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.

Does Google Have a Color Problem?

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The story this week that has been setting social media on fire is the one about the algorithmic miss classification of some photos by Google+.  The problem is that it classified a picture of a nice African American couple as “Gorillas.” That’s horrible, and what’s worse is that the only way Google could find to fix the immediate problem was to remove the tag entirely. Obviously, it was a mistake and Google apologized profusely.

Image recognition is much tougher than you might think. I read recently that at any given moment, about 65% of our brain processing power is focused on visual processing. We are extremely good at it, and we evolved that skill over millions of years. We recognize things and people with incredibly few visual clues. Expecting software to be as good as we are is probably unrealistic.

Having said that, this oops moment does perhaps point to a larger problem. Silicon Valley is horribly white. Actually it’s white and Asian, by which I mean mostly Indian Asian. There is a sprinkling of Latinos and about 2% African American. In short, Silicon Valley is a privileged white, first-generation, super-educated immigrant mix. I don’t recall ever seeing a black face in a meeting. Companies like Google promote diversity, but any visitor to their cafeteria (a fantastic place BTW) will be struck by the mass of pencil-necked geeks and button-down collar-wearing senior nerds and the phalanx of Indians (the Indian food there is first class BTW).

If all the diversity you have is white and green card, it’s less likely that anyone is even thinking about checking things like algorithms for culturally disastrous mistakes like this one. Nobody looks like them, so nobody checked. I guarantee that there are special routines built in to check for things like Native American vs. Indian sub-continent. I wouldn’t be surprised if there is special code to try to differentiate various Asian groups, but clearly not black.

It’s a problem without an easy fix. Graduation rates, etc. are lower in some communities, but companies like Google could invest in urban tech programs. Maybe fund a few charter schools in cities that aren’t San Francisco. At the very least, they could check modules like the one in question for obviously offensive situations like this one. If you live in a bubble, this kind of thing is likely to keep happening.

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.

Apple Gunning for Google…Again

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A few weeks back, Facebook announced that it was adding a good sized index of Facebook-exclusive stuff to its product, which in theory presents a threat to Google News and possibly other search products. At its developer conference this week, Apple announced a much larger threat to Google.

This gets inside baseball very quickly, but it’s worth it; hang with me. If you are an iDevice user, you will be familiar with Spotlight search. It’s the search box that appears if you swipe down from pretty much anywhere in iOS. At the moment, it pulls up matches from some native apps on your phone; things like your contacts, calendar and some email programs.

The Apple announcement today will allow pretty much any app to link into Spotlight search through an API (that’s the language in which programs talk to each other). So if you have the CCN app (for example), and you searched for “ISIS” in the Spotlight bar, the CNN app could return stories from the main site CNN.com without you ever calling up a browser or doing a search on any other search engine. That’s potentially huge. It would also allow apps like Amazon and eBay to pull up commercial results, again without recourse to Google.

The nuance to this is that (unlike Google) Apple doesn’t rely on exploiting search results with commercials to drive 95% of its revenue, so it can promise (as it did this week) that your searches will never be shared or targeted. Given the massive and accelerating growth of mobile vs. desktop usage, this could make a significant dent in Google.

The good news for Google is that it owns Android, which holds a significant market lead in mobile devices. It could certainly make a similar move and return Google Ads around the results, but it doesn’t have the vice-like grip on its own mobile OS the way Apple does. Carriers futz with Android, which makes this kind of over-arching play trickier. It will be interesting to see how this plays out.

Is Google Treading Water? Or Drowning?

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I’m not really a stock market betting guy. It’s a game I’ve never been good at and frankly doesn’t interest me. I do keep an eye on several stocks, though, and one of them is Google. It’s been a tough year for them, and I’m sure their larger investors are letting them have it at their current shareholders meeting. The problem is that they have been more or less flat, showing a 1% decline in a period where the S&P 500 has hit nearly 10% growth.

I have extensively documented the factors driving these doldrums. The rapid move to mobile by users when advertisers have been slower to follow has hurt them. They have swapped desktop dollars for mobile pennies in many categories. The irony of that transition will not be lost on newspapers, who suffered a similar calamity a decade or so ago when print dollars became online pennies.

Having conquered search, they went on to miss out on social media. They missed Facebook, Twitter, Snapchat, and a bunch of other upstarts that have been pulling users away from Google properties. They also have a penchant for super expensive, “revenue-free” projects like Google Glass, Fiber, Nest, Driverless cars and Loon. That’s fine and dandy when you are king of the hill and leading the pack, but it’s less cool when you are just another online ad platform. Add to those woes the growth of markets over which they don’t have any sway, like Amazon and eBay. It’s tougher to be a Googler than it was a few years back.

At its core, Google is an advertising platform based around an auction system. The explosion of mobile inventory and the slower rate of adoption by advertisers has driven their click prices down month over month. That will likely improve as the ad world catches up, but it won’t be soon.

They need some game-changing, revenue-rich ideas. To that end, they are moving towards being the marketplace and selling goods and services direct, as opposed to being the forum where advertisers pay to reach the audience. It’s a good idea if they can make it work, but it’s also dangerous as they may end up in competition with their own advertisers.

There is talk of them moving into our local space. The idea is that Google becomes the platform which a local business uses to get jobs, then shares the profit on that job with Google (as opposed to merely buying ads to get customers). It’s huge and potentially game changing. It’s also fraught with friction and would require a fundamental change in how the local economy works.

It’s possible that in spite of having a massive war chest of cash and market leadership in something as fundamental as search, the glory days of Google growth are behind us. If they are, Google stands the risk of being discounted in the same way that newspapers were a decade or so ago. Maybe it is already far too far out, and not waving but drowning.

Facebook Looking to Keep Users from Google

FacebookFacebook has been testing its own in-app search engine that will allow users to post links in a status update without having to visit Google.

Some U.S. users of the Facebook app will see an “add a link” option next to buttons to add photos or a location to a status post. A user will type in a search term and then a drop down list of links will appear. The user will be able to preview what is on that website and then share the link on the social networking site.

Typically, a user would have to search on Google (or any other search engine) or go directly to a website and copy and paste the link into. Facebook has been working on cutting out that process and keeping people inside the Facebook app for as long as possible.

Facebook has indexed one trillion posts that have been shared on users’ feeds. This will allow the in-app search engine to suggest the most shared links. This data will allow Facebook to steal a march on Google. This, coupled with advertising opportunities could worry Google, given the stiff competition for mobile ad dollars. Over 70% of Facebook’s total advertising revenue comes from mobile and the company has been working hard to keep people in the app for longer.

Another attempt by Facebook to keep its users away from search engines is news. A report in the New York Times this year suggested Facebook was in talk with news publishers to host content on the social networking site rather than linking back to the publisher’s website. The aim would be to share ad revenues.

Apple Crawling…

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Did anyone get rich by betting against Apple recently? The short answer is probably no, unless you were lucky enough to pick the short round about Christmas last year. So, if I were to suggest that Apple is planning to take on Google as a search provider, who’d give me $50 against them making that work? Any takers? Didn’t think so.

There has been a rumor circling out there for a while that Apple is going to build their own search engine. The challenge of doing that is both simpler and more difficult than it was back in the early days. It’s simpler because the processor power needed to do something that huge is much cheaper, but the scale of the task has ballooned along with the internet.

As Apple inserts themselves into more and more of our lives, it makes perfect sense that they would try to claim at least a part of the search pie. I (like many people) have Apple devices on which I mostly run Google Apps. Since mobile and wearable continue to dominate our interaction with the web and each other, it might be more convenient if we could use a decent Apple search rather than always having to divert to Google.

Apple has given us perhaps the strongest indicator yet by announcing webmaster guidelines around their web crawler or search bot. Just in case you have a life and aren’t familiar with the term, a web crawler is a program that roams over the net following links and indexing the content it finds. You can stop it from indexing all or part of your site by naming it in your robots.txt file. Apple is now telling webmasters which syntax to use to stop Applebot from indexing their sites.

Google and Bing have an enormous head start in terms of familiarity for both users and advertisers, but Apple has a massive user base to which it could immediately propagate its search. It doesn’t mean that people will use it, but if they put it on the home screen, I bet may would at least try it.

The search pundits (yes such things exist) are speculating that this is Apple only looking to build a search for Siri. But why stop there? If you are Apple, with the brand recognition and user base they have, why wouldn’t you go the whole way and jump into search full on? If they are just now announcing their bot, it won’t happen overnight. But in a year — absolutely possible.

A Kinder, Softer Google?

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Anyone who has ever dealt with Google knows what a ruthless, relentless competitor they are. If you don’t like their way, you can go pound and…”We are Google, dammit!” So it was a little surprising to see a new, fluffy Google attempting to make love not war with the EU newspaper industry.

Remember newspapers? In the EU, there has been a growing clamor against all things Google led in part, at least, by the rich and powerful newspaper groups. Though they are considerably less rich and powerful owing to the thrashing their industry has taken in the last couple of decades, they still have a loud voice in Europe. Massive cross media conglomerates, like Axel Springer and NewsCorp, still carry a big stick and have been in a standoff with Google for a while.

Google has just announced a new “Digital Initiative” with a group of major EU publishers. They have pledged about $170 million over three years to help newspapers grow their digital products and revenues. Given the insane amounts of money Google has thrown at projects like Nest and Glass, the amount seems a little patronizing, if not insulting. But it’s better than nothing and it’s better than being at war with the major EU news publishers.

In a kerfuffle I documented in this very blog a few months back, the Spanish government passed a law that essentially required Google to pay to include snippets culled from Spanish news sites in their search results. In response, Google shut down their Spanish news site entirely (a very Google move, BTW). That led to the implosion of many news sites who lost most of their search referral traffic. Both parties backed away from the mess, and this uneasy, somewhat patronizing initiative seems to be the result.

What’s really happening here is that Google is trying to narrow the number of concurrent battles they’re waging in Europe. The EU competition commissioner is leading a pretty strong assault on Google for what looks to be a very tightly-defined accusation of anti-competitive behavior. Indeed, there are some in the EU lobbying for a “Google Tax” on all things Google.  That would be a problem, as would a $2Bn monopoly-based fine. Having the very vocal news industry editorializing about how evil Google is won’t help that cause. I’m sure Google is hoping that the digital bone they have thrown the EU news hounds will keep them quiet for a while.

The Mobile Chickens Have Come Home to Roost

_82435951_img_20150420_123227-1If there is one thing that makes me curse at my cell phone more than anything else, it’s large companies with pitiful mobile web presences. I’m sure you’ve done this any number of times: search for a business on Google, and click through to find a page with teeny tiny lettering and un-clickable links. A shockingly large number of good sized companies still don’t have mobile-friendly websites. For example, Big O Tires (www.bigotires.com), a national chain with over 400 franchise locations, is an ugly mess on any mobile device. There’s just no excuse for it, and Google has a plan to fix it.

On the grounds that things won’t get better until circumstances dictate they must, Google is changing the rules. As of April 21st, it’s tweaking its algorithm so that sites which aren’t mobile friendly won’t rank as well for queries on mobile devices. Nobody quite knows how devastating a change that will be, but since mobile traffic is now just about 60% of all search, that’s likely a huge deal.

In fairness, they did give the world a few months of warning. The grim reality will still catch many companies with their sites down. It will no doubt force a bunch of companies who hadn’t quite gotten around to making their sites mobile-friendly to get off the dime and get them fixed or face a massive drop in traffic. That’s tough love but they had it coming.

The people who aren’t quite as well placed to handle this change are the millions of small- to medium-sized businesses who may only have just gotten their acts together to put up a decent site. Now the 80% of them who aren’t mobile friendly will find themselves at a disadvantage to the (mostly) larger guys who are. There are only so many web developers out there and for many local businesses, their online presence already ranks low on the to-do list. The likelihood that they will all have the resources to fix it quickly is slim. Indeed, they probably don’t even know this is coming. It’s going to hurt.