Say a Little, Say a Lot: Thoughts on Search Engine Transparency
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Written By Reprise Media | November 1, 2005 | Share This
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When I arrived at work yesterday morning I was greeted by a flurry of emails and phone calls that all had the same basic message:
“Cool that you were quoted in the New York Times, but didn’t you have anything more eloquent to say?”
Of course, this is the price you pay for spending 90 minutes with a reporter and going on the record with something as sensationalistic and woefully inarticulate as “Google is very opaque and bizarre to deal with.”
No, I’m not blaming Saul Hansell, the outstanding business writer for the NYT, since (a) I said it and (b) the quote was completely in context for his story. I just know I’ll catch some flack for this remark from friends and coworkers, particularly since just two weeks ago I was credited with an equally ridiculous statement in the Wall Street Journal. Yes, I seem to have become the guy that makes elusive, slightly rude declarations that only get heard in a vacuum. Then I thought, that’s what blogging is for, right?
My statement about the lack of transparency from Google is something that shouldn’t come as a surprise to anyone who works with them in the press, on Wall Street, or - in Reprise Media’s case - as a client. Theoretically, search marketing is supposed to be the new democratized way in which media will be bought and sold. Given the nature of the “open” auction systems and 24/7/365 access, that should be the case and in many ways this system is far more accessible than the typical, more human-oriented process of buying and selling media (it’s definitely more efficient than the classic two martini lunch).
That said, anyone who thinks that Adwords is a transparent system clearly has not spent much, if any, time actually managing SEM campaigns. Unlike other pure auction systems such as Yahoo where the advertiser that pays the most gets featured at the top of the list of sponsored results, Google’s system is based upon an equation that factors in what an advertiser is willing to pay (cost-per-click) along with relevancy (supposed to be click-through-rate, but more on that shortly).
When Google launched this system they were praised for purportedly caring more about their users because they wanted them to see only the most relevant ads. What seems to have gotten lost is the fact that it’s not just the users who win: advertisers get better performance and Google is able to maximize its profit potential.
The fact that the house always wins is not the reason Google is opaque. The main driver behind this point is that the users of its system can’t necessarily identify causal relationships to improve their own performance. Google has made it simple for marketers to get started and run search campaigns, but incredibly challenging for them to understand - and dare I say master - the in’s and out’s of the Adwords system.
While the most obvious parallel to auction-based media markets are the financial exchanges, the major distinction is that Google never tells you what other advertisers are willing to pay. By comparison, Yahoo! and other second tier systems like Miva and Enhance offer total insight into what the bid landscapes in the market look like.
To use financial services terminology, Google’s system becomes a guessing game on the spread between the bid and the ask. With regard to the relevancy piece, Google has always publicized that this is based upon the metric of click-through rate.
Not so fast…lately Google has made claims to our account teams that there are other factors that impact an advertiser’s relevancy, including attributes such as URL, listing copy and actual content on your site. Don’t even try to understand the interplay among these criteria because that might be the foggiest component of them all.
You may be asking, why don’t people just ask someone at Google how this all works? Good luck. You could literally ask three different people and get completely different answers. Now, I don’t believe that people at Google are being intentionally evasive. It’s my guess that the front-end client services and sales teams really don’t know. All this chaos, of course, leaves the market guessing, which is very good for Google - not to mention their stock price.
Now that I have all the space in the world to make my point, I don’t want to be misunderstood. We built a whole business model here at Reprise Media based on our belief in the power of search marketing - which at this stage is synonymous with saying we believe in Google. I think Google Adwords is great. Without Google, our business would look entirely different, since our advertisers get an ROI from their platform that is far superior to anything they’ve ever seen.
One would assume that given the head start Yahoo (actually Overture) had in the SEM category, that they’d be far ahead - or at least neck and neck in their respective businesses. Not even close. Google effectively built a business from scratch and not only caught Yahoo, but established superiority in every aspect that matters (except, of course, transparency - sigh). Google has more scaleable and reliable systems, bigger (and smarter) front-end customer service teams, lower minimum bids - which allow advertisers to buy more tail terms and yield stronger performance. Not that any of that matters because they have more momentum than any company I’ve ever seen and could probably get by on hype alone.
In all fairness to both Google and Yahoo, it’s important to understand that these companies are still in their relative infancies and are just getting cooking. In my opinion this is an industry held together with duct tape, and the demand is growing so quickly that the supply side is having a hard time building software and finding people. That will change. We are watching a major transformation in the media world as a whole and Google and Yahoo (and maybe some other players like MSN and IAC) are the most important companies to watch.
As Saul zoned in on in his article,while Google and Yahoo have changed the face of internet advertising, the aspirations of these players are much broader. Each will continue to disrupt any market they can. As Battelle said,“[the NYT article]…reads as something of a valentine.” It’s exciting to see that the mainstream media starting to understand what’s going on.
As Peter posted previously,search marketing initially took off because it was a very elegant channel, where the user and advertiser could have a conversation. It’s going to scale, however, mostly because auctions are efficient. Other than the truly integrated sponsorships and things like product placement, anything that can be sold in an auction will be. Not a bad spot to be in.
Now, you’re probably wishing I had stopped at one simple, clumsy quote.
Topics: Search: Innovations |
Great post Joshua. Well said.