Tag Archives: Google

Google’s UI Growing Pains

In general, I’ve been a huge fan of Google’s UI changes. It makes the service seem fresher, more relevant and easy to use. Overall, it’s a nice progressive move that shouldn’t totally freak out a user base made up of a huge variety of user skill levels, operating systems, you-name-it. But there are a few spots where it starts to break down. For instance, this is the upper-right hand corner of the Google Voice UI now.

Google Voice new UI

I mean, that’s just plain confusing. There are nine controls packed into that little space and they are almost completely unrelated to one another in terms of functionality.

I love that Google is iterating quickly on it’s products and that it’s pushing it’s UI to be more modern. There’s nothing worse than being stuck in an old UI because your user base can’t or won’t adapt. Ask Amazon. But, I also hope that Google acts quickly to come through a clean up areas like the above so that they continue to drive that Google hallmark of ease of use and clarity down through all of their products.

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Google Plusification, or It’s not about Latitude vs. Foursquare

Google+ logoForget gamification, the new marketing trend you should be thinking about is Google Plusification, the emerging social layer on top of every Google product. Yesterday it was revealed that Google Maps Latitude mobile product now came with check-ins for Google Plus users. This puts Latitude in competition (at least in terms of feature set) with Foursquare – a social game layer added to Google Maps. This comes on top of another announcement the same day which adds a +1 button to the main google.com page for some users. And all of that is on the heels of recent changes to Google Search which incorporate Google Plus results into the main Google search results and the addition of Circles to GMail. It’s clear that Google is making it a priority to weave Google Plus into the fabric of all of it’s products. And there’s no question that they’re only getting started.

The Impact of Plusification

Plusification is already having a profound effect on search engine marketing. A quick look at any SEO forum will give you a good sense that the plusification of Google search is completely rewriting the rules of that industry. Now thousands of words are spilled daily on how to optimize your Google Plus profile to appear in Google search, and any SEO worth their salt is racing to get their clients up and running on Google Plus. It’s not an overstatement to say that the Plusification of Google search is changing the SEO industry by the minute.

Just to drive this home, When’s the last time you really looked at a Google search result page? If it’s been a while, the results might surprise you. A simple search for AT&T reveals a home page packed with Google products – Google Maps, Google Places, Google AdWords and, yes, Google Plus, make up the vast majority of the content on that page. The only result above the fold? The actual AT&T website. The rest is Google. Try a search for “music” or “social media” or other generic terms – to the right, your AdWords have been replaced by Google Plus profile matches. The AdWords? Shoved down the page.

Let me say that again – Google has favored Google Plus over the thing the one thing it makes all of it’s money on. There’s no better indicator that their serious with their social initiative.

It’s not hard to look at the SEO industry as a model for how the Google social layer will profoundly impact their other products and industries they compete in. While the Latitude update may seem like a knock off of Foursquare, the implications are broader. Google is leveraging every opportunity to plusify every product it owns.

What’s Next for Plusification

So what next for Google Plusification? Well it’s easy to think of how the service could be weaved into other products. Here are a few examples:

Plusification of Google Places
Imagine local business search results and rankings being affected by the number of +1′s your business has. Looking for a local bakery? The bakery at the top might be the one with the most +1′s from people in your circles. How about reviews? Will reviews be filtered by the number of +1′s the user submitting the review has? The more +1 power of the user, the greater visibility and weight the review has. And photos? Sure, why not pull in photos from Google Plus geo-tagged with the address location of the business. And ownership? Tie your Google Plus profile to your page and let people see who the owner is.

Plusification of Google Docs
Share that doc of yours with a particular circle. Eliminate the current permissions logic and set permissions based on circle membership. Some can edit, some can view. Use it for soccer team call-down lists or product specifications. Share it with circles on Google+ for feedback and, well, sharing. It’s easy to see how current document commenting could morph into Yammer-like internal-only plusification of business documents that live in Google. In fact, the entire “Apps” suite could be leveraged in this same way – calendar, spreadsheets, presentations, etc. Now, commenting, editing and sharing are not confined to the individual document, but tied to your Google+ profile and the circles you choose to share permissions with.

Plusification of GMail
This is already underway, with the addition of Circles to your mail address book; but this is just step one. There is so much more Google can, and will eventually do, with the plusification of GMail. Priority inbox? The mail from your most important Circles clearly goes there. Individual users who have lots of +1′s probably get a better sender score and have a higher priority tied to their message. And what about spam and commercial mail? If you’re a brand with a ton of +1′s, maybe you skip the bulk or notification baskets and hit the inbox. No +1 power means you’re hidden with the rest of the bulk mail. These changes could be profound, and completely rewrite how people think about email and email marketing.

This is on top of the obvious competition against plugins list Rapportive, which can obviously be deprecated by Google+ profile information.

Plusification of Google Maps
While the Latitude points check-in launch is the first step, there is again, tons more that can be done with Google Plus and the platform. Look no further than Caterina Fake’s Pinwheel for inspiration on what Google can do with the plusification of Maps. Leave notes, photos and to-dos at the places you’ve been for your Circles, make them private or public. Save driving directions, favorite places and more. Share them or store them.

Plusification of Ads
Another area where plusification is under way. As a user you can +1 ad units, and supposedly these +1′s will impact the ad quality score, lowering the cost per click while increasing the visibility of the ad unit. There’s no reason this couldn’t go further. Have an ad that has been plus 1′d more than others by your friends? You’ll see that one first. Own a business that has more +1′s? You’ll probably get a better quality score as a default and enjoy those benefits. And that’s just AdWords. What about remarketing? Couldn’t that be optimized based on your profile information and +1 history? I think so. Here, the options seem to go on forever.

Plusification is Just Getting Started

All of the above are just the obvious ways that Google Plus can be integrated into their existing products. With more than a few minutes of thought, it’s not hard to go even further. Some changes will be small, some will upend entire industries. But one thing is certain, we’re in early days and Google is betting the house with Plus. We should expect more social layer announcements and launches in the coming weeks and years. And when it’s all said an done, Google Plus won’t be a URL you visit, it will be baked into the Google Products you use every day.

So when we see a new announcement about social in a Google product – like Latitude – we should stop and not look at it individually, but analyze it in the context of this proliferation of the Google social layer. Because Google is not out to take down Foursquare, or bury Rapportive, or any other individual pursuits. These are all just collateral damage. Google is focused on making everything you do with Google social and connected. Their plusifying their product set and the Web, and that is the trend worth paying attention to.

 

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Groupon’s Biggest Threats Won’t Come from the Web

Image representing YellowPages as depicted in ...
Image via CrunchBase

Now that Groupon has closed “Like, a Billion Dollars” it’s time for the company to get down to business. Mathew Ingram notes on GigaOm, that “now comes the hard part” for the company. And he’s right, now that you have the money it’s time to go out an execute and build a business that can provide a return on that level of investment. They’ve got competition and more and more wannabe’s are popping up with deal offers left and right. But the threat’s to be worried about won’t come from the Web companies. The threat’s to be wary of come from the yellow page directories themselves.

Ingram writes:

On top of Google presenting a competitive threat, there is also Facebook, which has experimented with Groupon-style discounts via Facebook Places, and could quite easily leverage its 600-million-user reach to compete with the company if it wanted to. And then there are competitors such as LivingSocial, the second-largest group-buying player, which recently got a $175-million investment from Amazon — another company that has the deep pockets and the reach to compete with Groupon — and Tippr, which has a white-label platform that allows merchants and website publishers to run their own Groupon offers, with Tippr handling all of the back-end and support.

And while, sure, Google and Facebook and LivingSocial pose legitimate threats from the online world, the fiercest competition is going to come from companies like AT&T YellowPages and Yellowbook. Because I believe that Groupon is going to go after the SMB business that is the lifeblood to those companies. I wrote earlier, when the $950 million news broke:

Groupon knows that without people pounding the pavement, pounding on doors and pounding the phone, they won’t reach the mass of SMBs who are 1) not actively seeking out new advertising options online and 2) are hounded by traditional SMB advertising providers like the Yellow Pages, who don’t ever let up on closing small business deals. And to put that organization in place is going to take a ton of cash. You need sales agents in each city, you need sales management, you need office space, you need call centers, you need fulfillment, billing and operations teams to handle that size of a customer base. And that takes a ton of money.

That’s where the threats and challenges will come from. Groupon is way out ahead of any of its web competitors; but now, to succeed at capturing a big chunk of the SMB market it has to go head-to-head with these massive companies that have sales teams, offices, infrastructure, relationships (oh, and experience) selling to SMBs. They’re the company that local businesses are comfortable investing with. Now, SMBs may not be happy with them, and their businesses may be dying; but they’re a force to be reckoned with and Groupon is going to have it’s work cut out for them to make their business a legitimate contender for the big chunks of SMB dollars currently being spent with YellowPages and the other directories.

So Ingram is right, “now comes the hard part,” but while they’ll need to keep an eye on their web-brethren currently in the rearview; it’s their brand-new competition that will require the most scrutiny. The directories have lost enough already—they’re going to try to leverage their head start to deploy their own deal offerings, and that’s where the battle really lies for Groupon.

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Does Google Want to Send You to Content Farms?

Matthew Ingram writes on GigaOm that Google and Demand Media are headed for an inevitable showdown, as the search giant tries to keep its results from being overrun by the prolific content-for-profit machine. Writing on the heels of comments by Paul Kedrosky and Marco Arment on the spammy nature of Google search results, Ingram echos the sentiment that Google needs to do something to maintain the value of their search results—their cash cow—especially in the face of threats to their traffic and utility from Facebook and Bing. In a conversation on Twitter the night before he published his article, Ingram had a brief exchange with Chris Dixon who posited that Google actually benefits from content-farm search results because visitors who hit these pages then click away from via AdSense units, of which Google gets a share.

Here is the exchange via Storify (if you can’t see it in reader, click through):

Dixon is quick to point out that Google of course cares about the user experience; but that inadvertently they’ve created a cottage industry of spammers that they in turn benefit from. It’s an intriguing argument, at least on the surface. Demand Media’s IPO filing states that the company generates 40% of their 550 million monthly page views via Google search.

The question becomes, then, how much money are we talking about?

Turns out it’s not that much, relatively speaking. Demand Media reports that it earned 18% of its revenue from Google in 2009 (and 26% from Google in the first 6 months of 2010.) On 2009 revenues of $198.45 million that works out to $35.72 million in revenue from Google. If we take Google’s stated AdSense revenue share numbers of 68% for the publisher/32% to Google, that puts the total revenue of Google-driven revenue at $52.5 million, leaving $16.8 million for Google. (Of course this could be different depending on the actual split of the Demand Media/Google agreement; but is probably in the right neighborhood.)

For Google, who’s 2009 annual revenue was $23.65 billion, this is a rounding error. And for a company who is willing to pull out of lucrative opportunities on principle alone (China, anyone?) it seems like eliminating or reducing the small monetary benefit that Demand Media generates for them in order to save their user experience is a no-brainer. So while the idea that Google actually “wants” Demand Media to stay around to drive revenues from AdSense is intriguing, it doesn’t really add up.

Whether Google devalues the Demand Media content in their search results I don’t think will ever be explicitly known. Google has to be careful about the implications of changes to the algorithm that reek of editorial governance. (SEO’s I know quipped that the DecorMyEyes fiasco just showed that all you need to get your competitor delisted from Google was a scathing PR hatchet job.) But clearly, as the chorus of influential users voice their dissatisfaction with search results, Google will be under more pressure to deliver cleaner, more valuable content or risk losing them altogether.

If Google does (and I believe they should) make this move Demand Media is in trouble. Looking at their IPO filing, the short of it is that without Google the business doesn’t have any real growth. And rather than being a unique content-on-demand business, their a incrementally growing domain registrar.

It will be interesting to see how this plays out; but one thing is for certain. Matthew Ingram is right—a showdown likely looms, either between Google and Demand Media or Google and it’s users, and there is a lot at stake for everyone.

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Why Groupon Needs $950 Million More

Groupon logo.
Image via Wikipedia

The blogosphere is abuzz over tech-darling Groupon’s proposed $950 million Series G round. Many people have asked “Why do they need all that money?” And while expansion is the obvious answer, it’s a bit more nuanced than that. Groupon knows that in order to grow at scale in the SMB market you need a big sales organization with feet-on-the-street in the markets you’re hoping to reach. If you look at the successful small business advertising providers—the one’s that own large chunks of the market—they all have large sales forces. And it’s the large sales force that has stood between many a great, local-business-focused business plans and actual success.

Groupon knows that without people pounding the pavement, pounding on doors and pounding the phone, they won’t reach the mass of SMBs who are 1) not actively seeking out new advertising options online and 2) are hounded by traditional SMB advertising providers like the Yellow Pages, who don’t ever let up on closing small business deals. And to put that organization in place is going to take a ton of cash. You need sales agents in each city, you need sales management, you need office space, you need call centers, you need fulfillment, billing and operations teams to handle that size of a customer base. And that takes a ton of money.

What Groupon is doing is something that no other tech company has done in recent memory—made a real run at securing a big chunk of the SMB market. Sure, new local-business-focused companies pop-up all the time. But most of them are either niche providers or they partner with the big existing yellow page providers to get access to their sales organization. They become a B2B channel provider leveraging the existing sales force because few can generate or raise the cash necessary to build a sales organization to go out and reach those SMBs directly.

Even mighty Google has taken this approach until now. They’re either unwilling to, or culturally unable to, commit to the SMB market with a massive sales force. Google has targeted savvy SMBs directly with AdWords solicitations; but has also worked aggressively to partner with yellow page companies to sell AdWords as part of existing yellow page bundled services, and often resold as CPM-based impressions (e.g. spend $2,500/month to get a quarter-page ad in the yellow book, a bolded listing with a photo on the site and a bucket of impressions driven by CPMs). And they’ve supported that initiative with direct mail, SEM (of course) and some print advertising as air cover to increase awareness and trial of AdWords through one channel or another.

But it was not until just last week that Google started outbound telesales direct to small business owners. That is a direct response to Groupon spurning their offer, and the realization that if they’re going to get serious about local business they can’t solve it with an algorithm. They need to put people toward the business unit to succeed.

All of this of course sheds quite a bit of light on the Groupon/Google negotiations and why the deal fell apart. I think what Groupon’s board realized (and kudos to them for this insight) is that Google—at its core—is not a sales-driven company. They don’t have the internal buy-in to be a hardcore sales organization and they’ve never committed the resources needed to make small business a booming success. They’ve tried to do it every other way except invest in a massive sales force. And I think Groupon looked at what has worked in reaching SMBs at scale and they realized it’s not arms-length. They realized that SMB advertising is still old school. It’s still knocking and dialing for dollars.

Groupon realized that what they needed is a sales-focused organization, not a technology-focused one. And tying up with Google would be a mistake, because at their core the two companies are fundamentally different in what they know about going to market. Google knows that it’s tech and better and more tech; Groupon knows that it’s how many calls can we make in a day. Groupon’s board knew it wouldn’t thrive under Google.

Additionally, Groupon knew that tying up with a dinosaur of a yellow page business was a bad idea too. The margins are non-existent, advertising dollars are shrinking and moving online, and most observers are waiting for someone to drag those pre-Internet monoliths out behind the wood shed and put a bullet in them. So the only logical step for Groupon, between their options, is to go out and build the sales organization they need that supports the tech organization that they are.

So while everyone oohs and ahhs at $950 million and will continue to talk about bubbles in the tech space; I personally think Groupon has made a very savvy decision to truly be one-of-a-kind, to be the first tech company to go hard after the SMB market—and win.

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If Context Isn’t King Yet, It’s Certainly the Heir Apparent

Google announced at Le Web that they are working on providing search results without users needing to search. Path has limited your social graph to 50 people. Facebook is working hard on its groups, lists and messaging features. Google has tried to buy Groupon and Yelp. Amazon invested $175 million in LivingSocial. Twitter recently launched People Like You. Companies like My6Sense, Curated.by and Storify are popping up everywhere. Jason Kottke and Frank Gruber have two massively trafficked web sites, where they primarily link people to other content. What do they all have in common with one another? They all are an attempt to bring context to an ever-more crowded, noisy and cluttered world.

Context Restores Value to Connections

As the Web gets more connected and crowded, the concept of connections have diminished in inherent value, quickly become commodities. Not sure you agree? Here’s a quick test. Go to LinkedIn, find a co-worker, and ask them about one of their random LinkedIn connections. Chances are they can’t tell you where that person works or remember how they met them. Same thing on Facebook. In the race to connect many users have destroyed the value of their connections by treating them all the same (a limitation of the networks when we first joined.) And when we can’t easily distinguish one connection from another we run into all sorts of issues, from diminished connection with those we really want to stay connected with (I can’t tell you how many of my brother’s status updates I miss, replaced with a steady diet of random weak tie updates) to privacy issues (why can’t I treat my coworkers differently than my former fraternity brothers?)

Context helps to restore the value of these connections by parsing the important ones out of network. All connections are not the same, and should never be treated as such. By helping users provide context to their connections networks like Facebook are hoping to restore the utility of smaller, stronger connections that have been diminished by unwieldy, weak-tie networks that pervade social networking sites.

Facebook has been hard at work with groups. Which allows users to create smaller, intimate groups based on particular connection attributes (family, work, interests,) aka context, that creates more value and brings more utility to the network. I can now connect with and share things with my family members, like photos of my son, easily and privately within the group structure. Something I couldn’t do before very easily. By allowing me to add context to my network I’m able to get more out of it on Facebook.

Path takes a different approach on a similar dynamic. By limiting your connections to 50, they’re ensuring that your network consists of strong connections only. Strong connections create greater intimacy, privacy and add an immediate layer of context that governs how the service is used. My Path is two people right now. Me and my girlfriend. And that’s perfect for me. Because our Path is our photo diary. I don’t need to share it with the world. Path’s forced context creates a quiet, intimate space, much like the Facebook groups does. Path adds another layer of context via its primary functionality. Being almost completely app-based, Path combines the context of location and mobility with privacy and photos. Those layers of context create value for the user. Which leads us to location as an important context.

Context Drives Local Discovery and Commerce

The rush to local buying sites like Groupon, LivingSocial, BuyWithMe and others heralds the arrival of the local context layer being successfully applied to the Web. Yelp was the early pioneer, building social elements onto the local context layer on the Web. Google, Amazon and countless other Web companies are dying to crack the local commerce nut. And now, by applying the local layer to the social web it seems like we’ve reached a tipping point of moving local commerce online. Google gets the importance of connecting social context to local context. That’s why they were happy to shell out $6 billion for Groupon. Amazon gets it too, which is why they invested $175 million in a company with only ~10% of all group buying web traffic.

The local and social context layers drive commerce because it finally connects where we live with what we do and who we know on the Web. And the results are staggering and this connectivity is only beginning. And it’s not just group buying, it’s what every location based service, like Foursquare and Gowalla are trying to solve in their own way too.

These context layers added to online commerce drive confidence and intimacy. It makes the universe of possibilities smaller, more relevant and easier to act on. The context is the key to local web commerce.

Context Drives Content Discovery

Information overload is old news. I’m not even going to rehash the problem; but suffice to say words like “curation” don’t get worn out in information-poor environments. We are swimming in a sea of content. The majority of content, even more so than connections, has become commoditized to a point of uselessness. The advent of publishing technologies has helped content explode, but the tools to deal with this over-abundance are now just starting to get traction. Whether it’s My6Sense which learns what is interesting to you based on your past consumption, or a tool like Storify which lets human editors pull out and arrange Tweets into coherent conversations and storylines, they are trying to serve a massive need for context applied to our content.

Twitter is also trying to up the value of your Tweet stream by pointing to people who are like you, that may up the signal in a stream that is hard to cobble together one connection at a time. I can tell you from experience that it’s hard to craft an inbound Tweet stream of value at any scale. This is a big problem that Twitter needs to solve to help grow the service and make it relevant for less sophisticated users who don’t have the expertise, time or inclination to curate a group of people they follow that gives them the best experience they can get on the network. Twitter is trying to bring context to who you follow and what your Tweet stream looks like in response.

It’s not just machines and services either that are applying context to the content white noise. The ability to curate content, to create and apply an interesting and consistent context filter, is becoming more valuable than the content creation itself. People like Jason Kottke, the folks at Brain Picker and Boing Boing (among others,) are known, and valued, more for their ability to filter, surface and bring context to the endless firehose of content than of their ability to create it. They are the new editors of the Web. While mainstream print and network news have lost relevance these new editors are picking up the reigns of their offline counterparts, and providing much needed guidance to an audience that struggles just to keep up with the torrent of content, good, bad, farmed and malicious.

In a world where we find our own news, we are now in desperate search for our own editors. The software, companies and people who can create context for us that was lost when we ditched network TV for the blogosphere and statusphere are the ones that are creating new value for us on the Web. We’ll see more software like My6Sense, more context-driven M&A like Google and Amazon, and more Jason Kottke’s and Frank Gruber’s as we look for better ways to apply important context to the content that continues to come, like a never-ending avalanche down the hill. It will be these people, software and companies that will thrive and that will win in the next wave of the Web. Because more than great content we need great editors. Content’s days as King are numbered. Context is the new heir apparent, and the overthrow couldn’t happen soon enough.

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Google Should Learn from Blekko and Open Up

Image representing Blekko as depicted in Crunc...
Image via CrunchBase

The New York Times recently highlighted how one insidious online retailer was able to use the power of negative reviews to drive his site to the top of Google and drive his business revenues at the same time. The piece brought to light a flaw in Google’s valuable algorithm; and drew a response from Google, who announced that they had made changes to keep this type of thing from happening again. The problem is, of course, Google can’t say what they changed in the algorithm or how they went about solving the problem. And they can’t because, like the Coca Cola recipe, their algorithm is secret and worth billions of dollars a year in revenues. Google’s secrecy will continue to leave it open to attacks of this kind and the negative press associated with them; and that secrecy is bad for business. That’s why Google should take a page from Blekko and open up about it’s algorithm.

And here’s why. Let’s start with the original article from the New York Times:

It’s all part of a sales strategy, he said. Online chatter about DecorMyEyes, even furious online chatter, pushed the site higher in Google search results, which led to greater sales. He closed with a sardonic expression of gratitude: “I never had the amount of traffic I have now since my 1st complaint. I am in heaven.”

That would sound like schoolyard taunting but for this fact: The post is two years old. Between then and now, hundreds of additional tirades have been tacked to Get Satisfaction, ComplaintsBoard.com, ConsumerAffairs.com and sites like them.

Not only has this heap of grievances failed to deter DecorMyEyes, but as Ms. Rodriguez’s all-too-cursory Google search demonstrated, the company can show up in the most coveted place on the Internet’s most powerful site.

The article states that links from sites like Get Satisfaction, even those in negative reviews are driving the site higher in the Google rank. The article makes the argument that inbound links that his site was getting from negative reviews was actually helping his search ranking; and potential customers who took his high rank as a mark of credibility fell into his scam. But then Get Satisfaction jumped in with a response basically saying that Get Satisfaction was wrongly implicated because of the company’s use of “nofollow” tags which prevent valuable link juice being passed from posts in their support forum:

But the article is unintentionally misleading. The story implies that links on Get Satisfaction positively accrue to the benefit of a company, even if they’re negative. Like any online community that cares to combat spammers, we code our user-submitted links so that Google ignores them for the purposes of calculating page rank (specifically, we attach “rel=nofollow” to anchor tags). Somebody trying to gin up their Page Rank by encouraging complaints on Get Satisfaction would be sorely disappointed.

Which makes sense to people familiar with the web, and absolves Get Satisfaction of unwillingly helping this crook, but could be easily missed by a reporter on a salacious story who doesn’t know which facts to check.

So, today Google comes out with the following statement about the fiasco on their blog:

We were horrified to read about Ms. Rodriguez’s dreadful experience. Even though our initial analysis pointed to this being an edge case and not a widespread problem in our search results, we immediately convened a team that looked carefully at the issue. That team developed an initial algorithmic solution, implemented it, and the solution is already live. I am here to tell you that being bad is, and hopefully will always be, bad for business in Google’s search results.

We can’t say for sure that no one will ever find a loophole in our ranking algorithms in the future. We know that people will keep trying: attempts to game Google’s ranking, like the ones mentioned in the article, go on 24 hours a day, every single day. That’s why we cannot reveal the details of our solution—the underlying signals, data sources, and how we combined them to improve our rankings—beyond what we’ve already said. We can say with reasonable confidence that being bad to customers is bad for business on Google. And we will continue to work hard towards a better search.

And while Google is (rightfully) getting praised for their responsiveness, I can’t help but think that this entire fiasco and misleading story would’ve been diffused before it even got started if Google was more like Blekko. If you aren’t familiar with the new search engine, you should invest some time to checking it out. They have some innovative features, most notably slash tags, but they also do something novel in the search space – they put their search recipe out for the world to see. You, me, everyone can see the how, what and why that goes into each and every listing on their site. Danny Sullivan does a nice overview of Blekko in his piece on Search Engine Land, worth a full read:

There’s much, much more that you can drill down into, enough for a separate article in the future. Using the “Visualize URLs” feature, you can even compare four different sites to each other

Blekko had considered if it should refine its reporting to make it a paid service for SEOs but decided instead to stick with what it shows as a way of being more transparent about how it works behind the scenes.

“Our primary purpose is to be open in how it works,” said Skrenta. “It might be the case that in the future, we’ll provide an API for people who want to build tools further on our data.”

This openness is not only refreshing, but provides users a clear view of how the search engine thinks. It renders the stories like the ones in the Times moot. By looking at a domain in Blekko you can clearly see what factors go into the ranking, you can see the inbound links and the ranks of those links, you can get a very clear picture of what elements Blekko is using to rank domains.

In fact, if you searched the domain in question at Blekko you’d see that there are no Get Satisfaction links being used to rank the site (because of the “no follow” tags,) and that Polyvore was the largest inbound link contributor used in ranking the site in Blekko. If Google was open like Blekko the reporter or fact checker could’ve easily clicked on the seo tag for the entry and received a much clearer picture of the math that went into the ranking, rather than relying on the business owner’s word for it and incorrectly implicating sites like Get Satisfaction.

The web would be a better place with more openness in search. Black hat SEO would be less likely, people could get a better understanding of why sites were ranked where they were, and there would be more trust in the rankings themselves, because search companies can stand on their algorithm, point to the data used and let the community have a conversation about it, rather than simply saying “We’re not evil. Trust us.”

And this is what Google can learn from Blekko. It’s not the slashtags (although cool) that’s the killer feature of the engine, it’s the openness. And Google should work towards a day when they can point to the data in response to inquiries about their search, rather than say “don’t worry, we’ve got your best interests in mind,” and expect that to be the end of the conversation.

Blekko has published a “web search bill or rights” that clearly outlines how they think about web search and includes things like “search shall be open,” and “ranking data shall not be kept secret.”  I hope that one day soon, Google will provide its users and customers the visibility and access that will make search more open, transparent, understandable and safer for everyone.

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Google Gaga for Groupon’s Growth

The rumors started Sunday night with a note from Vator News that Google acquired Groupon for $2.5 billion. Now Kara Swisher over at BoomTown puts the number of the Groupon Google Deal at $5-6 billion. Whatever the number, the reasoning behind it is clear. Google is in a desperate hunt for revenue growth. Groupon is the fastest growing business on record. Google wants to finally crack the local nut after years of battling for SMB dollars with yellow page directories, Groupon is a sensation among small business owners. Those two factors make Groupon a must win for Google, and they’re willing to pay a premium for it.

Image representing Google as depicted in Crunc...

Image via CrunchBase

Google needs Groupon for growth. Google has no doubt been on a tear, but in 2009 they slowed, dramatically. Google advertising revenues grew 59% YOY in 2007, 29% in 2008, and just 8% in an admittedly tough economy in 2009. And in 2010, it looks as if advertising revenue will grow somewhere in the neighborhood of 15% if Q4 revenues are in the ballpark of the rest of the year. And while most companies would love to see this track record of growth, it can’t be satisfying to Google execs who have seen companies like Apple see their revenues and market caps up big. And even private companies like Facebook and Twitter are reporting big gains in users, big gains in advertising revenue (with Facebook’s purported $1 billion in revenue this year) and getting impressive private valuations.

It’s clear. The battle for web dollars is on. Google is turning more into a utility with good but not great growth while the aforementioned high fliers are getting the growth, the spotlight and the valuation. For Google, Groupon is the perfect antidote. An infusion of growth for a company that really has no other answers.

Think about it for a minute. Google’s big acquisitions YouTube and DoubleClick are not growth centers. Heck, YouTube is specutively a break even business unit at best. Their enterprise apps, mail, and other products are seeing user growth; but not revenue growth. And Google’s recent spate of product launches (refinements to search, HotPot, etc.) don’t point to any new revenue champs coming from internal teams. All this leads to Google looking for growth, and there is no better growth story on the Web right now than Groupon.

Groupon is enjoying 50% margins and an estimated $50 million per month in revenue. That’s a shot in the arm for Google’s bottom line. And Groupon isn’t even operating at scale yet. They’re still rolling up knock-offs, hiring sales and copywriting staff like crazy, and innovating on the product side to bring Groupon to everyone. And even if small businesses lament Groupon and even if Groupon’s not a great marketing strategy for business, it’s popular, it’s easy and it works to drive numbers to local businesses. And Google, for all it’s done on AdWords and Places has not been able to capture the imagination of small business like Groupon has.

For small business owners Google is hard and confusing. AdWords is competitive, expensive, requires keen oversight and intensive setup to get right. And even after doing all of that, the search query volume for “Pomona pet store” just isn’t high enough to drive real traffic and business to small business. And as anyone in the directory business can tell you, it’s not about branding, it’s not about being findable, it’s all (and I mean all) about making the register ring. Yellow page companies have been chasing this grail for years, with click to call technology and in-depth customer reporting, all in a desperate effort to tie results back to spend. And while Google has a much clearer ROI path and performance model, they can’t drive foot traffic, phone calls and new customers like Groupon can (and like the Yellow pages used to.)

But the yellow pages are expensive with high monthly minimums, and even with the advent of new performance plans on things like search and click to call, the industry doesn’t have a strong way to drive new business in waves (like Groupon) or have clear ROI reporting in line with Google’s.

Which gets us back to Groupon, because Groupon solves the two problems that Google and the yellow pages don’t solve. They get awareness, and lots of it. The Groupon rushes are famous by now. Google can’t generate demand like that, they can only help to harness existing demand and drive it in your direction. They can’t make more people search for teeth whitening; but Groupon can set off a wave of people who suddenly realize they need to brighten up their incisors. Groupon also has the low cost and the yellow pages can’t compete with that; their monthly minimums come and go every month for the entire year. Groupon, in contrast is pay for performance. You only pay for each person that buys, although, you pay out the nose.

When you put it all together, Groupon is a sexy, sexy target for Google. For all of Groupon’s misgivings, it’s a hot company; a big growth opportunity and a model that small businesses get and like, for the most part. So if Groupon is the right play for the company that wants to be the yellow pages of the Internet, the next question becomes the price tag. At $5 billion, this is no small potatoes, and represents Google’s biggest M&A deal ever. The questions are numerous – will Groupon be able to maintain margins in the face of stiff competition (currently at %50, the answer is NO,) will Groupon be able to scale efficiently, will Groupon be able to continue it’s growth? Not likely and not likely. There are only a handful of companies that have successfully cracked the local nut, their names are AT&T, SuperPages, Local Insight Media, Dex and a handful of others; all have large sales forces, and all have low margin, low growth businesses. Interestingly, most have had to reorganize via some form of bankruptcy or acquisition. Can Groupon buck that trend? Questionable. But they do have things going for them that yellow page companies don’t, like no cost of goods and production of books as massive cost centers.

So is $5-6 billion worth it to Google? Buying growth is expensive and companies will pay a premium for it. Just look at Disney’s acquisition of Marvel for $4 billion, all in the name of growth among tween and teenage boys. For Google and Groupon, time will tell; but I think the answer is yes, because Google needs growth, Google has the resources to scale Groupon and Google can leverage the wonderful world of advertiser bundles to sell things like places, tags, and AdWords to advertisers who make Groupon just part of their advertising/marketing mix. I argued that Groupon is not a marketing strategy; but Groupon, combined with thoughtful search, and other localized online marketing can be a part of a coherent small business marketing strategy. Google has all the pieces to deliver that value.

Let me know what you think.

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Groupon is Not a Marketing Strategy

Groupon logo.

Image via Wikipedia

Groupon‘s UK Managing Director Chris Muhr opined today that the reason Google would want to purchase Groupon was because Groupon has “…something that Google does not have and no one else has and that we have really tapped a new market,” but is it really a new market or have the just tapped into the greed and laziness of businesses who long for days of old media? I think it’s the later, which is why the idea of Groupon is at once appealing and dangerous to small businesses and brands all over. But first a bit of background.

How Groupon Works - Groupon highlights one business in each city every day with a sale that’s too good to pass up. (They also have “side deals” and Groupon Stores, but we’ll focus on the main deal here.) Usually 50% or more off retail price of a service or item. They like to focus on a price range that makes the item easily bought on impulse and guide businesses to try to stay under $50 for the best results. So if you sell wine for $30 a bottle they’ll want you to offer it for $12-$15 on Groupon. Then Groupon takes 50% of every transaction successfully processed through the offer. So to continue the example, if you sell wine for $30 regularly, you’ll put in on Groupon at $12 and you’ll end up with $6 per bottle sold. They’ll also set a tipping point for the deal to be activated (the “group”” in Groupon) and will also let you cap your deal at a certain amount of sales. It’s pretty easy to see that if you don’t have much margin built into your product, you’ll be in the red on every sale, depending on how you structure your Groupon. And if you can give up 75% of revenue and still make a profit, it’s likely going to be a very small one, which means you need to sell a lot of units to make any money.

So, then why does a business use Groupon? Businesses use Groupon because they can drive a large number of visitors to a store location with a single event. They hope that the new customers reached by Groupon will buy additional items above what is advertised (if you’re losing money on your Groupon this is considered a “loss leader” strategy,) and/or you hope that they become loyal customers that come back. But I also think they use Groupon because they’re lazy. That’s right. Lazy. And here’s why.

Groupon works a lot like a newspaper ad used to. You find the biggest circulation possible, you make an appealing offer and you hope that you get customers that will come in and like your business. It’s the old “spray and pray” model of marketing that worked so well in the days of mass production and mass consumption. Get it in front of them and they will buy. It takes little thought, little effort. It doesn’t take cultivating relationships, building a brand or finding customers who really need your service. It’s the laziest form of marketing out there.

If you’re a business you have four critical attributes that help drive sales: your brand, your prices, your awareness level and your location. There are of course many more; but let’s look at these four for a moment.

Your Brand – If you have a strong, growing brand, you don’t need Groupon. Your brand drives customers, customer loyalty, word of mouth marketing and strong margins. You can charge more, spend less on advertising and focus on growing your brand through unique experiences and high quality products. It’s a virtuous cycle, but one which few companies get into and fewer still that can maintain it.

Your Prices - If you don’t have a strong brand but you have incredibly low prices then you’ve defined yourself as the low cost leader, you’re first in the race to the bottom and you know you’ll live a life of low margins and need to move a lot of units to make up for it. You also aren’t ideal for Groupon because you probably have a brand associated with being the low cost leader, and Groupon’s pricing structure doesn’t work well in a low margin world (as outlined above.) If you’re priced in the middle of the market you really don’t have a lever for sales on prices because customers can go to the low cost leader.

Your Awareness Level – Among your customer base your awareness level is what drives repeat visits, word of mouth and new customer acquisition. If you have great awareness, if everyone knows that you’re the only 24 hour locksmith or the only tux rental place in town then you’ve got great awareness. If you’re one of 12 women’s clothing stores, like a Chico’s in a strip mall somewhere, you’re awareness level isn’t great. Groupon starts to sound like a good idea here.

Your Location - Unless you’re a virtual retailer with a strong ecommerce presence, you’re really limited to the surrounding area for your customers. How far they’re willing to travel to get to you is a function of all three above. Groupon makes sense here too.

So if you’re a middling business with little or no brand, little or no price differentiation, and a fixed customer base that is more or less only growing with the population in your area, then you have only a few levers to pull to make your business go. You can go about the hard work of building a brand in your community. Connecting with core customers, building word of mouth by creating an amazing experience, or demonstrating expertise above and beyond the competition. Or you can cut your prices, be the unbeatable low cost leader and price match anyone else. People know that they’ll get the lowest price from you and that goes a long way. Or you can increase your awareness by advertising, sponsoring events, etc. Or you can open more locations, a capital intensive process that may or may not work for your business.

Or, you can Groupon. Because with Groupon you don’t need to do any of that. You just spray and pray. Cut the prices on an item and let Groupon do the rest. But is that really it? Do the customers come back? Do the customers care that you exist? Do the customers remember who you are and where to go the next time they need something you provide? There are plenty of Groupon disaster examples on the Web that say “No.” Because without thoughtful marketing in place, Groupon is just a flash in the pan.

In the PR trade they say “Getting on TechCrunch is not a PR strategy.” I say “Getting on Groupon is not a marketing strategy.” And it’s where I think Chris Muhr is wrong. Google provides the savvy, thoughtful marketer a lot more than Groupon ever could. It provides the people willing to invest in their brand, their customer experience and their awareness with an avenue to showcase their business to people actually looking for them, not just people looking for a rock-bottom deal.

This goes for big brands as well as small businesses. If your brand is flagging, and you’re undifferentiated among your competitors Groupon is not going to solve your woes. It doesn’t matter how many gift cards you sell if you can’t convert those customers into repeat customers and advocates of your brand. And if you don’t fundamentally change your brand and the customer experience then Groupon will be nothing more than crack for your marketing department. Because each time you run a Groupon you’re high will be a little less than the last time and your hangover will be a little worse. For every Groupon you run, you dilute your brand a little bit. Do it once and it’s a marketing stunt. Do it over and over and you begin to redefine the value of your product or service. You hurt your brand and any differentiation you had. You’ve chosen the low cost leader, commodity approach. Prepare to accept the consequences.

So can Groupon work? Absolutely. Is it the right answer? Maybe once. Is it a strategy? Absolutely not. Is it easy? Too easy. Small businesses and big brands should focus on reengineering their customer experience from the web site to the warranty service. And when that is done then, maybe, it’ll be time to shout it to the world with Groupon. But more likely, the people that have been blown away by the change in your service will have already told the people you want to reach. Don’t be lazy. Do your job. Your brand and your bottom line will thank you.

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Did Google Miss the Next Big Thing by Chasing Social Media?

Facebook announced a new messaging platform today that combines all of your communications into one inbox and uses your social graph to prioritize and validate inbound messages. Email, IM, SMS and social messages in one place. It’s a unified approach to communication and focuses on the relationship between people, rather than between messages as its foundation. And I can’t help but wonder, Why didn’t Google do this first? And, did Google’s obsession with “catching” Facebook and Twitter leave a blind spot to this new way to bring efficiencies to digital communication?

In retrospect, Google was better positioned to unify communication types than Facebook. With Google Voice, Gmail, Wave, SMS-enabled GChat, YouTube and Docs, it had all the components in place and ready to go. Voice, Docs and Wave aren’t even available on the Facebook platform as viable options and Gmail is much more mature than Facebook messaging. But instead of tying these various forms of communication together they were busy chasing down the social grail; fumbling the Buzz launch, botching Wave and trying to court Twitter and roll out real time search.

Now don’t get me wrong, real time search is indeed important, and a big business to be in; but the bolted-on Buzz failed, Wave failed, Google Friend Connect didn’t take hold, and before those, Jaiku and Dodgeball died in-house too. And now, their nebulous new Google Me effort looks foolish compared to the innovation coming out of Facebook. In this mad quest to catch Facebook they’ve overlooked key strategic advantages that they’ve now fumbled to their biggest competitor.

When you’re focused on organizing the world’s information, it’s a pretty big miss to let your sworn enemy get to organizing our digital communications first.

The severity of this blow will take a bit of time to play out as more people become accustomed to getting their texts, IMs and email all in one place. And not just any place, but the place they spend more than 5 hours a month online (that’s 2.5x longer than users spend on Google properties, btw.) But once people realize the “cognitive load” savings realized by this centralization Google will start losing Gmail users and growth will slow.

Think about it, is there any reason to leave Facebook once messaging gets integrated? And with the orientation around individuals and not subject lines, communications will become easier to manage. Why would I go to GMail, then to docs, then to my phone, then to Chat when I can have it all in one place? (note: a Hacker News commentor astutely pointed out that these things _are_ in the same place on Google.  What I was referring to here, and rushed too quickly to articulate is that if I’m already spending 5.5 hours per month on Facebook looking at photos, commenting, liking things, etc. Why, once the functionality was available within the interface and on my mobile device, would I jump out of my default environment to use a series of other tools that don’t integrate at all w/my preferred online service. I hope this clarifies this a bit.)

Now, emails from my mom about traveling to see me for the holidays will be in the same place as her text messages about being delayed and where to pick her up. I’ll have flight info in the email with the real time info from her text message all in one place. Plus, with Facebook phone book I can call her from that same interface.

This is a powerful new way of handling communication. Or is it? Some early analysis likens Facebook to the old AOL, opining that Facebook too, will suffer the vagaries of time and evolution of the Web.

And while this may seem reminiscent of AOL in the days when many regular users considered AOL the Internet, I think we’re looking at something fundamentally different for a few reasons. The first has to do with scale. The sheer number of connections on Facebook make it a far more sustainable platform than AOL ever was. At it’s largest, AOL had 30 million members – that’s less than a tenth of the Facebook population. Second is APIs. The connected nature and ubiquity of the Facebook Connect and Like integrations (not to mention automatic personalization) have woven Facebook throughout a large portion of the Web. And third, the time. We, as a population are more digitally savvy than ever before. My parents have cell phones, my grandparents have cell phones. My 4 year old son texts my mother. We’re connected in a way that we never were in the AOL days – all playing into the hands of Facebook.

We’ve also heard the early rumblings of the privacy issues this new platform brings into question. And the privacy debate is an important one; but one that will happen at the fringes. There will be plenty of handwringing by pundits about what Zuck will do with our SMS and email data; but it’s an argument that won’t resonate with your casual user, even if it should. Let’s face it, the moment we accepted Gmail as our email client we gave up that inbox privacy ghost. This is just another step, and one that won’t raise the flags of rebellion among the proletariat.

So what’s next for Google? They’re now in the position where they have to play catch up again. Nothing they ship for Google Me will put them ahead of the game. They were sitting on a massive opportunity and missed it. While they’re out building self-driving cars, Facebook is building the true OS of the Web. And while privacy advocates and open Internet advocates will cry foul, the denziens of the Web will enjoy the cozy confines of their Facebook home and appreciate their newfound ability to have a single point communication interface that lets them manage all their relationships on the Web. And all of it will be hidden from Google.

As more and more of the world’s information gets organized by Facebook, the venerable search giant will need to stop chasing and start looking more at what opportunities their strengths provide if they want to be more than just the yellow pages of the Web.

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