How Google Makes Decisions

Every time Google makes a change to its search model or landscape it prompts numerous blog posts debating the reasons for the move often including complicated strategic or structural implications. But when you boil Google’s search revenue model down to its base parts, the reasons behind each change to either the SERP landscape or Google Adwords start to make more sense.

The formula for Google’s search revenues is pretty simple:

Number of search queries x revenue per query = total revenue from search

So there are only really two levers Google can pull when it wants to improve its revenues through search (which as a public floated company it is under constant pressure to do). And given its dominant position in most countries it has little way of improving the volume of queries people do so it has to try and increase the revenue per query.

How to increase revenue per query
Breaking this down slightly further there are only two real ways Google can increase their revenue per query.

  • Increase the click through rate of paid options on the SERP page – either through adding more elements or making them more prominent
  • Increase the intensity of the auction meaning everyone bids higher and the average CPC increases

When Google makes changes to their search landscape is it more often than not, linked to one of the above objectives.

Applying This to Recent Changes
When you apply this to recent and upcoming changes it becomes very simple.

The move from free to paid for Google Shopping
A very simple on is the move from a free to a paid model for Google Merchant Centre which powers its shopping/product results. Since its inception Google’s shopping results have been free and for many retailers generate a large amounts of traffic. Due to the fact they appear on most product level search and the fact their format makes them stand out on the page their click through rate has been high and Google has been providing this traffic to retailers for free.

So when they are looking at the search landscape and looking to pull the ‘revenue per query’ lever then this was an obvious change to make.

Thinly veiled as an attempt to improve the quality of results this was a simple revenue play by Google.

The introduction of enhanced campaigns

This one is slightly less clear but again, bringing it back to their base model, is a simple move to increase their revenue per query, but in a different way.

Over the past few years percentage of Google’s overall queries which have been performed on mobile devices has risen. Due to slow mobile adoption and a historical approach of having a smaller keyword set the average CPC on mobile search has been lower. In addition there are less paid ad slots in the mobile SERP and therefore the overall revenu per mobile query is lower. So as mobile has become a proportion of Google’s total queries, their combined revenue per query is in danger of declining.

Back to my original point around how to improve revenue per query they therefore have two options when it comes to mobile search. Increase the amount of paid options, or increase the intensity of the auction and therefore the average CPC. Given the limited nature of the mobile screen real estate adding more paid options would be very difficult.
The new enhanced campaigns format automatically opts all advertisers into mobile search, something which was previously optional. So unless an advertiser takes the step of applying a 0% bid multiplier for mobile search then everyone appears on mobile devices. As a result the auction intensity increases and the average CPC for mobile PPC will increase, thus increasing Google’s revenue per search.

So you can see that when you boil Google’s business model back to its simple formula, each decision it makes starts to make more sense. The only caveat they have to place on these decisions is to make sure they aren’t to the detriment of user experience as this could affect the other side of the equation, query volume. However so long as they are confident it won’t, and they can put a more positive spin on the change to the advertising public, the decision comes back to revenues.

Can Google Predict the Top 2012 Christmas Toys?

I have been having a scout around Google trends and the new products being touted for success at Christmas time in 2012 and wanted to do a check to see whether demand in Google could be used to predict the biggest selling toys of this festive period.

After scouring the various blogs and predictions site I have picked out the 5 toys below that are being touted for success.

  • 2012 Furby
  • Innpoad
  • Nintendo Wii U
  • LeapPad 2
  • SpyNet Video Watch

A quick scan of Google trends shows that the 2012 version of the 90s Furby toy appears to be the clear front runner and set to take the mantle of must have toy this Christmas. The Nintendo Wii U however saw an understandably huge spike at the announcement of its US launch in September.

The LeapPad 2 has shown steady growth since the middle of the year and could be the dark horse of the bunch or will the Innopad and the Spynet Video Watch come from nowhere and take the crown?

Of course we wont know for sure until 2012 and the plan is to check back in on this information at the turn of the year to see how good a tool Google Trends was at predicting the overall winner for Christmas 2012.

Does Google Boost Fit the SME Need?

At the end of October, Google launched their latest attempt to crack the SME market, Google Boost. In recent times Google has dedicated a lot of resource to gaining more of a foothold as a small business marketing channel. The Google Reseller scheme, Jumpstart, GBBO and Google Adwords Vouchers have all been aimed at getting more small businesses using Adwords and their efforts have often seemed confused and convoluted as I have documented in the past. So is Google Boost going to be the answer they are looking for?

The Lowdown

So what is Google Boost all about? Is it the answer to the SME prayers?
Google Boost ads are basically paid search listings linked to a Google Places with management automated and simplified. These ads appear, as normal paid search listings, on Google.com (and variations) and Google maps in the sponsored links sections.

Google Boost Example
Google Boost Example

The SME provides a description of their business, which is used as the ad copy, selects the category and sub category their business falls in to, picks a budget, and away they go! The business location is pulled from the Google Places information and Google takes care of the rest. Google selects the most appropriate keywords for your advert to appear on, manage your bid prices, your daily settings and the SME sits back and waits for the business to roll in.

What problem is this solving?

Google is making serious in roads into local search at present and Google Boost forms part of this attack. It appears from the outside that there is a clear focus on local search internally at Google, so to them, this provides the ideal solution for further monetising both local search, and Google Maps.

But what about the SME?

Google Boost is a stripped back, simplified version of Adwords with a local twist, so Google is obviously hoping its simplicity and local targeting will make it appeal to the SME.

Does this fit the SME need?

In my opinion, no. I’ve worked extensively in the SME search market in the UK and simplicity and leaving it all to somebody else, are on the whole, way down the list when it comes to priorities around paid search. Most SMEs want to know where and when their ads are going to be appearing, and are less than pleased if they can’t see them. With Google Boost they are reliant on software to choose their keywords and on Google for their ad-scheduling, a significant lack of control from the SME perspective.

They are also not going to get the support they need should something go wrong with Google Boost or if they just have a question. It is a core SME need to know they can pick up the phone, or send in an email, and they will receive response and support for the service they have purchased and with Google Boost they won’t get this.

So what is it good for?

I’ve no doubt that in the US, where local search is more prevalent, and Boost is currently in beta, they will get some level of take up. High ticket value services with local appeal such as solicitors, dentists and vets ill probably see quite high take up (solicitors is one of the key markets in US SME search) but it isn’t going to be any sort of magic bullet and will probably just take up some slack from their cancelled reseller programme. Many, more developed markets will see Boost as unnecessary and too basic for their needs. And in the UK (despite recent attempts to force maps into the results) local results are not as relevant and generally accurate enough to be useful. Where they are, the advertisers available will be limited to the point it won’t reach the penetration Google will need to keep it running.

So what next?

I predict Google Boost will make it out of beta n the US, with reasonable success, but fail to reach penetration in the UK and Europe without a major SERP shake up. Then Google will be back to the drawing board trying to find their next product to take over the SME world.

Google Wave: Ripple or Tidal?

They claim it is the evolution of communication, the best bits from email and microblogging, “an unbelievable, powerful demonstration of what is possible in the browser”. The world of twitter was abuzz with talk of invites, delays and initial reactions. But is Google Wave going to live up to the initial hype and revolutionise Internet collaboration and communication? Lets look at the good points and the draw backs:

Whats Good about Google Wave?

I have only played around with it a little, but here is what I would say are the good points:

  • Collaborative Group Communication:  Very useful for collaborative group work.  The ability to invite people to conversations, drop in files, links, maps and gadgets, all make for a useful conversation tool.
  • More flexible than messenger: Remains available once you close your browser, can easily drag and drop files, links and users.
  • More Real Time Than Email: Pretty cool to be able to see people typing in a conversation in real time.  But more than cool it is actually useful.  Also in comparison to group emails this is a much more efficient way of communication as you have a real time dialogue and aren’t waiting for responses.
  • More Privacy Than Twitter: Only those invited see the conversation, therefore has the conversational feel without the mass broadcast of information.

Why Won’t Google Wave Take Off?

  • Who’s Using It?: OK so a short term one until uptake and invites grow, but not everyone has access to Google Wave, which limits its usage.
  • Do We Need Another Tool?: Ive noticed already that very few people who I have a connection with who are on wave are ever logged in.  Twitter, Messenger, Facebook, Email, Yammer, do we need, or have we got time for, another tool?
  • What Do We Use It For?: Nobody I have spoken to seems to have a solid use for it.  Yes, collaborative working, but not everyone had an invite, or stays logged in enough to collaborate!
  • Its Not Different Enough: This is going to be the key.  It doesn’t do anything I cant get done through another tool.  OK so it might be smoother and cooler, but it doesn’t have a significant advantage which would want to make me change.

What do you think of Google Wave?  Will it take off or wipe out?

Heres oneof the better videos I have seen about its uses, one which covers the main features and one where somebody got a bit creative with it, enjoy.



Google Fails The Broad Match Test

Ive seen some matching errors in my time in search engine marketing. It used to be one of the best sales tools, and still is in a less obvious way, to take screenshots in advance of a pitch, or sales meeting, of a prospects PPC ads appearing on keywords which are unrelated to their product or service.

But if there is one company you would expect to be able to understand and control their matching system, it would be Google themselves. But apparently not! A search I performed on Google recently for the phrase “marketing jobs” brought up a PPCad for Google Adwords. At first I didn’t realise what had happened, but then it clicked, and a search on the single word phrase “marketing” brought up the Google ad also. Google are broad matching and haven’t included the term jobs as a negative keyword!

Now you argue that they don’t really need to as they wont be paying for the clicks anyway, but surely they should be practicing what they preach!?!

And while I am at it, the ad text isn’t to impressive either. Disappointing effort Google, shame on you!

google makes error in PPC broad matching
google broad match error