A Blog About Google

A contradiction

2005-08-17T17:53:00.000-05:00

Back in April, Google announced a set of new advertising policies, among which was allowing advertisers to choose which sites display their ads. However, this new capability potentially shuts out a "long tail" of publishers which may be:

1. Sites with objectionable content.

2. New sites without a track record, or unfairly suspected of generating fraudulent clicks.

3. Sites with low nominal conversion rates, either due to low real conversion rates, or to low enough traffic resulting in zero conversions over some time periods.

This is part of a more general contradiction: in the quest for "quality" traffic, how much of Google's revenues will actually remain intact? If you take all the junk traffic out of the equation, will we see the same revenue growth rates? Add this to increasing competition coming from Yahoo and AskJeeves and it's an open question whether GOOG's high multiple is really justified.

Google Current

2005-08-01T18:16:00.000-05:00

Apparently, Google is in a content partnership with Al Gore's Current TV, which just debuted last night. The unstated premise of this TV network is to promote an extreme liberal agenda to young people in a "hip" MTV-style format (at which Al Gore is an expert). The buzz so far is that this project is a complete flop. I haven't watched any of the programming, but I'm wondering what kind of content Google Current is coming up with. There will surely be some egg on Google's face as the overall crappiness of the whole enterprise becomes widely appreciated. A couple of facts about Current TV:

1. Their stated purpose is to provide 3 minute bite-sized segments (no shows), because young people are so stupid they don't have an attention span longer than 3 minutes.

2. The TV listings information on their web site requires personal indentifying information - and they don't give you the listings! (The database they're building here surely won't be used in some 2008 election campaign fundraising, right?)

3. Their web site sucks ass - SLOW, NO content, NONE of the promised "interactivity."

Run GOOG Run

2005-06-28T09:58:00.000-05:00

You know why GOOG isn't going down anytime soon? Because everybody's down on GOOG right now. People are worrying out loud that this is another dot com bubble. That's the surest indication. Also, check out the long/short ratio on ClearStation.

Google ads are dumb

2005-06-15T00:26:00.000-05:00

As everyone knows, Google ads are pretty dumb. Keyword-driven ads are too simplistic, especially for third party, niche sites. They don't care about context or propriety. This is a huge inefficiency. And even with this inefficiency, Google's revenues are what they are, and growing at the rates they are growing. Now think about this: Google's engineers are experts in artificial intelligence. They are innovative. They will eventually figure out how to get context into the picture. Think about getting 50% click-through ratio instead of 5%. It is a fundamental change in the scale and scope of Google's operation. One reason to be bullish.

(I'm not necessarily bullish on GOOG. Click fraud remains a big threat to Google's revenues from small ad network partners.)

Cool Google game

2005-05-01T08:10:00.000-05:00

Play Guess-the-Google. The game generates a montage of images resulting from a Google search. You have to guess the keyword that was searched. You have 20 seconds per montage (extra points for unused time), 10 montages per game. The maximum score is 400 (high scores are already at 399).

It's a pretty fun and innovative game. After playing a few times, I got a 345. My main beef with the game is that the keyword database is pretty small. Keywords start repeating after only a couple of games. So, it just turns into a game of memory (no wonder people got 399). Also, the reaction time of the flash program is pretty slow. So, if you type in a guess (or many guesses), the timer counts down while you're waiting for a response. I also noticed a bug where a montage repeats, but is associated with a different keyword. Good potential here, though.

UPDATE: Ok, I just got a 398.

New advertising strategy

2005-04-26T07:12:00.000-05:00

Google is declaring war on internet ad servers by offering image ads and CPM (cost-per-impression), in addition to CPC (cost-per-click), bidding model. Site targeting will ensure that click fraud stays at a minimum (even though it may significantly impact revenues). Regional and local targeting gives advertisers control on a fine geographic granularity. This is especially important to the CPM model (which does not use keyword targeting).

Google is trying to take over a shrinking industry (image and banner ads), but the costs of doing so are low due to their leadership in search advertising. DoubleClick has fallen from its height in the dot com era doing exactly what Google wants to do. It will be interesting to see if Hellman & Friedman get their money's worth for their acquisition, now that Google is moving in on their turf.

This move may tarnish Google's "good guy" mystique. It will probably increase demand for ad blockers like AdBlock. Also, the image/CPM ads may not be as compelling or relevant to the user as keyword-targeted ads. I sincerely hope Google avoids the pop-up business.

Google AdSense allows site-specific targeting

2005-04-25T02:59:00.000-05:00

From Search Engine Watch:

Google will now allow its advertisers to decide which AdSense sites will display their ads. They can make either an "include" or "exclude" list. This is an excellent move by Google to counter click fraud. However, it may shut smaller and newer publishers out of the advertising game, since they are most prone to click fraud activity. The real question is whether the revenue hit that results from allowing exclusions will be made up for by increased advertiser confidence.

Profits aplenty for Google

2005-04-22T05:22:00.000-05:00

The Q12005 8-K came in much better than expected, with quarterly revenue up a whopping 93% year-over-year (22% sequential) to $1.256 billion. Here's the interesting factoid for those concerned about click fraud: AdSense revenue share dropped to 47%, at $584 million (75% year-over-year increase). AdWords accounted for 52% of total revenue, or $657 million (116% year-over-year increase).

Analysis: this implies that AdSense revenue share has indeed peaked at 49% and is beginning to drop. This is very good news for Google, since they are reducing their dependence on the fraudulent and potentially catastrophic ad model. Google will not be going under anytime soon, much to the dismay of the Fucked Google guys, I'm sure.

Here's more commentary from ISB.

Here's a chart of GOOG, up to $223.69 in after-hours trading.

Google in denial about click fraud

2005-04-20T04:27:00.000-05:00

Excellent click-fraud coverage at Search Engine Watch.

GOOG explodes!

2005-04-19T23:54:00.000-05:00

In after hours trading, GOOG is up 4% to 199!

GOOG slaughtered

2005-04-15T23:39:00.000-05:00

Just after I posted that GOOG was outperforming the Nasdaq and YHOO, GOOG got crushed today (-3.37%), underperforming Nasdaq and YHOO. What goes up...

AdSense to allow custom ad formatting

2005-04-14T21:19:00.000-05:00

From Inside Google. Custom AdSense ad formatting will allow publishers to tailor their ads to fit their web sites better, leading to higher click-through rates. The real question is, why did Google do this now? A couple of possibilities:

1. They only got around to implementing it now.
2. Click-through rates have fallen enough to justify a policy change. Custom formatting definitely allows for more ... ahem ... deceptiveness.
3. Click-through rates have not changed, but Google is getting greedy.

The first possibility is just odd, considering Google's massive resources and oodles of PhD workers. The second possibility is disturbing, for two reasons:

1. It means people are losing interest in clicking on Google ads.
2. It doesn't fix anything. Click-through may increase, but ROI will still decrease.

The third possibility is also disturbing. It implies that the forces of short term profit are winning over the forces of "do no evil." I wrote about this earlier, here and here.

GOOG outperforming Nasdaq

2005-04-14T16:41:00.000-05:00

Even though GOOG has been down the past couple of days, it is still outperforming the Nasdaq composite (past 5 days). Incidentally, it is also outperforming YHOO, by an even bigger margin.

Legal roundup (update)

2005-04-14T16:32:00.000-05:00

Plaintiff	Country	Date	Status	Payout	Issue
Lane's Gifts (class action)	US	04/06/2005	In Progress	N/A	Click Fraud
Agence France Presse	US	03/18/2005	Preempted	N/A	Content Syndication
Luteciel and Viaticum	France	03/16/2005	Lost	$100,300	Ad Keywords
Louis Vuitton	France	02/04/2005	Lost	$257,430	Ad Keywords
Le Meridien	France	12/16/2004	Lost	$2,592	Ad Keywords
GEICO	US	12/15/2004	Won	N/A	Ad Keywords
American Blind	US	01/28/2004	In Progress	N/A	Ad Keywords

Web analytics vs. click fraud

2005-04-11T12:14:00.000-05:00

The Internet Stock Blog covers the click fraud issue again, this time talking about how increasing web analytics impacts fraud. ISB is optimistic that

As web analytics improve, click fraud will be more easily detectable and advertisers will be able to manage more closely to RoI.
This is true, from the advertisers' point of view. But the corollary is that improving analytics will expose lower-than-expected ROI (due to fraud), which causes advertisers to spend less. Which is very ironic, considering Google's recent acquisition of Urchin.

What exactly is their strategy here? Increasing the general use and efficacy of web analytics is not in their interests, since it risks demolishing their entire business model. They would only benefit from making these tools available to their publishers, thus enabling them to increase traffic, and therefore click counts.

Another issue is that a decrease in advertiser spending will not only affect the AdSense program. Advertisers can only manage their campaigns on a keyword basis, since Google does not differentiate between AdWords and AdSense clicks. So, a spending decrease would affect the entire Google ad revenue stream. Look for an increasing AdSense share of total revenues, accompanied by slowing total revenue growth.

Search and content convergence

2005-04-09T04:27:00.000-05:00

The Internet Stock Blog discusses the implications of Google Q&A, focusing on search engines as answer engines - gateways to proprietary content. Google's strength is its position as gateway, rather than content provider:

It's better to be a search company moving into content than vica versa, because search will be the gateway to content, and we know from experience that he who controls the gateway...
I'm not as optimistic as ISB. It comes down to the business model - how is Google going to make money off this content? The only model they have right now is AdWords - text ads alongside search results. I'm unconvinced that this model is sustainable. It is very vulnerable to competition and disruption. Some other possibilities:

1. Paid listings in specialized searches. The risk here is betraying the idea of unbiased search results. Google may be able to pull it off without tainting their search results by creating the idea of special categories of answers (separate from search). Google Q&A may fit into such a strategy.
2. Market research service. This may become Google's strongest model in the future. Think about it. All that data they gather on how people use the web can be turned into extremely valuable information. They just need to develop the right analytical tools. Best of all, this doesn't need to compromise the objectivity of their search service.

But this is just speculation. I'm waiting to see if Google will actually move its business model beyond AdWords.

Separation of "church and state" blurring

2005-04-07T01:37:00.000-05:00

Man, I'm on a roll today. I was recently talking about how Google will increasingly find itself torn between the forces of short-term profits and the necessity to maintain its aura of objectivity. Now, this from Search Engine Watch:

Google & SEO Support For Advertisers now posted for Search Engine Watch members looks at how increased editorial listings support being given to large advertisers is raising concerns with search marketers and threatening the "church and state" division between ads and editorial results that Google has long sought to maintain.

Told ya so

2005-04-07T00:35:00.000-05:00

GOOG has jumped up recently, to $189.22 on Wednesday. Remember when I told you to buy it at $180.04? Well, don't feel bad. I would probably make you broke in the long run.

Class action lawsuit on click fraud

2005-04-05T16:01:00.000-05:00

From Dow Jones (via Battelle): A group of advertisers are filing a class action lawsuit against Google, Yahoo, AOL Time Warner, Ask Jeeves, Disney, Lycos, LookSmart, and FindWhat. The advertisers claim that the ad-serving companies charged them for fraudulent clicks. Interestingly, the article only mentions AdWords-style click fraud (i.e., competitors clicking on your ads in Google search results), not AdSense-style fraud. It's unclear from the article what the scope of the lawsuit is. It's also unclear how serious this effort will be. But a ruling in favor of the plaintiffs will certainly embolden other advertisers to sue. Even so, the click fraud issue is unlikely to be resolved in the courts.

Acquisition roundup

2005-04-03T04:16:00.000-05:00

A summary of Google's acquisitions:

Company	Service	Date	Cost
Urchin	Web Analytics	03/29/2005	$30M
ZipDash	Traffic Info	2004	$56M*
Where2	Google Maps	2004	*
Keyhole	3D Maps	10/01/2004	*
Picassa	Photo Sharing	07/01/2004	*
Pyra Labs	Blogger	02/01/2003	?

* Google spent $56M acquiring four companies in 2004.

Potential revenue stream

2005-03-31T02:55:00.000-06:00

John Battelle has some thoughts on a potential revenue stream for Google that would probably violate their "Do no evil" policy. It involves doling out top search results on structured searches (finance, for example) for some sort of business arrangement (cash). This would also violate their long-standing policy of not tainting their search results with advertiser revenue. However, they may be tempted to do so for a few "special" searches.

As long as people trust Google, the business model can survive. However, once the moral authority of providing unbiased search results dissipates, the jig is up. And therein lies the problem. Google will constantly be torn between two forces: 1. the desire for short-term profits in the form of specific, measurable revenue streams and 2. the necessity to maintain the aura of objectivity which underlies the long-term viability of their business. I will let the reader decide which of these forces has historically prevailed.

Legal roundup

2005-03-31T01:15:00.000-06:00

I've compiled a summary of recent lawsuits against Google.

Plaintiff	Country	Date	Status	Payout	Issue
GEICO	US	12/15/2004	Won	N/A	Ad Keywords
Le Meridien	France	12/16/2004	Lost	$2,592	Ad Keywords
Louis Vuitton	France	2/4/2005	Lost	$257,430	Ad Keywords
Luteciel and Viaticum	France	3/16/2005	Lost	$100,300	Ad Keywords

Agence France Presse	US	3/18/2005	Preempted	N/A	Content Syndication

Google 10K

2005-03-30T21:08:00.000-06:00

The Google 10K is here. Looks like AdSense revenues have held constant at 48% of total revenues for 3 months ended Dec 31 2004 (vs. 48% for 3 months ended Sept 31 2004). Google comments:

Although the growth in advertising revenues from our Google Network members’ web sites was nearly as great as that from our web sites from the three months ended September 30, 2004 compared to the three months ended December 31, 2004, we expect this growth to be slower than the growth in revenues from our web sites for the foreseeable future. Oh yeah? That's what they said last time in their Nov 2004 10Q, but the AdSense revenue share remains constant.

Although we entered into a significant new AdSense for search agreement in October 2004, the growth in advertising revenues from our Google Network members' web sites is expected to be less than the growth in revenues from our web sites for the foreseeable future. Google can try spinning this all they want but the fact remains: nearly half their revenue comes from a Ponzi scheme that people are increasingly becoming aware of. It will eventually burst, as all bubbles do. The only question is when.

Random Google search of the day

2005-03-22T14:10:00.000-06:00

If you've ever wondered how many results you'd get if you typed in the value of pi to N decimal places, then, well, here it is. (Example: at index 4, you'd type in "3.1415" in the Google search.)

index value google count
2 4 2540000
3 1 153000
4 5 41700
5 9 171000
6 2 17100
7 6 24700
8 5 22700
9 3 922
10 5 10200
11 8 1970
12 9 681
13 7 2160
14 9 13200
15 3 15100
16 2 563
17 3 1300
18 8 3660
19 4 880
20 6 19500
21 2 510
22 6 2480
23 4 882
24 3 518
25 3 3280
26 8 1260
27 3 458
28 2 1360
29 7 1470
30 9 5910
31 5 660
32 0 1490
33 2 749
34 8 717
35 8 4130
36 4 459
37 1 1330
38 9 898
39 7 1270
40 1 1110
41 6 1020
42 9 244
43 3 211
44 9 526
45 9 198
46 3 135
47 7 578
48 5 2030
49 1 409
50 0 2980
51 5 128
52 8 359
53 2 278
54 0 216
55 9 1430
56 7 1800
57 4 44
58 9 182
59 4 197
60 4 1140
61 5 592
62 9 625
63 2 9000
64 3 62
65 0 80
66 7 940
67 8 427
68 1 1050
69 6 60
70 4 157
71 0 459
72 6 45
73 2 342
74 8 469
75 6 617
76 2 1610
77 0 585
78 8 60
79 9 13
80 9 235
81 8 30
82 6 4
83 2 12
84 8 517
85 0 6
86 3 7
87 4 134
88 8 15
89 2 163
90 5 3480
91 3 8
92 4 8
93 2 8
94 1 8
95 1 18
96 7 127
97 0 90
98 6 75
99 7 139
100 9 1500

Silly Frenchmen

2005-03-22T13:08:00.000-06:00

First, the French complain that Google's library digitization project will be biased towards English literature and exclude or minimize French works. Now, Agence France Presse is whining that Google indexes its articles without permission. AFP sued Google, and of course, Google is removing all AFP content. Somebody call Chirac!