why Brand Creates a Sustainable Advantage
When you think about what brand is, it is a mental shorthand for a concept. It leads to increased recall, fatter sustained profit margins, and thus the ability to spend more on marketing. If Google is to put more weight on reviews and look at sentiment analysis then of course that will benefit the larger players who invested into establishing positive associations, even at a young age. The results of such branding efforts are quite powerful.
And even moreso if you don’t use them for evil, Pepsi! 😀
Affiliates Are Evil, Except When They Are Named Google
In the past Google has positioned that affiliates are evil (the body language says it all IMHO), though there are Google’s remote quality rater documents which provide further proof to anyone with lingering doubts.
As Google is becoming the affiliate they are getting direct signals into what consumers like most & are able to serve them a personalized recommendation engine. New extended ad formats & using location data will allow Google to further drive down the organic results.
Free Traffic For Free Data, for a While
Not only does Google sell CPA priced product ads on their search results, but they also allow your Google Base account to drive additional product links, which gives them over 150 million products to advertise. The name of the game is to give Google a bit more data to get a higher clickthrough rate & thus have a higher quality score & be enabled for additional profitable opportunities sold at below fair market rates. That seems like a free lunch and works great, up until the day Google decides to use the aggregate data to compete directly against you. 😉
Google now runs a thin affiliate site in Boutiques.com. Google’s ability to recommend consumption behaviors not only impacts ecommerce, but every type of media in the world. They control the ad rates of various advertisers & can create custom ad integration opportunities.
Google’s Role in Media Consumption
Youtube offers related videos, a never-ending personalized streaming service in LeanBack and ads which users can select from.
Would that be Google moving from pushing bits & people to pushing physical products?
Clean Up on Aisle 3
Meanwhile Google is the same company which published this & recommends keygens and serials when you search for a brand. Google promises to fix that later issue – something that has only took them a few YEARS to do, even though they were blocking porn words (& other words that could have earned them negative press) much sooner.
In much the same way that Google has captured most of the revenue streams they will be able to with direct response ads, I think they realize that they will need to work better at managing property rights of big media & other publishers if they really want to drive brand advertising revenues. This will likely lead to a decline of the “anything goes” web.
From ‘Anything Goes’ to Respecting Property Rights
The whole reason Google was so liberal in their approach to supporting (and even funding) copyright violation it was so that they could weaken the positions of the companies that hold those rights, such that Google can eventually negotiate a deal with them. But the main thing holding back Google music is that based on Google’s past performance the labels do not trust the idea of a digital music locker hosted by Google. After all, Google AdSense ads are what allow sites dedicated to downloading MP3s from Youtube to be monetized today.
Google offers promotional links on Youtube & knows how much money they are missing out on. Google’s boondoggle of using public relations to paint a clean show publicly while using legal loopholes to circumvent the intent of the law was good for getting them into a strong market position, but if they want to have a leadership position in more big media markets they will need to get buy in from established players.
Google wants to get big into television ads. And that is going to mean having better respect for copyright. To some degree as we see the Google business model change we will see their approach of “paying anyone to steal anything & wrap it in Google ads” (to soften up copyright) change to a model where the put themselves as a gatekeeper on DRM content & push the “official” sources of the media (and try to make a cut of the profits). Already on Youtube if you view certain content from outside the United States they will tell you that it is unavailable in your area.
Google’s first video store was a complete failure. Once again they are pushing hard on video with Google TV & by buying the DRM company widevine. Big media companies have opted out of Google TV awaiting more favorable deals.
Part of such deals will ultimately rely on backroom payouts coupled with hard coded promotions. There will be a lot of collateral damage as entire categories become unprofitable for those who do not have direct access. I think we are seeing the organic search results take a page from the ad book: pay to play.
Google’s old model of paying people to scrape content & wrap it in ads was leading to a market for lemons, where the top ranked piece of text might often be seen as relevant, but certainly wasn’t useful.
This transition was driven by a watering down of online content through Gresham’s theorem. Much like how the most fraudulent banks could afford to buy out less fraudulent ones, and how Chinese milk with melamine was cheaper than real milk sent real companies into bankruptcy, the search results were suffering from the age of scrape/mash/publish. Given the surrounding economic forces crushing newspapers, Google was making things worse than they needed to be.
Those who are creating original high-quality content have real business costs. Google paying scraper sites like Mahalo and Ask to borrow your content & wrap it in ads means that you are sometimes getting outranked for scraped duplications of your own content. That drives down publisher margins and pushes marginally profitable publishers into losing money, and eventually, bankruptcy.
What Are You the Official Source For?
Slowly but surely the search results will fill up with official hotel sites, official music sources, official video sources, official ebook sources, etc etc etc … with Google putting a big foot on the gas & accepting whatever cut they can get. If they want to avoid regulatory scrutiny they need to work with the official sources (which are every bit as politically connected as Google is).
As that shift happens the longtail spam model will lose out on its profitability because it will be forced to compete with higher quality content that is automatically mixed into the search results. (The whole point of universal search was to allow Google to short cut certain types of information right into the core search results…as they start making money from micro-payments and such look for that trend to accelerate).
Ultimately what has doomed most portals was that they were willing to produce second rate holder stuff that filled out a vertical and was ‘good enough.’ What makes Google so powerful with the stealth backdoor portal approach is that it allows them to mix 3rd party content without forcing them to either absorb the cost or create low quality backfill stuff on their own. As they have success with 1 partner that creates the narrative which brings other folks to the negotiation table.
One area that is ripe for ad innovations is books:
I’m genuinely glad to have Google enter this market because it will be reaching potential customers at a unique point in their book-buying journey: at the point of web search, not at the point of searching the bookstore. This means many things you didn’t realize a book can help you with—overcoming depression, remodeling a bathroom, making friends and influencing people—will now be surfaced alongside all the YouTube and other results Google will offer. This is a net plus for books.
But the ultimate effect of Google e-books, if Google knows what’s good for it, will be the creation of an ad-supported publishing model.
Now that books are digital & Google has rights to sell them, I would expect in the next year or 2 that Google starts to display them in the organic search results more aggressively. The free samples can be monetized via ads & upsells of the whole book. That endless stream of editorially vetted content could put a dent in the content farm business model.