Posts Tagged ‘google’

November 7th, 2007

Can Facebook take adrevenue from Google?

So Facebook’s founder Mark Zuckerberg has declared that “The next 100 years start today, and it’s going to be different.” Well both points are certainly true when isolated from the immediate context of his comments. But are they true for the audiences he is specifically addressing?

By saying that the next 100 years start today, young Mr Z. must surely be waving a derogatory digit at Google. From Google’s perspective, the next 100 years began in autumn 1997 when Backrub was renamed and made available to Stanford students. Mr. Z. thinks he’s onto something bigger and better than Google. And maybe he is. But the reality is that nobody can say for sure. Why? Well that’s because Google’s adrevenue model is proven and Facebook’s is not.

To date, Google’s adrevenue has been generated from a direct response model; PPC effectively took us back to the old results-based payment per inquiry (PI) deals. Direct response advertisers like paying for sales results and not for simply being seen. These direct response advertisers like the way Google’s performance based model works for them so the money flows straight in. For Facebook to take a share of this direct response revenue, it must deliver results that are at least as good as those generated by Google.

But Facebook has an ace and this could be where the $15bn comes in. Because of the way it is used, and because of the type of people who use it, advertisers may see it as more than a purveyor of direct response sales performance. They may come to view it as a place to talk about brands in targeted ways to highly targeted groups of consumers. This means that it could be liberated from the rigid ROI metrics that rule direct response. And that in turn means that advertisers may be prepared to pay more per person reached on Facebook and and be more relaxed about how it delivers ROI. From a media owner perspective, that’s a good place to be when it comes to counting the ad revenue dollars. In other words, the next 100 years did begin in 1997 for direct response advertisers, but they may just be about to begin again for brand advertisers.

May 2nd, 2007

Google’s secret recipie


These are MI5 products. They’re are both produced using “secret recipes”. Employees involved in their manufacture probably sign a commercial equivalent of the Official Secrets Act with their contract and are sworn never to divulge the ingredients and techniques used in the making of these products.

And now of course, we have a 21st century online equivalent of these culinary mysteries; the search algorithms used by Google to sift and rank the world’s websites.

Seas of SEO consultants claim to be able to “beat Google” and increase your site’s page rank. They too have their own SEO recipes; buy more back links, get listed in big web directories, optimise your HTML, don’t use java or pictures and remember that meta tags are passe. For some, ‘beating’ Google is an interesting intellectual puzzle. For others, it’s a chance to fleece the unwary. So what is Google’s secret recipe and is it really possible for an SEO consultant to beat it?

My guess is that Google runs what is, in effect, a very complex credit scoring model and applies it to the web sites of the world just as a retailer applies credit scoring to prospective card account customers. Think back to when you last applied for a credit or store card. You were asked where you lived, your DOB, your income, where you worked, if you owned your home, if so, for how many years, whether or not you had other credit cards or other debts and so on. This process is about collecting statistical data about you to predict how you are likely to behave as a customer. The store or the credit scoring company don’t know you as a person so they have to collect information that is representative of you, your financial behaviour and, ultimately, your financial trustworthiness.

But collecting this data is just the start of a complex process (you can do a PhD in Credit Scoring in the School of Computer Sciences at Edinburgh University). To start with, not all your answers are treated as equal. For example, where you live may be three times as important as your age in determining your credit worthiness. And your income may be twice as important as where you live. All your answers are individually weighted and then aggregated to give an overall score for your credit application. So if you fail against an unimportant factor, your score may not be significantly reduced. But if you fail against a highly weighted factor, that could fail you regardless of all your other answers.

There are other factors too. Companies must continually adjust the way they score applicants because the nature of the applicant market ‘pool’ may change, or because the firm may have changing volume targets to deliver from within a fixed pool - necessitating a change in the way they look at those applicants within the pool. Statistical rules may need to change.

New techniques are being developed to reflect the dynamic nature of the task. Models are now capable of “meta learning” which means that they can run multiple learning applications and then take the most important learnings from the learnings developed by individual sub-models. This is where we get into the territory of machine learning, soft margins, non-linear regression and hyperplanes. These models are far more complicated than the recipes for certain spicy foods or fizzy drinks.

If you’re a webmaster, then it’s highly likely that your site is being scrutinised by Google using these sorts of data mining techniques. If you come across a search consultant who claims to have discovered how to “beat Google” and “improve your page rank dramatically” then bear in mind that they must have cracked the sophisticated statistical model that Google uses to prioritise pages.

So is Google really the equivalent of the HP or Worcestershire sauce of the 21st century? Well the answer is both yes and no. Yes, it’s certainly secret, but no, it’s far more complicated than the process of manufacturing a spicy sauce.

Update 22 August 2007:

Under the term “Digital Media+Web 2.0″ Teqtonic.com is ranking 11 out of 49,000,000 returns on Google. Unfortunately, that keeps us at the top of page 2, which is not ideal. But we’re working on those last 11 places….

March 23rd, 2007

Google tests Pay per Action

Google is running a beta test to trial ‘Pay per Action’ advertising. To date, many advertisers will associate Google with the pay per click (PPC) model. Pay per click was in itself a big advancement on the traditional CPM (paying for audience eyeballs, rather than response), but paying for an advertiser-nominated action is a mighty breakthrough for direct selling advertisers.

The traditional advertising model run by TV, radio, press and outdoor, as well as direct mail is based around buying what is in effect a viewing by the target audience. But nothing more. The risk beyond that lies entirely with the advertiser. What’s amazing about pay per click this that you don’t pay simply for the privilege of being seen, you pay when people act upon your message and click through to your site. Google* shares the risk of getting a response with the advertiser. Google’s Pay per Action model takes this sentiment even further, you don’t pay to be seen and you don’t even pay to get a click through. You only pay when your visitor performs a nominated action like submitting their email address, signing up for a newsletter, becoming a lead, or even a customer. This is without doubt great news for all direct selling advertisers and to some degree a nail in the coffin of the traditional advertising model.

You may be asking, “How do the financials work, for Google and for me?”. Well you’ll still effectively have to bid (on the content network) for the action that delivers your sale. Of course other advertisers will also be bidding for their sales at the same time. Google will have estimated that the financial yield for getting people to bid for actions may well be higher than the yield from allowing them to bid for clicks. Of course, if they weren’t sure this beta test will allow them to find out.

Whether or not we see Google making Pay per Action a mainstream product may well depend on how this test works for Google as well as how it works for online advertisers.

*And of course, all the other pay per click suppliers