I’ve written in the past about what market leaders do to build categories, and frequently I cite Google as the best example of these strategies. Their approach with laying down fiber and providing really cheap, super fast internet in Kansas City is no exception. Like it did with Chrome (at least at the beginning), Google is trying to jumpstart a stagnant market:
If you are one of the lucky few Kansas City natives to have already signed up for Google Fiber, I don’t begrudge you one megabit; your ancestors had to deal with the Dust Bowl, you deserve a little extra bandwidth. But at its heart, Google’s attempt at being its own ISP is much more about forcing the entrenched service providers — the Verizon’s and Time Warner’s and AT&T’s of this world — to step up their games than it is about making this particular business a raving financial success. When I asked the Google spokeswoman what the ultimate goal of all this was, she replied that Google wants “to make the web better and faster for all users.” The implication is that they don’t necessarily want to do it all by themselves.
This is a cross-post from the Percolate Blog. I thought you all might enjoy reading it here as well.
Let me get something out of the way before we get started: In case you haven’t heard, Facebook is going to IPO this week.
Okay, seriously, all this IPO talk has driven people to dive into Facebook’s business model and lots of folks are coming up with doubts. As Peter Kafka points out, even Facebook has its doubts, mentioning as much in their IPO filing: “We believe that most advertisers are still learning and experimenting with the best ways to leverage Facebook to create more social and valuable ads.”
But what does that mean really? And what’s the opportunity? And, most importantly in many people’s eyes, does Facebook really have the opportunity to be a bigger company than Google?
While I don’t know the precise answers to those questions, I do have lots of opinions and since it happens to be Internet Week in NYC, I’ve been having these conversations a lot (mostly on panels). The bulk of the argument against Facebook revolves around their lack of “intent” data. This, of course, is what Google has in bulk and is the reason they are a multi-billion dollar business. Being able to target people at specific points in the purchase process changes the way marketing works. It allows advertisers to do something that was all but impossible (you could buy in-store and outdoor around stores, but that’s a whole lot less efficient). This is an amazing thing for marketers and Google’s market cap reflects it.
But if you ask most advertisers why they spend millions (and sometimes billions) on traditional ads, it’s not to harvest people who intend to buy, it’s to create demand: continuing to grow a business requires continuing to bring in new customers constantly. However it makes you feel, most ads exist to remind you that you need something new. That shoe company with billboard isn’t trying to get you to buy their shoes over a competitor, they’re trying to remind you that you need new shoes and, they hope, when you walk into the store you’ll spring for their brand.
That’s where brands spend real dollars. When startups show off “the chart” (you know, the one with the gap on time spent versus ad spend), they are looking at the effect of digital platforms not having a good answer to intent creation.
That, I believe, is where the opportunity for social is. We’re not there yet, but the promise is that you can use your understanding of a user’s interests to present them with messages that let them know about things they want before they want them. If Facebook figures this out it will be a bigger company than Google.
So how does content fit in?
Using the traditional purchase funnel, I think you still have a gap between awareness and intent. Once someone knows about your brand or product, how do you create need? One really good way of doing that is to remind them you exist (a large portion of CPG ad spend is used for just this). The way to remind people you exist is to create content they’ll see. To create content they’ll see on Facebook you need to a) be engaging enough that it builds organic activity and pushes beyond the base distribution you get through EdgeRank or b) buy Reach Generator. The two big goals (awareness and intent creation) have paid actions associated with them in Facebook, Twitter and Tumblr. If these companies continue to build on these ideas and find better ways to target users based on their interests they will be solving a real problem for advertisers, something that hasn’t really been done on the web since paid search in the early 2000s.
Of course, there are lots of ifs here. The products are not quite there yet (targeting, for instance, is still largely based on social connections instead of interest connections), but I think these platforms will get there and I think they’ll succeed.
This is a really interesting way to think about the power of Facebook:
Google could still put ads in front of more people than Facebook, but Facebook knows so much more about those people. Advertisers and publishers cherish this kind of personal information, so much so that they are willing to put the Facebook brand before their own. Exhibit A: www.facebook.com/nike, a company with the power and clout of Nike putting their own brand after Facebook’s? No company has ever done that for Google and Google took it personally.
The rest of the article is worth a read as well. It’s a former Google engineer explaining why he left and what’s changed inside the organization in the last two years with the transition to social.
This whole Core77 article about the design of Google Maps is pretty excellent. It’s a great breakdown of the insane challenges of building a map of the world. Beyond everything else, though, I found this especially shocking: “In recent months we have introduced a few more regional changes to our color palette adding 3D building shadows to indicate local time-of-day.” 3D building shadows … Who knew? (I can’t seem to track it down myself, but it’s in the screenshots on the article.)
Good Hacker News thread about what Web 1.0 businesses still make money. One of the answers is affiliate, but even better than the answer is this explanation of the complicated relationship between Google and affiliates: “Big Daddy G basically sees most affiliates as bugs which, if fixed, would entitle them to an extra 100%+ on the purchase at issue over what they’re getting currently. This results in a frenemy dynamic because affiliates also spend $$$$$$$$ on AdWords.” That’s the trouble with Google, whether they like to admit it or not, they’re in competition with many of their biggest customers and like to pretend they’re not.
This one’s pretty hilarious. Google ran a sponsored post campaign for Google Chrome and in turn forget to make sure that the links included in the posts didn’t pass credibility. I’ve been really annoyed with this policy from Google for a long time and I’m happy to see them screw up. Like Search Engine Land wrote, “It also raises the serious question that if Google can’t keep track of its own rules, what hope is there that third parties are supposed to figure it all out?” Google has forced webmasters to be responsible for something that their algorithm should be able to figure out. I know that’s hard/impossible, but I thing this brings into focus how confusing the policy really is.
A search for “browser” in Google doesn’t show Chrome on the first page.
I never read Steven Levy’s In the Plex, but I was just mentioning this quote about Google’s speed to someone and thought it was worth sharing here:
[Google] was too good. If Excite were to host a search engine that instantly gave people information they sought, [Excite's CEO] explained, the users would leave the site instantly. Since his ad revenue came from people staying on the site—“stickiness” was the most desired metric in websites at the time—using Google’s technology would be counterproductive. “He told us he wanted Excite’s search engine to be 80 percent as good as the other search engines,” … and we were like, “Wow, these guys don’t know what they’re talking about.”
Nick Bilton on Google+: “Detractors don’t realize one very important point: Google does not see Google+ as a separate product; to the company, Google+ is the product.” An interesting take … I’ve heard a bunch of different theories on where G+ fits in the world of big G. Another is that G+ is the beginning of the Google social operating system. The gist is that you should think of G+ as a set of apps that make sense as native components of Android. Not sure where I fall on all this exactly, but it seems that this isn’t just a flash-in-the-pan project for Google.