More and more consumers increasingly live their lives online, prompting businesses to either invest in or to re-examine their Web and digital strategies. The Paley Center for Media, program partner of IESE/IME in the Advanced Management Program in Media and Entertainment, hosted a roundtable breakfast with Google’s VP of Americas Operations Dennis Woodside last March, to discuss Google’s role and outlook regarding media, advertising and the Internet. The event, sponsored by global management consulting firm booz&co., was moderated by Interactive Advertising Bureau CEO Randall Rothenberg.
Woodside was optimistic about the myriad opportunities on the Web, and noted that in many cases, the line between direct response advertising (wherein consumers are urged to respond immediately) and brand advertising (wherein the goal is to build brand awareness) is blurring. Google has had success in introducing a new car on YouTube, for example, as well as in getting people to consider alternative options in Google Search.
Local and mobile advertising are also potential goldmines, noted Woodside, especially as location-based services (e.g. mapping, social networking apps like “foursquare,” location-based search results, etc.) become more and more accessible through Web devices and therefore more and more popular with consumers. As economic models are just emerging, however, Woodside cautioned that not all ideas for monetization may necessarily pan out. Likewise, Woodside acknowledged the need for tighter measurements between the time consumers experience an ad and the time they take action — and one possible answer is through “behavioral targeting,” wherein measurable ads are delivered based on a user’s known interests and surfing habits.
Other discussion highlights included:
• Consumer privacy — Woodside believes self-regulation or allowing consumers to “opt out” makes sense.
• The future of journalism — Woodside noted that despite the disruption, consumer demand for news has increased, so the challenge is to monetize that demand using technology.
• An “open” vs. “closed” Web — Woodside claimed that neither approach is perfect, and that having both will create more opportunities for consumers, advertisers and content owners.
• Acquisition vs. innovation — Woodside said that the Web is moving far too fast for Google or any company to rely on just one approach.
Is Apple planning to take on Google Maps? ComputerWorld recently reported that Apple bought online mapping service Placebase.com back in July, for an undisclosed sum.
Apple hasn’t released an official statement, so its intentions are unclear. But in light of its recent rejection of Google Latitude — a “location-aware” app that allows users to see friends’ locations — for the iPhone, and Google CEO Eric Schmidt’s departure from Apple’s Board of Directors in August, there are those in the industry, like TechCrunch and ZDNet, that wonder if this Placebase acquisition signals another potential rivalry between Apple and Google. Indeed, as the two technology giants expand their market reach, more and more of their products overlap, if not directly compete. Think Android OS vs. iPhone OS, for example, or the upcoming Google Chrome OS vs. Mac OS X.
Currently, Apple uses Google Maps on the iPhone, iPod Touch and its iPhoto software. Placebase — founded in 2005 by Jaron Waldman, who’s now part of Apple’s mysterious and unexplained “Geo Team” — can potentially allow Apple to create its own digital mapping service. After all, Placebase held its own against Google Maps for several years by offering customization features, and by integrating layers of data sets, including demographics, commercial info and crime data onto its maps, notes a 2008 GigaOM report.
So if Apple were indeed planning on a Google Maps replacement, would it be a wise move? It would probably be easier to simply add value to Google Maps than to replace it, says PCWorld writer David Coursey. “If Apple is good enough, people will switch and eventually the rest can be moved over by force, if necessary,” Coursey notes. “But, only after Apple Maps does everything that Google Maps does — and then some.”
That’s quite a tall order. Currently, Google Maps is the de facto online mapping service for most users. Web analytics firm Compete notes that as of September, Google Maps had 57 million unique visitors, up 47 percent from a year ago. Mapquest.com, another online mapping service, had 44 million unique visitors and is on the decline. Other mapping services, like Yahoo! Maps and Bing Maps, are trailing far behind.
Google is also continuing to invest in its mapping service. It recently added improvements, such as Google Earth buildings, Street View, and a crowdsourcing function, which allows users to point out gaps or report mapping errors. Google also improved the overall aesthetics of its maps, making them more legible and easier to follow. What’s more, in response to strong consumer demand, Google just unveiled “Google Maps Navigation,” a free, browser-based GPS navigation tool for its Android 2.0 devices. Currently in beta, it includes useful features like 3D views, turn-by-turn voice driving instructions and automatic rerouting.
No doubt, Google Maps is a formidable opponent. But maybe Apple is not seeking to challenge Google per se, but is simply looking to incorporate geo-savvy features to its own products, such as a triangulation feature that would approximate the latitude or longitude of a Mac, says Wired reporter Brian X. Chen. That’s certainly a possibility. After all, AppleInsider notes that Apple has filed a number of location-based patents for its products with the U.S. Patent & Trademark Office, among them an automated home screen providing local info based on an iPhone’s location.
Whatever course Apple plans to chart for the future, one thing is for sure: being geo-savvy is fast-becoming a key factor for getting more ad dollars, especially at a time when advertising is on a decline and users are responding better to a targeted approach [see our previous post on mobile ads].
As a recent study by marketing research firm comScore shows, 10 percent of display ads across four major markets — Atlanta, Chicago, San Francisco and Washington, D.C. — are locally targeted. "Locally targeted ads are an increasingly important component of the digital ad landscape because they represent a more efficient allocation of ad dollars," said comScore Vice President Brian Jurutka.
Integrating location-aware features into one’s products, whether through in-house or rented technology, and enabling hyperlocal or targeted marketing, as Google Maps has done and as Apple seems keen to do, can help a company to remain competitive.
This September, Google launched yet another weapon in its quest for online dominance — the “Google Sidewiki.” Basically, once downloaded as part of the Google Toolbar, the Sidewiki appears as a browser sidebar next to any Web page that you visit. It allows you to read and write comments about that particular site or topic without needing to go through the site’s owners. Google even used an algorithm to rank the most relevant entries first, rather than displaying them chronologically, to help minimize spam.
Google’s Sidewiki also takes relevant comments and displays them next to other Web pages that contain the same text snippet. For example, feedback on President Obama’s speech will be shown on other Web pages that include the same speech. What’s more, the Sidewiki pulls related posts from blogs and other online sources that talk about the Web page you are currently visiting, and displays them so you can read the information.
Already, some analysts, developers and bloggers are calling the Sidewiki a game changer. Josh Bernoff, senior VP of idea development at technology and market research firm Forrester Research, said it was a “land grab” that can become huge within a few years. In a research report, Bernoff and co-author Sean Corcoran advised companies to take back control now by monitoring and responding to comments, and by building their own social features — such as consumer ratings and comment boxes — into their own sites.
Indeed, Google Sidewiki “further re-defines media, when anybody can ‘report’ their opinions and facts on any web page,” says Mark Rose, Director of Internet PR Strategies at the Influence Consulting PR firm in New York. On PRblognews.com, he writes that the primary function of public relations is no longer “How do I get the media to cover me?”, but “How do we impact our audience through our own media?”
Sidewiki, however, is not without its critics. Some bloggers are concerned that it could divert responses from their blog posts to Google, and they are voicing their opposition. “Google is trying to take interactivity away from the source and centralize it,” says Jeff Jarvis, blogger and author of the Harper Collins book What Would Google Do? “This isn't like Disqus, which enables me to add comment functionality on my blog. It takes comments away from my blog and puts them on Google. That sets up Google in channel conflict versus me. It robs my site of much of its value."
There’s also fear that Google Sidewiki is vulnerable to spammer abuse, and that it “finds itself at odds with content publishers, as its ongoing wars with book and newspaper publishers continues,” notes PCMagazine.
Finally, it’s important to note that other companies have made similar attempts in the past, without much success. In 1999, for example, Web start-up “Third Voice” launched a service that let people annotate sites through a browser plug-in. The company faced opposition from Web site owners and folded two years later due to a lack of funding, reports Wired Magazine. While Sidewiki has Google’s impressive financial backing, mainstream users would still have to “bite the bait” and make a habit of writing and reading comments, for Sidewiki to succeed.
Eric Schonfeld, co-editor at TechCrunch, believes this is a long shot. “Marking up the Web has limited appeal to the average consumer,” he writes. Schonfeld believes that a better approach would be to “make Web annotation an enterprise product and go after a specific industry that will actually value (and pay) for it.” As an example, he cites the newly launched “WebNotes PR” by WebNotes, a firm that develops online research tools. Basically, WebNotes PR enables public relations firms to highlight text and annotate relevant Web pages that they could then share with clients for a fee.
So will Google Sidewiki be a game-changing breakthrough or a bust? It’s still too soon to say. But maybe the game plan isn’t really to “change” the game, but to simply grab more territory in the ongoing browser wars. After all, while Sidewiki works with Internet Explorer, Firefox and eventually Google Chrome, users would still have to download and install the Google Toolbar to be able to use it. And the Google Toolbar, of course, includes Google’s search function, among other features. A wise move for Google in that regard, and possibly already a “win.”
Google’s quest to digitize millions of books from major libraries around the world has faced ongoing opposition. Last year, Google finally settled a class action lawsuit brought against it by the Authors Guild and the Association of American Publishers.
Basically, Google will pay authors and publishers $125 million and set up a book registry to compensate copyright owners. In exchange, Google will be given the go-ahead to digitize and “share” book content. For works that are in print and in copyright, Google can show preview pages and enable purchase, either by linking to booksellers like Amazon or through Google’s own e-bookstore (set to launch late this year). For out-of-print works not actively being sold, Google can show previews and sell the book itself. The proceeds, minus operating costs, will be held at the book registry, in case ownership is claimed later on. Lastly, for books out of copyright, Google can enable users to download or read the full text online. Authors or publishers can have their books removed at any time.
A court hearing is scheduled for October 7 to finalize the settlement, and critics, like the Open Book Alliance (which includes Amazon, Microsoft and Yahoo!, among other groups) have already filed their objections. Whatever happens, the potential impact to both the print and digital industries is significant. Consider, for example:
Will this give Google de facto monopoly to digitize and sell orphan books?
Under the settlement, Google has blanket license to digitize and sell “orphan” books, or those still under copyright, but whose rights holders are unknown or cannot be found. As Google is the only provider covered by the license, would-be competitors would have to negotiate their own rights to digitize individual orphan works. As this could take years and involve enormous costs, there’s no foreseeable competition for now (in fact, Microsoft gave up its own scanning efforts years ago), effectively giving Google free rein. While critics acknowledge that this gives readers a chance to access works that otherwise would have been difficult or impossible to find, some fear Google’s power would be unchecked. In an interview with The New York Times, Robert Darnton, head of the Harvard University library system, says Google could be free to “raise the price to unbearable levels.”
Will Google gain an insurmountable advantage in search and advertising dollars?
Google says that any time users do a Web search, they’re also searching Google’s book index, and relevant hits will appear in search results. Opponents like Open Alliance say the settlement gives Google an unfair advantage, because Google essentially uses the scanned data (including that from orphan books) to improve the “artificial intelligence” behind its services, including its search and advertising products. Google’s chief economist, Hal Varian, dismissed arguments that scale makes a search engine better. However, when it comes to Google’s translation capabilities, he told tech publication ZDNet Asia that the more copies of bilingual books that Google has access to, the more it can perfect its translation algorithm. This, in turn, improves Google’s services.
How will Google’s vision of a “digital book world” impact the industry?
At a recent talk at the Computer History Museum, Engineering Director for Google Books Dan Clancy emphasized the need for booksellers to adapt to the changing environment by offering digital copies of books in addition to print. He laid out Google’s vision for the future (as reported by media publication BayNewser) as: 1) Books will be stored in and accessed from the “cloud” (meaning, the Web); 2) There should be diversity in your choice of retailers (meaning, not just brick-and-mortar, but also online stores); and 3) Consumers should be able to read books on any device.
Google says it will work with any e-reader provider, and has in fact made its books available to Sony and Barnes & Noble e-readers. This could potentially hurt Amazon and its Kindle e-reader, which currently leads the market (per tech research and advisor iSuppli), especially as Google beefs up its library, and opens up its own e-bookstore.
But the implications don’t stop there. For instance, what will it mean to have books in the “cloud”? Could data on users’ reading habits be vulnerable to computer hackers or unscrupulous government officials? What will be the dominant format that will be used to make books readable on any device?
The verdict? There’s no question that Google’s plans could benefit researchers, readers and even authors and publishers. And certainly, one cannot expect pure altruism from a for-profit corporation. But as Google moves forward, many are anxious to see what changes we’ll be facing in the industry, and where exactly the scales would tip — for the better good, or simply for Google’s?
After almost three years since its YouTube acquisition, Google still has yet to make a profit on its $1.65 billion purchase of the video sharing website. While YouTube recorded 420 million-plus unique visitors in June 2009 and is now second only to Google in terms of overall search queries (according to data by marketing research firm comScore), YouTube has yet to bring in enough revenue to compensate for its massive bandwidth and infrastructure costs. Google however doesn’t seem to be worried, and has recently made several improvements to put YouTube on the road to black. Specifically: Better partnerships with users, more ad products, and network tie-ins.
Calling all users! Viral videos are often launched on YouTube, but they don’t always lead to profit — for YouTube or for the users that post them. The company is now hoping to change that. Instead of just monetizing videos from its “partners” (users accepted into the Partner Program because they post regularly and have a wide following), YouTube will now enable ads and revenue sharing on individual videos that prove to be popular. Obviously, the more videos users post, the better chances not only of a hit, but also of advertisers to come around.
Calling advertisers! Aside from banner ads on its home page, YouTube now offers “Click-to-Buy” links, as well as advertising space before, during or after a video. YouTube is also touting its “content management” tools, which it says can help rights holders monitor when their products are being used so that these rights holders can capitalize on the opportunity. Google cites the viral hit “JK Wedding Dance” as an example. Rather than block the video from using Chris Brown’s “Forever” music track, rights holder Sony Music placed “Click-to-Buy” links over the video, enabling viewers to purchase the song on Amazon and iTunes. Google says the move resulted in increased “Click-to-Buy” traffic, not only on the “JK Wedding Dance” video, but also on the official “Forever” music video.
“Despite compelling data and studies around consumer purchasing habits, many still question the promotional and bottom-line business value sites like YouTube provide artists,” says Google in a July 30 blog post. “But in the last week, over a year after its release, Chris Brown's ‘Forever’ has again rocketed up the charts, reaching as high as #4 on the iTunes singles chart and #3 on Amazon's best selling MP3 list. We’ve seen similar successes in the past with partners like Monty Python.”
Calling networks! YouTube knows, however, that it can’t just rely on user-generated content to bring in advertisers. Facing stiff competition from rival sites like Hulu.com, which offers full-length videos from shows like “Saturday Night Live” and “30 Rock,” YouTube is angling to bring in more professional content of its own. It recently signed deals with media companies like Time Warner and Walt Disney, and is ramping up negotiations with other networks.
Will these improvements finally make Google’s investment in YouTube worth it? Obviously, the answer will depend not just on how much content YouTube brings in, or how many views each video gets, but on how many users actually click on ads and make the transition to purchase. Plus, with a plan that seems to benefit various groups in the value chain – monetary incentives for video publishers, quality content for video consumers, and innovative selling opportunities for rights holders and advertisers – YouTube might not be the only one that ends up making a profit.
As gatekeepers to the Internet, browsers play a key role in the battle for online dominance. Browsers enable us to access Web sites. They control how Web pages are displayed. They can set search engine defaults. Google, for example, pays to be the default search engine on Firefox, Safari and Opera browsers. Meanwhile, Microsoft’s Bing search engine is defaulted on both Yahoo! and its own Internet Explorer browsers. If left unchanged by users, defaulted search engines gain an edge in Web traffic, and consequently, advertising revenues. This is because companies pay search engines to have their ads displayed next to search results, and also pay when users click on them.
And as technology improves, so do the possibilities. Now, browsers are faster and more powerful than ever, and are able to integrate an increasing number of “plug-ins” and run third-party apps. Users get more features and online productivity tools, while companies and developers get a platform to promote and distribute their products. In fact, there’s widespread belief in the industry that soon, all users will really need is a basic operating system and a powerful Web browser. Then, they can access all their data, run software and do all their computing activities online, diminishing the need for expensive, software-laden or resource-intensive computers. It’s called “cloud computing.”
“Many, many applications can be delivered through the browser and what that does for our costs is stunning,” said VP of Google Engineering Vic Gundotra at the recent MobileBeat conference in San Francisco. “We believe the Web has won and over the next several years, the browser, for economic reasons almost, will become the platform that matters and certainly that’s where Google is investing.”
Google recently announced that they are launching a Google Chrome operating system (OS) as a companion to their existing Google Chrome browser. The OS will be opened up to developers later this year. It will initially be targeted to netbooks (which are basic, inexpensive laptops) and will be made available to consumers in the second half of 2010.
Google, however, is not the only company planning to capitalize on the Web browser’s developing role as hub of all user activity. Microsoft’s research unit released a paper earlier this year on a project it calls “Gazelle.” The paper describes Gazelle as a secure browser that would act like the Windows operating system, ensuring that different Web applications run in separate processes. This ensures that the Web applications are protected from each other in cases of failure, even if they are run within the same site. While Gazelle is not yet under implementation, Microsoft researcher Helen Wang tells CNET News: "We’re really trying to leverage the decades of operating system experience and apply that in the Web and browser setting."
Other competitors are also lining up. Marc Andreessen, founder of Netscape (one of the first browsers and largely credited to have popularized the Internet), is reportedly backing start-up RockMelt. Andreessen tells The New York Times that RockMelt is developing a browser that would keep pace with the evolution of the Web. Exactly how is unclear, as little detail has been released.
As the industry moves toward power browsers and Web-centric operating systems, however, a number of questions crop up. How will this affect the digital media value chain? Will these lightweight operating systems (such as Google Chrome and Gazelle) actually end up replacing or outdating their traditional, more powerful — and more expensive —counterparts (such as Windows OS or Mac OS)? Will developers, device manufacturers and retailers support the movement enough to make it work? Perhaps most importantly, will consumers be convinced enough to make the switch? What about security and privacy issues? These questions need to be addressed, and many hurdles still need to be overcome before anyone can say who will win the browser war, or even what the battlefield will end up looking like.
Is Facebook a threat to Google? First Facebook buys FriendFeed, a service that instantaneously aggregates information from social media sites. Then Facebook rolls out an improved search system, enabling users to browse through posts by friends, by Facebook users who have elected to go public, and by Web results — all in real time.
Asking whether or not Facebook is a threat to Google is key because as social networking is gaining popularity — unique visitors to Twitter, for example, grew 950 percent in the past year, according to July data from Web analytics firm Compete — more and more people are sharing information in real time, whether through status updates, tweets, photos or links. The need to track and sort through everything that has been posted is changing “search” as we know it. How?
First: The increased need for speed. While Twitter hasn’t replaced traditional journalism, for example, it has become a hub for breaking stories, with users tweeting about events like the February Turkish Airlines crash as it happened. Services like FriendFeed collect updates like this from sites like Twitter, notifies you about them, and allows you to search through all the posted data instantly. Meanwhile, traditional search, such as the kind Google does, indexes information from the Web only periodically. Google might therefore need to speed up its indexing to strengthen its market lead.
In an interview earlier this year with TechCrunch, Google Co-Founder Larry Page admitted: "I have always thought we needed to index the Web every second to allow real time search. At first, my team laughed and did not believe me. With Twitter, now they know they have to do it."
But why did Facebook, which already had a service akin to Friendfeed — its News Feed — still buy the company? Some, like CNET News and BusinessWeek, say that it’s a talent acquisition, as FriendFeed engineers are mostly ex-Googlers who helped build Web services like Google Talk, Google Maps, and Gmail. In any case, Facebook stands to learn and benefit from FriendFeed’s features. In the official press release, FriendFeed co-founder Bret Taylor noted that they will “bring many of the innovations…developed at FriendFeed to Facebook’s 250 million users around the world.”
Second: The increased need for relevancy. When the World Health Organization raised the pandemic alert on swine flu in April, social media blog Mashable reported more than 10,000 tweets per hour about the virus. Indeed, the constant stream of updates on sites like Facebook or Twitter makes it difficult to monitor relevant posts or sift through data. It’s crucial, therefore, to have an advanced search function that enables users to filter noise from news — a technology such as the one offered by FriendFeed, where you can even search for keywords.
Google already has an advanced search function, but it doesn’t have real-time results just yet. That is why analysts from media and technology publications like TechCrunch and BoomTown think a Google/Twitter team-up would be the right move, especially as Facebook’s reach expands. While Google has kept mum on this possibility, it did recently unveil “Google Caffeine,” an upgraded version that speeds up its search results and promises improved accuracy, size and comprehensiveness.
For now, it’s too early to see whether Facebook will be able to do in search what it had done in social networking. Nevertheless, Google needs to speed up searches to real time if it wants to stay ahead in the rapidly-evolving search race.
If David can’t knock down Goliath, what does he do? He joins forces with the next biggest thing. That’s exactly what Bing (Microsoft’s new search engine) did, when it struck a deal with Yahoo!, currently ranked #2 worldwide, after Google.
A recent study by online advertising network Chitika found that, across its network, Bing users are over 50 percent more likely than Google users to click on Bing ads.
Microsoft prefers to call Bing a “decision engine,” not a “search engine,” touting that it analyzes the content of Web pages and delivers better results in four main categories: shopping, travel, health and local searches.
Basically, Bing will be the default search engine on Yahoo! for the next 10 years, while Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. The deal is still subject to regulatory review, and both companies expect it to close by early 2010.
“Success in search requires both innovation and scale,” says Microsoft CEO Steve Ballmer. “With our new Bing search platform, we’ve created breakthrough innovation and features. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness.”
For now, that “scale” is still far behind Google’s. June data from comScore shows that together, Yahoo! and Microsoft command about 28 percent of the online search market, while Google holds 65 percent. Even if the new team succeeds in bringing troubled AOL into its mix — AOL’s search-engine partnership with Google is up for renewal next December — that will only add an additional 3 percent.
Google — whose name has become synonymous with “search” — doesn’t seem to be worried about the competition. And indeed, the battle to be the #1 portal for Web users goes well beyond search capabilities. Google still may have “a few tricks up its sleeve,” including the much-anticipated Google Wave. New partners Yahoo! and Microsoft are amping up their own weapons. Yahoo!, for example, has revamped its homepage and will be providing photo sharing features on Yahoo! Mail through Xoopit.
But the two companies are hardly merging. “This agreement does not cover each company’s web properties and products,” Yahoo! and Microsoft said in its joint press release. “In those areas, [we] will continue to compete vigorously.”
