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GoogleBoiling Google’s strategy down to just one thing is impossible, but Internet marketers (and search marketers in particular) ought to be thinking about where Google wants to take the industry, because even if Google ultimately can’t go where it wants, the industry will be changed regardless. Watching Google helps us understand not only where Google is going, but where others might go also. So, what is behind all the actions we’ve seen Google take over the years?

Some of the motivations are simple. Google’s revenue is based on advertising, so it needs more and more places to show its ads to increase its revenue. So, expanding its reach through its AdSense contextual ad network makes sense. So does its acquisition of DoubleClick. Both of these moves allow Google to place ads on Web properties it does not own.

Similarly, Google has been consistently acquiring properties that serve as venues for its ads, such as Blogger and YouTube. Google has also pioneered new offerings that attract audiences for its ads, such as Gmail.

But Google’s strategy is far richer than merely adding new venues for the same kind of ads it shows on search results pages. Google knows that the reason that its ads have commanded premium prices (versus banner ads) is because Google ads have the customer’s attention. When someone is searching for something, they are interested in the ads, while Web surfers might not be. Google understands that the attention paid to a message is a critical part of why it has high value to an advertiser.

So, attention is more than real estate. Showing a display ad does not ensure true customer attention. True attention is a function of relevance.

Google already commands attention with its search ads, and seeks to create similar relevance with other forms of advertising. The act of searching itself is based on relevance, but Google’s contribution to advertising relevance is the hybrid paid search ranking scheme—they were the first to rank search ads based on the combination of bid price and clickthrough rate. By adding clickthrough rate to the previous high-bidder approach, Google not only maximized its income, but also increased the relevance of those paid search ads. It’s reasonable to think that the gradual increase in clicks on paid search ads is partially caused by the fact that they are more relevant than they once were, and searchers have learned trust them more.

But that’s not Google’s strategy, it’s Google’s history. Google has a history of selling advertising that is the most relevant—it’s relevancy is driven by the attention people pay to it. Google’s strategy is to broaden this kind of relevancy beyond search.

Google wants plain old banner ads to command the same level of attention that paid search ads do. And the key to that kind of relevance is personalization. That’s Google’s strategy. If you look at what Google has done over the years, it all ads up to finding out more about everyone.

The Google toolbar can report search terms and Web sites visited. Geotargeting identifies where they are. Google Analytics reports all activity on a Web site. Google Checkout knows what gets bought. Google Website Optimizer knows which variations of your marketing message work best. Gmail knows what your customers say, even in private. Google might even bid on mobile phone spectrum, which might allow it to know people’s whereabouts and even more of their behavior. And it’s all tied together with your Google Account.

Some people see some sinister “Big Brother” aspect to this, but I think it’s just the natural evolution of relevance. Search engineers have spent the last 40 years working on the content, but now it’s time to focus on the searcher. That’s why you’re seeing Google and the other search engines beginning to personalize search results. And it will only escalate—a few small changes to results here and there will lead to more and more personalized results over time.
But that’s not all. Behavioral targeting and retargeting brings personalization to banner ads. (Even ISPs are looking at behavioral targeting.) And Google is well-positioned to mine personal information, given how well it has executed its strategy. It’s hard to remember how, just a few years ago, Google seemed less capable than Yahoo! and Microsoft to bring about personalization. Those companies had portals that promised to detect far more information than Google’s simple (and anonymous) search interface. It’s remarkable how much ground Google has covered since, so that today it appears to know more about searchers and surfers than anyone.

Could anything derail this strategy?

The most likely problem Google will have to face down is a backlash based on privacy concerns. As the public becomes savvier about privacy with each passing year, providing free software might not be enough to persuade people to part with their privacy. Even the work underway is slow because searchers don’t understand the benefits of personalized search. Google is well aware of this danger, so it remains to be seen if they can evade it.

It’s always dangerous to attempt to summarize a company’s whole strategy in a short blog post—Google’s strategy is far more diffuse and nuanced than this. But it helps us to try to simplify things to their essence, even at the risk of oversimplifying, because it helps us understand the forces at work in Internet marketing.

Understand that what Google wants to do might not happen, but it is certain to affect what others do and what eventually does happen in Internet marketing. If you pay attention to these broad themes as you do think through your marketing strategy, you’ll be more prepared for whatever does come along.

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Mike Moran

About Mike Moran

Mike Moran has a unique blend of marketing and technology skills that he applies to raise return on investment for large marketing programs. Mike is a former IBM Distinguished Engineer and a senior strategist at Converseon, a leading social consultancy. Mike is the author of two books on digital marketing, an instructor at several leading universities, as well as a Senior Fellow at the Society for New Communications Research.

13 replies to this post
  1. Mike,
    First off, I don’t think that Google has a strategy per se. Their corporate mantra “search, ads and apps” is generally a good indication of where they want to go. (Personally, I have no idea what that means though.)
    I believe that did start with a belief in organizing the world’s information, which for them led to personalization – and ultimately (copying Ask.com’s) Universal search.
    The thing is that they are obviously not “just organizing the world’s information”. They’ve bought blogger / blogspot, they just now came out with jotspot, they have Youtube, jotspot, Google map reviews, and the list goes on. They are owning publishing platforms / content, as well as “organizing the world’s information”.
    Personally, when people criticize Yahoo for being disorganized, I get annoyed. Google is chaotic / has no plan too. They allow their developers to focus on little projects, and if they have potential to grow, they grow those platforms. They buy out platforms that have synergy, or allow them to get into new markets.
    The difference between Google and Yahoo,is whereas Google almost always integrates the services – overtly into their main “theme” somehow, Yahoo has not done that well. Flickr, mybloglog, Yahoo music, upcoming, search marketing etc. The consumer services might have a universal login, but there is no integration from platform to platform, internally connecting the different information, and allowing you to build things off of it.
    Google bought bits and pieces of office / productivity software and integrated it. They took their calendar, and integrated it with gmail. They are constantly looking for synergies, Yahoo is not.
    The real issue is integration. Technology is working towards integrating everything in your life; from your computer, to your multiple online profiles, to your keyword searches, to your location, house, gaming platform and more.
    All of the technology companies know that they can’t afford not to be in the game on any corner of the market. If they lose just 5% percent of the market in one area – say gaming, than they could lose that 5% across all of their platforms altogether. Additionally, that 5% can potentially another 5%, because people like working on the same platform as their friends.
    It really is a “race for world domination”, if you want to call it that. It’s just not in the sinister fashion that it sounds like.
    AOL, Microsoft and Yahoo all lost major market share to google because Google powered all of their searches in the beginning… They all now have to cover lost ground, and none of them are doing a great job at it.
    No one wants to lose the war on mobile search – or the integration to the other accounts that users use. (Hence Google’s play on the airwave buyout. It would leave the telecom’s powerless to be negotiators on search, because everyone could use Android.)
    In short, noone knows exactly when the next technology breakthrough will happen or where. They just want to be there when it happens, and have the capability in-house. Anyone does a big play in a new industry, everyone else analyzes how it will impact market share, and who else can be bought that owns that platform as well.

  2. David,
    Thanks for taking the time for such a long and thoughtful post. I agree that Google and many high-tech companies appear chaotic, but I don’t think that means they have no strategy. Granted that no one can summarize any company’s strategy in a blog post, but I’ll stick with my thought that Google’s goal is to make advertising more relevant and therefore more valuable.
    I agree with you that Yahoo! gets criticized for being disorganized but that successful companies exhibit this trait, also. In some ways, I think Google’s success as integration has been more about branding than anything else. If Yahoo! had bought Urchin, they might have just kept the name, while Google called it Google Analytics. Google has not changed YouTube, but it has re-branded many acquisitions, making them seem more integrated than perhaps they are.
    Thanks again for such an insightful comment, David.

  3. Hi, Mike.
    I generally agree and don’t typically fall into the “Google turning evil” camp. But at the same time, I’m concerned by a couple things:

    • Why can’t Google provide greater clarity on why it increases PPC bids, even in cases where clickthrough is strong?
    • How does Google determine which companies are worthy of their new search within a search boxes in their SERPs?

    While I don’t think moves like these themselves show “evil intent” (or good or bad strategy, for that matter), the opaque nature of these decisions make it hard for their customers to determine whether they have a strategy and whether that strategy is ultimately beneficial or not.
    Keep up the great work.

  4. Hi Mike,
    I totally agree on what you are saying in your post. Even if it is true that the strategy itself has to be directly derived from Googles 10 things.
    If you talk about “Googles history” you actually describe that Google keeps following its 10 things where four of them make their strategy happen:
    “2. It’s best to do one thing really, really well” and Never settle for the best regarding their search algorithms and as fast as possible,
    “1. Focus on the user and all else will follow” Result accuracy or “Relevance” as you name it in your post and Speed.
    “5. You don’t need to be at your desk to need an answer” Mobile environment
    and “8. The need for information crosses all borders” explains why Google acts globally on multilanguage.
    I strongly believe following these principles the actions they take are what we would like to call “Strategy” which makes it easier to us to understand what Google has in mind to do next.
    Larry Page would say “Our strategy? We do search!”.
    Great Blog Mike!
    Best,
    Andreas

  5. Thanks, Andreas. I agree with you that in a large company, it’s guiding principles probably tell you more about its intentions that its stated strategy. Google will continue to do many things, most of which fall into a strategy, with some that are inherently random, the way any large diffuse organization does. Thanks for commenting.

  6. Hello Mike and everyone
    First and foremost, great blog and great comments. Really insightful and coherent.
    Secondly the reason to my blogging: do you think that Google / Microsoft / Apple / Yahoo & friends will be able to turn wireless carriers into mere bit pipe providers? Will GMAY be able to stand between an operator and its client? I will tell you my opinion, would really appreciate if I could get some comments.
    I think that GMAY will prove more beneficial to mobile operators that harmful. I think that without these players and their innovations we will never see the mobile industry reach the next level: mass market data usage (music, tv, games, services, etc etc).
    GMAY will never be able to “desintermediate” operators if we want to go mass market with data usage because
    1. operators have the local knowledge and reach that (i) is required to sell a smartphone (ii) provide customer support and (iii) advertise
    2. smartphones need subsidies to be sold (which are provided by mobile operators)
    3. operators do the pricing plans for connection
    4. operators still have the control of their network thus may change the QoS for access off-portal
    5. operators still control handset OEMs and choose which phones they will sell (thus with which applications)
    I could go on and on with arguments in favour but I sometimes feel that I’m missing something here, given all that has been writen about operator’s desintermediation due to the GMAY arrival to the mobile world.
    The only argument I see against is the use of VOIP, but even that can be restricted…
    Tks

  7. I don’t think that Google and friends are interested in disintermediating mobile operators. I think that Google, for example, is more concerned that their advertising will be shut out of proprietary mobile networks than anything else. I believe that if the mobile operators work with Google and friends, they will monetize their operations such that they can move away from access-based payments so they can offer all-you-can-eat Internet access, just as ISPs do.

  8. Dear Mike, Interesting article!!! Some of the your views and thoughts are really eye catching. Great work.. Google’s biggest asset is innovation and creativity. Till the time they will keep on hiring right resources, nothing can bring Google down. Undoubtedly Ad Words are there biggest source of revenue generation and Google have to think of diversifying their revenue needs. You must like go through my blog which is about analysis on Business Level strategy of Google Search Engine.
    http://businesslevelstrategygoogle.blogspot.com/

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