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October 21, 2005
Both sides of an issue, Fri., Oct. 21, 2005, 5:35 PM
There would not be a market, or any issue, if there were not two sides. This afternoon, with regard to the Google operating issue, I received mail on both sides.
Hi Bill, Thanks again for all the wonderful advice you provide on your site.
This past weekend's IBD had an article about MSN entering the paid search world with Google and Yahoo. That article stated that Google had 50% of the paid search market, Yahoo has 30% and the balance goes to smaller firms. That is of course, paid search and not ALL internet advertising. Google is however allowing graphical images to be displayed now (and as of this week - Flash based ads) and is rapidly gaining in the online advertising world where branding is required.
I also have experience with Google, Yahoo, et al. I personally spent over $100K last year on Google Adwords (and another $50K or so with Yahoo search marketing). Aside from the fact that they sent me a better "thank you" gift (a nice beach towel vs a fountain pen from Yahoo) there is another more subtle thing happening that not too many people are talking about.
As a search marketing professional - I go to a great deal of effort to track the ROI of my ad spending (down to the keyword level) and can tell you that without a doubt - the quality of traffic coming from Google to my sites is much higher than with Yahoo. I get much better conversion rates and can therefore spend more per click than I can with Yahoo. This makes me (A) raise my bids and (B) shift more of my budget to Adwords over Yahoo. Now, no one who wanted a broad advertising plan would ever completely dump Yahoo in favor of Google but there are 100s of 1000s of small businesses out there (my customers) who have very limited ad budgets and can really only afford to focus on one advertising program. So who do you think I steer them towards???
My point is simply that not all paid search is created equal. Thus far in my 4 years of experience, Google has done a much better job sending me quality traffic than any of its competitors. I believe that as web analytics and conversion tracking tools become more prevalent, others will realize this and also favor Google, thereby raising their market share.
Just one man's opinion.
Even so, I DO NOT OWN GOOGLE. I just can't get past so many of the fundamental humps you point out. Thanks, /J"
Hi Bill, Your skepticism on GOOG is well founded. There is a real issue regarding click fraud that has many advertisers fed up with how Google charges them without proof of legitimate click-throughs. Many are ready to spread their dollars around to competitors who are increasingly nibbling away at GOOG share. Others are now assessing the effectiveness of sponsored ads and may bolt from the net completely. These risks to GOOG and current share valuations make it important that the public be aware of the downside potential when revenues are as questionable as they are. (CNNMoney article attached, he says, which wasn't). This article was found in a search and the article is almost a year old.
The issue of being charged for phony click-throughs is still there for many sponsors of ads who get billed without being able to ascertain sufficient details as to who clicked through to know if they are getting full value. The whole web-based sponsored ad revenue model is so new and to place this much value on it is ludicrous. Many users will try it and then move on to try the next thing and not be committed to web advertising in the future. Competitors are also working to steal share from GOOG and many dissatisfied users will migrate to them, or at the least carve up their budget among several search engine services.
(Then a follow up letter) In my message that was sent to you from the CNNMoney webpage originally, I pointed out that there is a something wrong when phony click-throughs cannot be filtered and you get a bill from GOOG that you cannot fully verify. The same people who are suspicious that the people who are selling you anti-virus software are allowing viruses, Trojans, variants and adware to get into your machine so they can offer you software, upgrades etc. are also suspicious that the sponsored ad sellers, such as GOOG, are also allowing fraudulent click-throughs. It is not beyond the imagination to see an enterprise put in place software that generates huge quantities of click-throughs from phony sources to kill their competitor, or convince them that they are wasting their money on the web. Would GOOG care as long as the sponsor pays the bill? GOOG will look the other way as long as the money keeps pouring in. /T"
Yes, both readers are making good points. I've thought of them all.
First and foremost, I don't think consumers are stupid. They buy advertising and they track the results. If the results are there, they buy more. Clearly Google performs.
Does Google own what is an exciting, exponentially growing market? They do today, but some will argue the future is too hard to predict, so we cannot say they will in a couple years.
I think the bigger issue is one of valuation. Google has only been a company for about seven years, and a public company for about a year. Investment analysts and customers alike are still trying to figure out the company. They are still trying to figure out the marketplace.
I love the marketplace. My own website has been growing at the exponential rate of +45 pct Month over Month since I started it in April 2004. So I'm the last guy in the world who should be saying anything negative about Google. Besides I use it at least 20-40 times a day!
I'm glad my readers like the blog. It's a great opportunity for me to teach, inform, plan for a new business, and have fun. I'm definitely not a mega-billionaire like Messrs Brin and Page, but it's been a good run, and I know there are performance limits.
I can take care of myself, but I'm a little concerned that there may be Moms and Pops out there who may think that Google will always be the cat's meow.
And if they do, I'd like to point out that even with a cat that has nine lives, you can expect the last one to be over in about 12 years. Unfortunately.
Posted by Posted by Bill Cara on October 21, 2005 05:35:47 PM | Category: Yada yada