Why Google is Bad for Capitalism

I want to preface this post by quickly saying that I am not endorsing use of another Search Engine or any of the companies or products listed in this post. I am just simply offering an opinion.

On October 28th Google dropped a bomb-shell by announcing a new FREE turn-by-turn directions mapping application (covered well by engadget here:http://www.engadget.com/2009/10/28/google-adds-free-turn-by-turn-navigation-car-dock-ui-to-android/). Almost immediately the stock of both Tom-Tom and Garmin plummeted (http://www.engadget.com/2009/10/28/the-game-has-changed/). While I am not one to ignore free anything, I cannot help but worry about the long term ramifications for Google's developing business model.

Google makes their money off Search through Google.com and enterprise Search with businesses and it is INSANELY profitable. That is pretty much it. Google then leverages those profits to create a juggernaut of free applications. Android, their new mobile OS is free to phone manufacturers. Google apps on the iphone are free. Our gmail, gtalk, and other Google Labs projects are free. Google Docs is free. In a Capitalist Society how does one compete against a free (oh yeah, and generally well designed) product?

Lets look at mobile phones. Microsoft and Symbian both license their mobile operating systems to phone manufacturers. What happens when/if Android dominates the market place? It is arguably a very good OS and superior to both Symbian and Windows Mobile. If MS and Symbian can not develop new software that offers more advance features with a greater value proposition than Android, then why would a manufacturer pay a fee to license software when they can make more money selling phones that have no licensing fees? (The Blackberry and iPhone are a different case altogether since both companies produce both the hardware and software for their phones and do not, nor are likely to, license the software to other companies.)

So why is this bad for capitalism? How many jobs are lost if Microsoft or Symbian shut down mobile development? How many more jobs will be lost if Tom Tom or Garmin go out of business because of a free Google app? This current/maybe ending recession has reminded us that job losses breed more job losses as money leaves the system. Capitalism is about making money by offering products and services that compete with similar products and services. FREE is not competition. It destroys the competitive market place.

Now, I will admit, there are lots of free applications, products and services that we all tend to eschew in favor a paid or licensed version, but that is simply because the paid version has a much greater value proposition and feature set than the free version. Linux is a free and open operating system that will run on any personal computer. However it has been entirely unsuccssful as a consumer product because MS Windows and Apple OS/X offer significantly more value. They are easier for the average user to use, have more software, and are better integrated into our digital lives. The problem is that Google does a fantastic job designing new products and services that often compete 1:1 with their paid counterparts. Their free applications and services are not a half baked, feature light version of somthing that already exists in paid form, they are full functioning and feature complete.

So be careful, enjoy your gmail, gtalk, blogger.com, Android Phone, Google Docs, etc, but do not forget that our global society is built upon paying for what we use. The $100 you spent on your Garmin or Tom tom GPS device helps pay the wages and provides shareholder value to thousands of other people like you. Some off them probably take that paycheck and spend part of it on a product or service that you work to create, advertise, or manage. If they lose their jobs, then they can no longer buy your product or service and the cycle propagates. Sure, maybe you will spend that $100 on a different product or a nice dinner and a movie (lets not even get started on the pitfalls of a service economy.) Maybe you will do the responsible thing and save it or payoff some of that mounting credit card debit (see: www.consumerist.com.) Regardless, I look at it this way... If you work out a way for everything to be free, then no one works.

Me, I will continue to spend when and where I can, and support the products that and companies I love. Even if there is a free version of it out there somewhere.

The Real Search Warrior

PS. Yes I get that my blog is hosted on a site owned by Google and that I have ads on the page provided by Google. I am a capitalist... I want to make money.

The Importance of Auto Bid Management

Thanks to Mary Green with Position2 on the Linkedin SMX blog for bringing this to my attention. This is a great free webcast on the importance of both Auto Bid Management and how important it is for us as Search Engine Marketers to be open to new tools to enhance our clients' performance in recessionary times.

Disclaimer: It is a sales pitch so don't going running off to Position2 without speaking to me first.

Linkedin Discussion: http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&discussionID=8909377&gid=38900&trk=EML_anet_qa_ttle-cThOon0JumNFomgJt7dBpSBA

Brighttalk Webcast (Free Registration Required): http://www.brighttalk.com/webcasts/6166/play

Is There Life After Search Trade Shows

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=98131

Steve Baldwin from Didit hits on some great points here.  The one that stood out the most is this:

“What happened? Well, it seems that the show managers decided that they had to offer "something for everyone" to goose their traffic. The result was a smorgasbord of content offerings designed to appeal to everyone from the experienced PPC professional to guys who just discovered that they can buy keywords from Google.”

I have been attending these shows for quite a while now and for the past 5 years my feedback to my manager has always been “same show, different venue.”  While the SEM industry is by no means mature in the sense that radio or TV is, we long ago reached a point where there are many people who do not just know what they are doing, but that do it extremely well.  While there will always be a need for some basic SEM 101 at these shows, I am dying for someone to take the discussions to the next level. 

To SES and SMX organizers.  Please, please please please… stop putting Google, Yahoo, Microsoft and Ask on the same stage to purportedly discuss the future of Search or whatever banal topic you can think of.  It just turns into a pissing match and no one learns anything.

Instead, bring out the true leaders in this industry to foster discussion on Advanced SEM techniques or integrating Search with other online and offline media.  Create interactive sessions where SEMs, retailers and enthusiasts can discover better and more efficient ways of managing their listings or new strategies to grow their business.  Finally, if you want the C-level managers to really take an active role in these shows, create special sessions just for them and their skill set so that they can walk the show floor and be knowledgeable about their company’s SEM strategies and have meaningful discussions with the sales teams on the floor.

(and on a personal note… PLEASE STOP SCHEDULING SES  -CHICAGO IN THE WINTER.  Really, who thinks this is a good idea?  We Chicagoans live for our summers and you will have a much higher attendance in May or June.)

SearchWarrior

Goldman’s Haiku 2.0 for 2009

Aaron Goldman, VP at Resolution Media, has some great Haikus to get you in the 2009 spirit.   [Via Mediapost.com]

Haiku 2.0 -- 2009 Edition

http://www.mediapost.com/publications/?fa=Archives.showArchive&art_type=30

Do Toolbar Distribution Deals increase market share?

Microsoft strikes deals for Live Search

http://ces.cnet.com/8301-19167_1-10135067-100.html

Microsoft Live Search Toolbar to Be Distributed on 2009 HP Consumer PCs

http://www.microsoft.com/presspass/press/2008/jun08/06-02HPToolbarPR.mspx

This is the big question for Microsoft after signing two big deals with Dell and HP to distribute Live Search and the Windows Live product suite with all new PCs and Laptops.  For years Google and Yahoo have dominated the Toolbar space with a 95% market share between the two of them  (Comscore, June ‘08) and I personally think that toolbar downloads go a long way to establishing a pattern a consistent user Search Behavior.  The Yahoo and Google Toolbars have been so pervasive over the past few years that they have simply become a nuisance.  At one point you could not download Flash, Java, or any host of online products without installing a toolbar.  Until recently, the only way to avoid it was to choose “Custom Install” from the installation menu (something I ALWAYS do now and I RECOMMEND to EVERYONE else) and uncheck the Toolbar box.

Herein lies our conundrum: Is there a portion of the Search User base that defaults to a particular engine simply because it is the primary Search or Toolbar Default in their browser?  Also, what percentage of users are savvy enough to switch their default preferences  after buying a new machine?  I don’t know if an answer is available, but my hunch is this:

The Live Search and Windows Live Product Suite integration with Dell and HP will give users the opportunity to reevaluate Live Search and some of those users will switch over.  Will it be enough to post significant gains on Google?  No, but I expect that we will see an uptick in Live Search market share.  I will reiterate my belief that while these toolbar distribution deals are nice, the only way MSFT or Yahoo will really make an impact is buying going after Google’s adWords distribution partners.

SearchWarrior

Oh yeah, my favorite toolbar is the MSN Toolbar powered by Silverlight.  http://www.newmsntoolbar.com/

YSM Changes Terms and Conditions

Terms & Conditions

"OPTIMIZATION. In the U.S. only, for those advertisers not bound by an Insertion Order, we may help you optimize your account(s). Accordingly, you expressly agree that we may also: (i) create ads, (ii) add and/or remove keywords, and/or (iii) optimize your account(s). We will notify you via email of such changes made to your account(s), and can also include a spreadsheet of such changes upon your written request. If you would like any of such changes reversed, please reply to such email within 14 days of the change(s), and we will make commercially reasonable efforts to reverse the change(s) you specifically identify. Notwithstanding the foregoing, you remain responsible for all changes made to your account(s), including all click charges incurred prior to any reversions being made. It is your responsibility to monitor your account(s) and to ensure that your account settings are consistent with your business objectives."

IMHO, this is bad business… however is it does bring up an interesting point that continues to plague me on the sales and service side.  My guess is that YSM is implementing these changes as a solution to the same problem that Microsoft and Ask deal with… Client mindshare.

Google is so large and dominant that they easily take up the majority of an SEM team’s resources.  As such, especially with the smaller engines, they default to the same optimization tactics for all Search Engines.  Experience has shown this is an inefficient way of managing listings.   So how does an SEM team juggle all of their Search Engines?

• Leverage your vendor resources where available.
• Ask, Microsoft, and Yahoo have capable and experienced teams that know their tools, users, and systems inside and out.  Let them do the work for you and trust that they are both trying to make your campaigns more efficient and drive more traffic.

 

• Don’t be afraid to use different keyword lists for different engines.
• What may not work on Google may work well elsewhere.  Stranger things have happened.

 

• Don’t fear Content Ads, but approach with caution.
• I am less familiar with Yahoo and Ask content listings, but know that adSense and Windows Live Content can be very effective when leveraged properly.  adSense utilizes the “casting a wide net” and your listings will appear across a wide a array of sites.  Microsoft is different.  They have a few Premium Partners mostly focused in the FinServ and Travel verticals.

 

• Ask your Service Team for an account review.
• They may have insights and opportunities that you never thought of.

 

• Finally, leverage your plan and goals across all online media.
• Search, Content, and Display ads within a single network will drive performance across the board.

At the end of day, do not let YSM optimize your accounts for you without your knowledge.  Use this as an opportunity to be proactive with your “non-Google” partners and use all of the tools available to you to optimize your account.

SearchWarrior

Face down, *ss up in the Kool-Aid

This article from Danny Sullivan on Search Engine Land was enough to get me to start blogging as I am tired of too many “pundits” in our industry hooked up to an IV of Google Kool-Aid.

Tough Love For Microsoft Search

Dec 30, 2008 at 5:11am ET by Danny Sullivan

http://searchengineland.com/tough-love-for-microsoft-search-15968

"Remember also that Google didn’t get into search to make money. OK, yes — Larry Page and Sergey Brin clearly hoped to be financially successful. But first and foremost, they thought the challenge of improving search was important. They thought search could be made better, and that motivated them to develop Google, assuming they’d find a way to pay for the service later. Microsoft didn’t get into search to help anyone as their primary motive — they got into it to help themselves."

- Danny Sullivan

<sigh> Here we go again

This remains one of the biggest pieces of PR tomfoolery to emerge from Google's rise to dominance. Building a better Search Engine was a their Business Model and highly successful one at that. One might as well equate the "altruistic" creation of Google to the Virgin Birth or the parting of the Red Sea. At the end of the day, it simply shows that too many of us in this industry are face down, floating in the Kool-Aid.

Google has built some fantastic products (Search, Gmail, Android) and had some pretty big busts… Google Accelerator, Google Video, Google X ("Roses are red. Violets are blue. OS X rocks. Homage to you") to name a few. At the end of the day, we need to remember that Search is a business service not a lifestyle decision. Microsoft, Yahoo, and Ask (I’ve worked for two of these) won’t come close to pulling Google of their throne until they build a better business model off substantially different platform or product. Just as Microsoft was not first into the “Windowed GUI” OS, Google was not the first search engine; just the first really good one. Microsoft retains its OS dominance not because it builds a better product than Apple or Ubuntu, but because it is the “adopted standard of the masses.” I personally think Ask.com has the best Organic algorithm in play right now and spends considerably advertising their product. Yet month after month they remain 4^th in traffic and usage because it is nearly impossible to dethrone the “standard of the masses.” Just as people will not leave Windows en masse unless someone else redefines personal computing, people will not leave Google en masse until someone else redefines search in a Revolutionary way.

The only way Microsoft and Yahoo are going to hurt Google is buying hitting them in the pocketbook and going after their adWords distribution deals. Google’s primary distribution partners provide a steady base of traffic and conversions that allows Google to add partners who are maybe “not so premium.” Remove an AOL and an Ask.com from their distribution landscape and CPCs will plummet as the balance of “Premium” to “Not so Premium” traffic falls out whack. Advertisers will spend less with Google and more with their competitors. Google’s earning and stock price will drop while “Paid Listings Traffic” for Microsoft and Yahoo increase. Such a plan will not ruin Google, but may at least level the playing field.

SearchWarrior