Google's Strategy

Monday, March 3, 2008 by Mistlee

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Google's Strategy

By Mike Moran

Boiling 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.

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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.

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About the Author:
Mike Moran is an IBM Distinguished Engineer, expert on Internet marketing, and the author of Search Engine Marketing, Inc., the best-selling book on search marketing. Mike also writes the popular Biznology newsletter and blog. Copyright Mike Moran

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