montereyEricB’s recent post on his excellent blog Inside Analytics was on the topic of Analytics and Results. It covered two things (Eric correct me if I misstate anything):

1) Concern in the blogosphere and elsewhere around potential for misuse by Google of data they have from AdWords and Google Analytics and

2) Need for defining a new industry standard for measuring “conversions” or “actions”.

I started to write a comment on his post around the first point but it got so long that I thought it might be better off as a blog post.

Context and "Back Story":

There seems to be some concern in the industry, newspapers and blogs around the potential for “mischief” by Google if you do Pay Per Click (PPC) campaigns as well as use Google Analytics to report on that data. The core premise being that since Google will have access to both your ad spend and return on that ad spend (hence value) they can manipulate the market to make more money (because they know how much you  are making from that 50 cent ad click). Or variations of this theme.

Exploring an Alternative Point of View:

The concern is coming from different quarters, from Google’s current competitors, from Google’s perceived future competitors, from general folks who seem to be genuinely worried. 

If Google wants to be profitable and they have access to your spend and, say for ecommerce,“order size”, it is a simple small step to go manipulate market / customers to make even more revenue from Search Engine Marketing (SEM) campaigns. Is it genuine? Are there any flaws in the thinking behind the opinions?

There are some significantly smarter people talking up these concerns surrounding Google AdWords and Google Analytics, but I am a bit mystified that some obvious points have been overlooked. At the expense of sounding naive here are three thoughts for you to critique (in no apparent order):

1) The mountain is very high (and is it really worth it?) :

Most of you who read this blog, and I, actually work with Analytics tools and I think we can safely say that this is a non-trivial challenge to overcome even when we use dedicated analytics tools and just for one company. Think integration of WebTrends and Omniture and ClickTracks etc with our PPC data and getting even half decent insights fast enough. It is really complicated, no matter how you look at it.

If we can't even do it well for one company, ours, for Google to do it for the rest of the world and all the different business models and acquisition strategies is a non-trivial challenge.  Even though there are examples of extremely efficient arbitrage, specifically in the foreign currency markets, I am skeptical that it is “easy” for Google to find "insights" and do so in a timely manner to over charge us and do so while balancing that against real ROI Google would get for itself.

Now I'll admit that if Google's new mantra is "Only Do Evil", they most definitely have the brightest collection of people to actually pull this off. But with all the eyes and hard core scrutiny on Google how would this story look on the front page of New York Times, and what would be the impact on the company’s future?

2) Single acquisition channel vs a world of many :

All the concerns raised assume that Google is going to be the only acquisition strategy option for all companies out there. This is far from certain. PPC is important but for most Fortune 1000 companies it is hardly all their spending.  In as much PPC competes against all other acquisition strategies that we have at our disposal (direct marketing, email, affiliates, SEO, bill boards, crazy tv ads etc etc).

If I run a business and suddenly I see that Google PPC is not as cost effective for me as an acquisition channel,  we will pour money into other channels that get us better ROI. 

The Internet is beautiful and in the past switching acquisition strategies was complex, expensive and hard to pull quickly, now it takes me 10 minutes to switch strategies (don’t ya love the web!).

3) “Efficient Markets” and helping oneself vs customers :

I believe in efficient markets and the power of markets to constantly find optimal ways for companies to reach customers.

Google is not a monopoly, it is not the only option out there, there are larger companies out there trying to compete with Google (though some are in a process of getting their act together :) and Google will have to compete with all of them to be a part of my acquisition strategy.

If they change their mantra to Only Do Evil and they mobilize 5,000 PhD's to build artificial intelligence algorithms to mine my goal page data in Google Analytics to charge me more via AdWords , I'll simply shift to Yahoo! or MSN or a company that I don't know about today but is sure to come along.

Google is not omnipresent and it can't rest on its laurels or bank its existence on a strategy to "rip off" its customers (us). To stay in business for a long time (and at $380 per share for stock) they are going to have to compete for my marketing dollars with all other options I have. For that to happen their strategy will not be "how to make the most amount of money From Avinash" but rather “how to make the most amount of money For Avinash at the lowest cost for him". That will separate them from competitors, that is the difference, for any company, between a short-term strategy and a long term strategy.

A metaphor:

I recently gave a speech at Google at the nice Googleplex in Mountain View in Building 40. The reason I am being specific about it is because I spent almost four and half years working in those exact buildings when they were owned by SGI (Silicon Graphics Inc). 

When I joined SGI nine odd years ago there was a Business Week front page cover titled “coolest technology company on earth” (I am paraphrasing). Today SGI is almost bankrupt (and it truly breaks my heart because I loved that company).

As I walked in B40 for my Google speech it struck me that there could be a story in Business Week today with the exact same title and it would rightly apply to Google and they are in the exact same building.

If Google wants to avoid the fate of SGI (and it took SGI less than three years to go from the “coolest company” magazine cover to start layoffs), it has got to constantly keep innovating, stay relevant, fight in a dog eat dog world and most importantly maintain 1) a persistent focus on having the best damn customer experience for all that Google offers, search and beyond, and 2) be the best, and most competitive ROI, customer acquisition channel for companies.

The fastest way to a SGI like fate is to do the kinds of things the GA + AdWords concerns suggest, and I think Google is smarter than that.

Small but important point: 

Does this mean you should use Google Analytics? That you should link GA with AdWords? Or that you should not? All these are questions that you'll answer for yourself and do what makes best sense for your individual company.

Full Disclosure :

  • I think Google is a very innovative company and I have a favorable opinion of the company
  • I know three people who work at Google, I think they are nice (this could cloud my judgment)
  • I have given a speech at Google and they gave me a free drink (Odwalla Mango Tango)
  • I have absolutely positively no insights into Google’s strategy and I have no inside information into Google Analytics or AdWords

So what do you think? Is this a very naive view of the world? Do you think Google can “crush” all competition and become the “king of the world” forever? Is there something obvious that I should have considered that I am missing? Please share your feedback via comments (and I have a thick skin so please be as brutal as you have to be).

(Eric I am sure you’ll agree this was a really long comment on your post! Thanks for posting something that stretched the brain. : )).

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PS: Hello from the beautiful and historic Hotel Del Coronado in Coronado, California. Stock photo below.


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