Author Archive - John Cha
Google Overload: More Search History, More Acquisitions and More Revenues!
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Written By John Chan | April 20, 2007 | Share This
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Big news from Google: Yesterday’s earnings call reported that Google brought in $3.66 billion in Q1 revenues, an increase of 63% y/y, with a 69% profit increase. CEO Eric Schmidt attributed Google’s success to its core search advertising business that “continues to let us take calculated risks in new markets…and extend our business to new platforms and formats.” From ClickZ,
“In addition to alluding to the growth of YouTube, and relationships with content partners like BBC, Google execs referred to its recent partnerships with traditional media outlets and acquisition of ad management firm DoubleClick as driving efficiency for advertisers.”
Though the earnings call focused primarily on advertising, Google execs pointedly mentioned upcoming enterprise products like Google Presentations, Apps Premier, and the accelerated growth of social applications like Talk and YouTube. On that note, Google today announced their acquisition of Marratech, a swedish video conferencing company. A competitor of WebEx, Marratech will “enable from-the-desktop participation for Googlers in videoconference meetings wherever there’s an Internet connection.” It’s unclear whether Google plans to use Marratech as an internal software, or release it as part of their growing portfolio of enterprise apps.
Finally, Google announced the expansion of personal “Search History” into “Web History”. Using data from the Google Toolbar, Google has added mored stats to their visible record of each user’s personal browsing history. Danny Sullivan has an extensive rundown of what Web History is and why it matters. He writes,
“With today’s announcement, part of me wants to ring the alarm bell and shout “Uninstall your toolbar! End your Google account!” Because let’s face it. Google’s getting big, huge, giant… The “we’re a tech company” charade is over from the very top, with CEO Eric Schmidt finally calling Google recently in a Wired interview “an advertising company.
“I remember when Google was a search engine, with a philosophy that said, “Google does search.” Now it puts ads on TV, in radio, in print — serves as a payment platform, provides web analytics, pitches software “packs” to us and more. Does it really need to have our web surfing histories as well? When’s enough enough?
“On the other hand, I’m a big believer in personalized search. I think this type of data can indeed improve the search experience…Should you be concerned? Of course. Everyone should be concerned about their private data. Everyone should really think about what is being logged and how it is being used. But we also make tradeoffs. We want certain things from companies, and to get them, we have to give up some of our privacy often trusting it will be protected.”
Further Reading
- Google’s Still Going Gangbusters (IP & Democracy)
- Text of Wired’s Interview with Google CEO Eric Schmidt (Wired)
- Google as the Invisible Hand of the Online Economy (SEO Book)
Who Asked Google For Preferred Cost Bidding?
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Written By John Chan | April 19, 2007 | Share This
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Amidst all the buzz surrounding the DoubleClick acquisition, Google quietly launched “Preferred Cost Bidding” yesterday. Advertisers now have the option to choose a “preferred” or average CPC rather than a max CPC and Google will algorithmically make sure that your clicks average to that cost over time.
Think on that for a second - if you happen to use algebra to determine CPCs, you’re calculating your CPC ceiling (or the true max CPC) based on back-end performance variables. With a little more algebra and some trending analysis, you’d then determine what your Google max CPC should be in order to hit your true max.
With Preferred Cost Bidding, however, your true max CPC becomes your “preferred” CPC. Google ensures that you’re charged your true max CPC on average, no matter what, by sporadically lowering and raising your bids. In other words, what you thought was your cap has become your middle ground, and half of the time your keyword is live, you’ll be paying a lot more than you’re willing to.
Now, I’ve always prided myself in being able to find rational explanations in the midst of idiocy, but this one has me stumped. Can someone that doesn’t work at Google explain to me how this benefits anybody except Google?
Okay, Google claims that Preferred Cost Bidding gives advertisers more control of their campaigns. Allegedly, Preferred Cost Bidding stabilizes costs so that advertisers don’t have to manually adjust bids. I might be taking crazy pills, but if a CPC is constantly fluctuating to try and hit an average target over an indefinite time-frame (Google says “at least four days”), you’re going to be paying a bunch of different CPCs at different times - where exactly is this “stability”? Furthermore, anyone who worked with the old Yahoo! DTC budgeting mechanism may remember that Yahoo!’s attempts to moderate average spend were miserable- you’d set a cap of $500/day, the account would spend $3000 in the first day, not a single penny for the 5 days that followed, and then report that the daily average over the 7 day period was $500. That concept’s not quite stable if you ask me.
In addition to creating fluctuating front-end costs, Preferred Cost Bidding could have a huge negative impact on back-end performance. If your CPC increases by a certain percentage to maintain the “preferred” average, your conversion rate has to increase by at least the same percentage to offset the higher cost. If not, your acquisition costs or revenues are going to get worse. Conversely, if you know you need to be in position 2 or 3 for a keyword, but your competitors flood the market and drive the CPC up for that keyword (which subsequently raises your CPC), Google’s going to drop your bid so that you can reach your “preferred” CPC. As a result, you’ll lose out on a large volume of high converting clicks during those times. I suppose you could run hourly reports for the front and back end data and recalculate what your “preferred” CPC should be, but does that really make things any more time efficient than manually adjusting the bids? Wouldn’t it be better to use the max CPC feature, cap your bid, and prevent either of those situations from occurring?
Finally, consider the impact of quality score on your “preferred” bid. Thanks to quality score, ads need a certain minimum bid to be active - but what if the Preferred Cost algorithm drops your bid to a CPC that’s too low to go live and your keyword gets pushed offline? Can Google automatically raise the bid high enough to ensure activity, or will advertisers have to constantly check keyword status and manually manipulate bids? Not much of a time-saver in my opinion.
What Google is essentially trying to sell us is a rudimentary bid management system. But, any experienced advertiser knows that CPCs alone can’t maintain performance - and are especially irrelevant within a quality-based ranking platform. How does it make sense to rely on an average bid that ignores all of the other variables of campaign management? Why would we use a feature that not only guarantees to charge us a maximum bid, but could also have a negative impact on back end performance?
I’ll end this post referring to where we began - Amidst all the buzz surrounding Google’s $3.1 billion DoubleClick acquisition, Google has quietly launched Preferred Cost Bidding. Unless we’re considering Google’s ailing bank account on the list of beneficiaries, Preferred Cost Bidding appears to help no one. Maybe you (or someone who doesn’t work at Google) can enlighten me.