Back In the Saddle

It’s been a few months but I’m back in the blogging groove. There’s been a lot going on.  We continue to make good progress growing our lead generation businerss based on search. The market continues to be complicated with Google dominating search.  The strategy Google alluded to more than a year ago as a potential fix for their ever increasing query volume but ever decreasing average price per click seems to be paying off. Clicks targeting a product or service and a locality (think plumber San Diego) continue to climb. As you may know we focus on an ROI based approach where we purchase and manage exposure through our platforms and turn that exposure into results we get paid for. Search is central to that. Other media represent additional opportunity. Display advertising can now be readily targeted to locality but in our (and others) testing display has proved pretty disappointing in attracting end users who are looking for that specific product or service and are ready to “call now.” Social media is more encouraging and certainly more effective than straight display but again it lacks the immediacy of search. The traditional high bounty markets (insurance, home security health) remain strong but the major brands are getting increasingly sensitive to how and where they are exposed to media which again makes the right kind of targeting trickier than it used to be.

Against this changing and challenging background we have seen a couple of dramatic changes in our society which are overlapping into our world. As you probably noticed the US has acquired a significant new problem in prescription drug abuse leading to heroin addiction in many cases. More people are dying from drug overdose than road traffic accidents. It’s a fairly recent change and it’s one that has impacted a much wider range of Americans than the cliché drug addict.  It’s a horrific and growing problem. The rules governing insurance were changed a couple of years ago with the goal of treating ‘behavioral health’ like any other chronic condition. If you ask any recovery facility how that’s working you will likely get a very angry answer. It’s not working well, yet…but it is better than it used to be with about 85% of recovery treatment costs being paid by insurers. What’s interesting here is that the entire process of finding the right kind of facility, matching it to the patients insurance and ability to cover any copayments is an arduous and time consuming mess. This industry is just about where hotels were ten years ago. The other point of note is that the process of finding help is done through search but transacted largely over the phone. People call facilities and facilities talk through their options. It’s search driven pay per call with very large bounties, much larger than traditional industries. We see this as a great fit for our platform and expertise and we are pursuing an initiative to address this rapidly expanding market. I’ll keep you posted on progress.

Apple Axing Advertising

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Apple is waging a battle on advertising, as they have made ad-blocking software available on the iPhone with the new operating system iOS9. This likely undermines their arch-rival Google, which dominates the $120 billion online ad market.

For the first time, third-party software strip out marketing messages such as banner and video ads when people surf the web via the Safari browser. But Apple’s new approach will not affect advertising inside applications such as Facebook, casual games, or even Apple’s own applications. In effect, Apple is nudging companies to shift spending to apps, rather than traditional online ads where Google leads. 200 million people have used ad blockers last year, up 40% from a year earlier, resulting in $22 billion in lost advertising revenue.

Incidentally, Apple has launched their own news app, which will allow media companies to bypass blockers to serve their own ads or let Apple sell ads and share the revenue. It will be interesting to see how these moves made by Apple will affect its own interests, and if it will loosen Google’s hold on the mobile ad market.

Google Getting Serious About Interstitials

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Yesterday, Google announced that as of November 1st, webpages need to get rid of any interstitials— those annoying prompts you get from some websites that want you to download their mobile app— or else face the penalty of losing priority in mobile search results:

“After November 1, mobile web pages that show an app install interstitial that hides a significant amount of content on the transition from the search result page will no longer be considered mobile-friendly.”

As discussed previously, more and more people are using their phones— not their laptops or desktops— to perform searches. Being considered non mobile-friendly can significantly impact organic traffic, as it’s known that Google aims to return only mobile-friendly sites in mobile search. Also, the Mobile Usability report in Search Console will warn you if it detects large app download interstitials. Rather than using app download interstitials, Google reminds that browsers promote apps in ways that are more user-friendly.

Back in late July, Google published a post on its blog asking people to reconsider using app download interstitials. History shows us that when Google issues a recommendation it is best to listen, because an algorithm update soon follows behind.

Facebook Takes the Top Spot in Referral Traffic

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Content analytics platform Parse.ly recently released data showing that Facebook passed Google in referral traffic to publishers in June. And as of July, Facebook claimed a 38.2% share of referral traffic, compared to 35.2% for Google. These findings are based on Parse.ly’s analysis of referral traffic to hundreds of clients, including Condé Nast, Mashable, Fox News, The Atlantic and Reuters. Facebook’s rise has been slow and steady since at least 2012, as it has been gradually winning referral traffic market share from Google Sites.

Both companies have switched places before, including last fall, when Facebook passed Google for the first time. However this time the lead is more sizeable. Parse.ly’s study comes as Facebook seeks to tighten its grip on publishers even further with programs like Instant Articles, which allows publishers to host content directly on Facebook’s platform, making distribution and consumption easier and more efficient.

Facebook has also tweaked the algorithms that govern organic reach, in favor of publishers and at the expense of brand marketers. Google has also been refining the way it refers traffic to publishers. Most notably they started to give lower search rankings to algorithmic content publishers, which post content based on analysis of patterns in search traffic and auction bids. In December 2013, Google announced a big move towards “high quality” content, again by giving it a higher profile in news feeds. Will Facebook sustain its lead over the long-term? Only time will tell.

A Buyer for Twitter?

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I hate to join a mob scene, but really Google, it’s time to spend some money wisely and buy Twitter. The little blue bird has been having a tough year. It’s trading at about $30 with a market cap of about $20 Billion, which is roughly half of where it was 18 month ago. Its investors are screaming about profits, which must make trying to plan ahead tough (trust me, I know of which I speak). Its management team is looking a little shaky, and it’s also seen slowing membership growth, which makes the market nervous. Last time I checked, Google had roughly $60 Billion in liquid cash stuffed behind the sofa, more than enough to pay cash and still have walking around money to fund their next moon shot projects.

 

Some argue that Facebook, Microsoft or Apple should make an offer, but Google would be the best fit. Apple has more than enough to do already, Facebook doesn’t need it, and Microsoft has their own social effort in Yammer. In contrast, Google could really use Twitter. To start with, in addition to the cash behind the sofa, it has another $440 Billion in market cap to play with, so putting the deal together seems feasible. Next, Google has been getting it in the neck of late for spending cash on projects with a high cool factor but no actual revenue. Google isn’t a car company or a Wi-Fi company or a VR company; at its core it’s an advertising company and a really good one at that. What twitter represents is a massive pool of end users who could be great consumers for the advertisers Google already possesses.

In recent months, Google has been killing off its failed social media effort Google+ (may it rest in peace). That leaves Google with a ton of advertisers, a difficult landscape in terms of making money out of mobile users, declining desktop traffic, and no social media component. If they were smart, they would make a play for Twitter and get them under their wing as a wholly owned subsidiary like they did with YouTube. YouTube thrives with a light managerial touch from Google and is now the second largest online search. If Google can annex Twitter, it can pretty much guarantee that it will also have the third largest search in Twitter as well.

Facebook has been focusing more on search recently, Apple has fired Google as their search, and with Windows 10, there is a chance that Microsoft will be able to grow Bing’s market share. If Google loses Twitter to one of those guys, its opportunity to grow its search in social will be greatly reduced at the same time their rivals are making aggressive moves into Google heartland.

It will be expensive, no doubt, and many will cry “foul” and “monopoly,” but it’s a move which makes perfect sense in many ways. It may by now be as close to a “must do” play for Google as makes little difference.

Google Finds Interstitial Advertising is Just Annoying

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How many times have you been browsing the internet, and see that annoying popup from the website asking you to install its app? Google has published the result of a recent study they performed, saying it found nearly 69% of visitors served with an interstitial (the popup for those who don’t know) for its Google+ social service abandoned the page entirely – neither downloading the app, nor going on to visit the mobile website – attributing this to the added friction of serving mobile users with an interstitial. Usually there is a large button to get the app and a small link to allow you to continue to the mobile site.

9% of the visits to the interstitial page resulted in the “Get App” button being pressed. But some percentages of users have already installed the app or gone through the entire course of the app store download. That means not only didn’t they go to the app store, but they didn’t even continue on to the mobile site.

Mobile web users are often irritated by the interstitial ad that often pops up to promote the website’s native app. However this week Google has eliminated its ads and did a big favor to users. The Google Plus iOS native app installs only experienced a 2% drop. Maybe this might be a precursor to other websites dropping their interstitial, allowing for a seamless transition to the page you actually want to visit.

Stalking the Google Way

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The recent data breach at Ashley Madison (a company whose boss was dumb enough to claim that he had the most secure site on earth) means the site may end up with private information about millions of people having affairs being released online. What is perhaps much more threatening to anyone trying to stay under the radar is the spy in your pocket. Google just announced the latest version of its timeline feature in Google Maps, and it’s kind of horrifying.

For as long as you have had location services turned on (the default is off, but many people turn it on to take advantage of other cool features), Google has been tracking your every movement. For example, last Christmas, we visited Las Vegas. On my timeline for Christmas day, it shows that we stayed at Caesars and visited an exhibit at the Luxor. It’s not perfect; it shows us at the Hilton (the Purple Rain tribute show), but has the time wrong. Nonetheless, it’s pretty amazing. The fact that I didn’t ask to be tracked and didn’t know it was happening is apparently neither here nor there.

In theory, all this rather creepy. Tracking is double opt in, but I bet most people have no idea what Google has been tracking for the past five plus years. Do you know where you were in April 2009? Google does. In some cases, it even shows me moving around inside my house. Again, weirdly creepy.

Obviously (as always), all this data collection comes down to commerce. If Google knows where we are, it can better target ads of all kinds at us. Since most of us don’t make much effort to control what we share (most don’t actually care), maybe it’s just another aspect of our “nothing to hide, nothing to fear” culture. However, since Google has no problems sharing with the government pretty much anything they ask for, you have to wonder what Google and our overlords are making of the places you go and the people you see.

Google Going Local?

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The word on the street for quite some time has been that Google wants in to the home services racket. The marketplace represented by all the work done by people like plumbers and lawyers is simply too huge to ignore. At the moment, most folks in the space (like Search Initiatives) focus on helping local businesses and national businesses with lots of locations drive business to those storefronts. Some sell leads, some build websites that do well in search, and some help those businesses spend their ad dollars to maximum effect. A great many of those ad dollars are going to Google, where the click prices for local search terms like “Plumber San Diego” are insanely high — over $40 a click in the case of that particular query.

The announcement last week that Google is buying HomeJoy and rolling their team into the Google-opolis reinforces the suspicion that something is afoot. The HomeJoy guys were essentially an Uber for house cleaning. They had raised a good chunk of funding, but were struggling with their latest round. They’re also getting into hot water in places like California, where the issue of their cleaners actually being employees rather than contractors was getting nasty.

Google now owns HomeJoy and a business reviews and profiles platform called Thumbtack. They represent different angles on the same space, and it’s likely that eventually, Google will pick a path and jump in.  The smart money says that Google will follow initiatives they have been announcing recently, where they become a vendor rather than only being the marketplace where all vendors compete. In local services, this means that a local plumber signs up and agrees to cut Google not how many clicks it costs to get a potential customer, but a piece of the actual value of the work involved. Amazon is trying something similar.

It’s likely that when they roll this out, the top results on search won’t be the people willing to pay the most for the click, but rather the people willing to cut the largest check out of the job value. The math runs something like this: it varies wildly, but many businesses will spend up to 10% of the value of a job on marketing. For example, an air conditioning repair guy will have to pay about $15 a click to have any chance of getting found on Google, actually closer to $30 to guarantee top spot, but $15 should get you some visibility. We know it takes around 5 to 10 clicks to get a solid lead, and most businesses close about 25% of all jobs they quote. That means a local business has to buy something between 20 and 40 clicks to get that billed job. That’s roughly $300-$600 of marketing cost per billed job in this case. As you can easily see, it’s tough to make money in the local search market where amateurs bidding on search terms are causing huge price spikes.

Given that Google is already earning a ton of money from this area, it will be interesting to see how they pivot into competing in the space. Convincing local businesses to buy search has been hard. I can’t imagine convincing them to sign over part of the contract value will be much easier. There will be questions like: how do they check on what got billed and paid? Is the job booked and collected by Google? What if the contract goes bad, and someone gets injured? Is Google essentially becoming the prime contractor and back office for local business?

It’s a massive opportunity, but also a huge potential pain in the neck. Local is hard, really hard. It’s the “Russian Winter” of the online space. It will be fascinating to see if Google has the stomach for the fight.

When AI Meets PC

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Google has spent many years and billions of dollars making its algorithms really smart. They detect behavior and the kind of content we look at, and then Google targets ads to users which its algorithms “think” fit them best. The recent calamity where it categorized African Americans as “Gorillas,” and more recently the one where it categorized a Chinese man as a “horse,” may be just the tip of a problem that most of us probably didn’t see coming.

If you make your algorithms super smart, the problem is they will behave as trained and work really hard to send the right ads to the best match, irrespective of the societal norms. In recent studies, researchers at Carnegie Mellon created fake male and female users and browsed sites which have a strong gender bias — think caranddriver.com vs. cosmopolitan.com. It’s not an exact study, but it’s an interesting approach. They then set these fake identities to browse gender-neutral sites and tracked what ads Google presented to the various fake users.

The results were striking. Male users of news sites like CNN were more frequently shown job ads with higher salaries than females on the same sites. They also found that an image search for CEO only presented 11% female results. Frequent browsers about addiction were sent ads for rehab.

Some of these results can be explained empirically. The fact is there are many fewer female CEOs, so the number of images indexed is likely proportionately lower. Likewise, the addiction result. Google tracks your browsing history, so if you spend a lot of time looking at fly fishing sites, it’s likely that’s what you will get ads for on CNN.  The fact that it also works for addiction feels different to fly fishing, but it’s not really.

The jobs and gender question is much weirder. It suggests that Google is divining your gender from your behavior, then making a value judgment. If we can assume that job ads don’t/can’t in the vast majority of cases specify gender, then it’s odd and perhaps worrying that Google is doing the math for us. It seems unlikely that someone in Google sat down and came up with this as a neat strategy. But rather, it’s probably the Google ‘brain’ watching the kinds of jobs people of different gender apply for and preferring those kinds of jobs to that gender because they are more likely to earn that click. Google only gets paid when ads get clicked on, so it tries really hard to fit the best ad to what it knows about the user every time. That’s fine for fly fishing, but weird for jobs.

I suspect that this is simply the unintended consequence of the AI running the ad platform getting a little too good at its job. In society, we adopt behaviors and constructs to address what we perceive to be intrinsic societal problems. We make extra efforts to be inclusive; we go the extra mile. AIs don’t have the same PC conscience, unless it’s programmed into them. I imagine there will be a bunch of changes made in the near future to “level the playing field” on this topic. Ironically, it will probably reduce the overall effectiveness of Google’s ad product in some areas. But that might be a small price to pay to avoid the discrimination law suits.

Google Accused… Again

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There are some arguments that just won’t go away. The “Google is skewing their results” argument has been kicking around for several years, and a new version has just popped up. I’ve commented multiple times on this deathly dull topic, but let’s review for old time’s sake.

Google skews its results. It’s a simple fact. They have done it for years. For example, if you use SafeSearch, it will skew away from adult content. When you make a local search, it skews results to fit your location. Nobody complains about that kind of skewing; it’s the type where they favor their own results or partners in reference to a competition that causes concern.

The FTC investigated this a year or more back in the US and found no fault. It’s unlikely to revisit this challenge, in part because it’s tricky to prove and in part because Google has a monster lobbying engine and the tech jobs issue (much like guns) is a third rail issue. The equivalent of the FTC in Europe is looking at taking on Google. Those EU guys hate Google with a passion and are always on the lookout for a stick with which to beat them.

This latest stick comes from a study commissioned and paid for by Yelp. That in of itself probably makes it worth less than the paper it’s printed on, but it’s an interesting study nonetheless. Essentially, they showed Google search presentations with and without the Google “Focus on the User Listing” OneBox container. In their testing, they found that users clicked on the plain results rather than the optimized version 45% more frequently. Their conclusion was that Google is deliberately sabotaging the end user by making the results less easy to use, forcing users to search again or…what, give up in tears? For a complaint of this kind to prosper, you have to show harm, and their version of harm here is a lower click through rate.

They aren’t claiming that a Google OneBox business being preferred is actually benefitting Google financially. Rather, by featuring OneBox registered businesses, Google is harming the end user. The overall claim is at best paper thin.

There are several quite good reasons why Google often prefers OneBox results. To start with, OneBox businesses have taken the time to validate their business, confirm the info is correct and, in many cases, create a nice business profile page that the searcher may well click through to. Either way, what does seem to be clear is if this is annoying users, it’s doing so to the extent where they are changing their search engine. Most people have bigger fish to fry.

Search and how that search is presented (much like the weather) is a big, complicated topic. If you stare hard enough, you are bound to find things that might look a bit off. Keep staring and it will change. Complaining about it to an FTC which has been bought and sold by Google won’t get you very far. I imagine these researchers will be mailing their results to the EU commissioners right away.