In The Black Swan, Nassim Nicholas Taleb writes about the life of the turkey: for 100 days, the turkey is sheltered, fed and cared for by the farmer. The turkey grows to trust the farmer completely, even perhaps developing a fondness for the farmer (and of course the feed). Then, on the 101st day (with Thanksgiving quickly approaching), the relationship between the turkey and the farmer changes abruptly and permanently. The rationale behind the farmer's apparent benevolence become clear in a final flash before the turkey takes the necessary step preceding de-feathering, vacuum-packing, freezing and shipping off to the market.
Taleb's lesson for us from this: don't be a turkey. More succinctly, don't assume that the future will resemble the past, or, in the words of mutual fund prospectuses, "past performance is no guarantee of future results." Also, remember that there is no such thing as a free lunch.
Of course, that doesn't take into account the perspective of the turkey farmer. The farmer would point out that he's making an honest living, providing a valued product in the market. Taking advantage of the trust of turkeys is his job—it's how he feeds his family. And finally, those turkeys wouldn't have gotten so plump and healthy in the first place without his care and feeding.
Now, what if we're not talking about a farmer and his family, but a corporation and its shareholders? The stock market can be brutal when a company fails to meet earning expectations, such as it was last week when Google's stock price fell by 10% despite a 35% increase in earnings. Like the farmer's hungry children, investors are demanding that Google squeeze more out of its turkeys. Err, advertisers.
Before this analogy goes any further, I just want to make it clear that I love Google. Adore it. Eric, Sergey, Larry, Matt—they're like rock stars. Benevolent. With a great sense of humor. It's just that, you know, some people might be thinking these things, so I have to write about them.
Seriously, I am a big fan of Google, which is good because recent news could certainly cause one to spin paranoid fantasies. This tale will have a happy ending. But first, the paranoid fantasy.
Now, unlike a farmer, a corporation can discard part of it's family for the benefit of the other children, as Google did when it shut down its Dallas and Denver offices earlier this month and laid off those employees. But that's not a long-term strategy.
Over the long term, Google has to find new ways to make money, and that means getting more out of its turkeys advertisers. It has unique market power to do this. As Michael Arrington points out on TechCrunch, Google "controls 60% of the search market and perhaps as much as half of all online advertising revenue." On some small company websites, between organic search and AdWords, Google can drive 70% or more of total traffic.
Google could manipulate natural search results based on a company's PPC activity, but ultimately probably has something a bit more sophisticated in mind. Philosophically, the company has laid the groundwork for changing its strategy; in the wickedly funny What Eric Schmidt Really Said; Five Google Statements Translated on Marketing Pilgrim, Andy Beal points out that, for example, Google has backed away from its "Don't be evil" mantra and has plans to be more than a one-trick pony.
Practically, Google is pulling its advertisers ever closer, increasing the dependency of its turkeys, so to speak. Move over SharePoint, Google’s got a challenge on the Enterprise3 blog states that "With the announcement of Google Sites, Google has unveiled a tool that incorporates email, calendars, excels, documents and presentation software." This is positioned as a challenge to Microsoft Office and SharePoint, which it is, but its potentially much more than that.
Consider how much knowledge Google potentially has about its advertisers. If they are running an AdWords campaign, Google knows which keywords the company thinks are important and how highly the company values each term (through its bids) as well as which keywords are really effective. Through Analytics, it knows how much traffic the company's website gets, where the traffic comes from, which pages get visited most frequently, and who is visiting those pages. Through it's search crawling, it knows which other sites link to that company's site, which publications and bloggers write about it, and what gets said about the company (if anything) on social media sites. And now with Google Sites, it has insight into the internal workings and finances of the company (through Docs and Spreadsheets), can eavesdrop on its communications (through Gmail), and even knows where its key people are scheduled to be at any time (through its calendar software).
That's a tremendous amount of information to know about any company, much less about a lot of companies. Actually, an unprecedented amount. And as Sir Francis Bacon said, "knowledge is power."
What will Google do with this? Hard to say, but even assuming that its top executives are angelic figures with only the purest of motives (which I do—really!), those
hungry childrengreedy shareholders, will exert pressure on the company to
take advantage of its turkeysmonetize that knowledge of its advertisers.
Such power, and its attendant temptation, is normally tempered by two forces: competition and the threat of legal action. Unfortunately for online advertisers, neither may be of much avail in this situation.
Competition
As Michael Madej points out in Google's erratic behavior and relevancy declines -- is Google getting greedy?, Google could be dethroned as the king of search, either through its own missteps (possible, though "google" has become a verb and habits are hard to break) or through the emergence of real competition, though "a new player would need Rupert Murdoch kind of money to even make a dent."
The most likely candidate is (was?) a Microsoft-Yahoo combination, though even with the intervention of Carl Icahn, both sides still appear too incompetent to consummate the union. Besides, even with Steve Balmer's reported determination to "f***ing kill Google" the company's past acquisition activities in this space have been mostly ineffective flailing. And how comfortable can anyone really be, recalling the Bill Gates is Satan hysteria of not-that-long-ago, with the idea of Microsoft as a savior?
Furthermore, Steve Baldwin speculates in Inside Microsoft’s War Room that in the "titanic clash between Microsoft (aka 'The Evil Empire') and Google aka 'The Don't Be Evil Empire'), Microsoft may already be thinking of throwing in the towel and making "contingency plans for a Google-ruled web."
Sean X Cummings in The X Factor: The ad network you'd kill to buy on tries to make the case for IAC as a Google killer, but being that Google gets 15 times the search traffic of Ask, is that really realistic?
Legal Action
C'mon, if Google really, intentionally, harmed someone, that individual or organization could sue, right? Sure—but don't count on beating the search giant in court. As Eric Goldman reported on his Technology & Marketing Law blog, a company called KinderStart sued Google in March of 2006: "Google has been sued for downgrading the PageRank of websites in contravention of its stated 'objective' policies. In KinderStart's case, they got kicked out of Google in March 2005 and immediately lost 70% of their traffic."
One year later, Goldman reported on the outcome of that suite in his follow-up piece, KinderStart v. Google Dismissed--With Sanctions Against KinderStart's Counsel: "Google has won big in the lawsuit brought by KinderStart due to their unhappiness with their search engine placement. Not only did Judge Fogel dismiss the complaint...but he issued Rule 11 sanctions against KinderStart's counsel Gregory Yu--meaning that Yu will have to pay some of Google's legal fees."
What the judge said essentially was that a site's search position on Google for any given term is determined by Google's algorithm, which is...whatever Google wants it to be. There is no intrinsically "right" or "wrong" search position rank for any website on any term. No matter how highly a particular site shows up for a specific search phrase, or how long it has enjoyed a high position, if it falls to page 40 tomorrow such is life.
Still, people keep trying.
A Different Kind of Farmer
One obvious argument to make here is that Google is more like a dairy farmer than a turkey farmer—it doesn't profit from butchering its dependent domestic
animalsadvertisers, just milking them. Therefore, it has an interest in keeping them fat, healthy and happy.
True, though even the dairy farmer can turn cows into hamburger if they don't produce. Remember KinderStart above, and there is the case of Wikipedia: there's no question that it wouldn't have become the seventh-most visited site on the Web without serious help from the #1 site. As Michael Gray demonstrated in Google Loves Wikipedia - Even the Empty Pages, Google seems to rank Wikipedia pages highly even when there is little or no content on them. It will be interesting to see what happens to the Google position of Wikipedia pages once Knol is launched, no?
Self Interest
But I promised a happy ending and here it is: Google will ultimately refrain from going completely over to the dark side purely out of self interest, and an understanding of history. After all, even the biggest and most powerful companies can falter if they screw up badly enough. Think General Motors and Sears, for example. After reigning for nearly a century as the world's largest retailer, Sears lost the top spot back in the 80s and is now in ninth place.
Searchers expect highly relevant results, and advertisers expect advertising that produces a reasonable return on investment. One KinderStart is a minor distraction, but lots of them could cause real problems. To whom much is given, from whom much is expected (Luke 12:48). The marketplace has given Google a great deal of power. If Google uses the knowledge its tools enable it to gain for the benefit of advertisers and consumers, it will be difficult to topple. If not, Steve Ballmer—or someone else—will take it down.
*****
Contact Mike Bannan: mike@digtialrdm.com
Taleb's lesson for us from this: don't be a turkey. More succinctly, don't assume that the future will resemble the past, or, in the words of mutual fund prospectuses, "past performance is no guarantee of future results." Also, remember that there is no such thing as a free lunch.
Of course, that doesn't take into account the perspective of the turkey farmer. The farmer would point out that he's making an honest living, providing a valued product in the market. Taking advantage of the trust of turkeys is his job—it's how he feeds his family. And finally, those turkeys wouldn't have gotten so plump and healthy in the first place without his care and feeding.
Now, what if we're not talking about a farmer and his family, but a corporation and its shareholders? The stock market can be brutal when a company fails to meet earning expectations, such as it was last week when Google's stock price fell by 10% despite a 35% increase in earnings. Like the farmer's hungry children, investors are demanding that Google squeeze more out of its turkeys. Err, advertisers.
Before this analogy goes any further, I just want to make it clear that I love Google. Adore it. Eric, Sergey, Larry, Matt—they're like rock stars. Benevolent. With a great sense of humor. It's just that, you know, some people might be thinking these things, so I have to write about them.
Seriously, I am a big fan of Google, which is good because recent news could certainly cause one to spin paranoid fantasies. This tale will have a happy ending. But first, the paranoid fantasy.
Now, unlike a farmer, a corporation can discard part of it's family for the benefit of the other children, as Google did when it shut down its Dallas and Denver offices earlier this month and laid off those employees. But that's not a long-term strategy.
Over the long term, Google has to find new ways to make money, and that means getting more out of its turkeys advertisers. It has unique market power to do this. As Michael Arrington points out on TechCrunch, Google "controls 60% of the search market and perhaps as much as half of all online advertising revenue." On some small company websites, between organic search and AdWords, Google can drive 70% or more of total traffic.
Google could manipulate natural search results based on a company's PPC activity, but ultimately probably has something a bit more sophisticated in mind. Philosophically, the company has laid the groundwork for changing its strategy; in the wickedly funny What Eric Schmidt Really Said; Five Google Statements Translated on Marketing Pilgrim, Andy Beal points out that, for example, Google has backed away from its "Don't be evil" mantra and has plans to be more than a one-trick pony.
Practically, Google is pulling its advertisers ever closer, increasing the dependency of its turkeys, so to speak. Move over SharePoint, Google’s got a challenge on the Enterprise3 blog states that "With the announcement of Google Sites, Google has unveiled a tool that incorporates email, calendars, excels, documents and presentation software." This is positioned as a challenge to Microsoft Office and SharePoint, which it is, but its potentially much more than that.
Consider how much knowledge Google potentially has about its advertisers. If they are running an AdWords campaign, Google knows which keywords the company thinks are important and how highly the company values each term (through its bids) as well as which keywords are really effective. Through Analytics, it knows how much traffic the company's website gets, where the traffic comes from, which pages get visited most frequently, and who is visiting those pages. Through it's search crawling, it knows which other sites link to that company's site, which publications and bloggers write about it, and what gets said about the company (if anything) on social media sites. And now with Google Sites, it has insight into the internal workings and finances of the company (through Docs and Spreadsheets), can eavesdrop on its communications (through Gmail), and even knows where its key people are scheduled to be at any time (through its calendar software).
That's a tremendous amount of information to know about any company, much less about a lot of companies. Actually, an unprecedented amount. And as Sir Francis Bacon said, "knowledge is power."
What will Google do with this? Hard to say, but even assuming that its top executives are angelic figures with only the purest of motives (which I do—really!), those
Such power, and its attendant temptation, is normally tempered by two forces: competition and the threat of legal action. Unfortunately for online advertisers, neither may be of much avail in this situation.
Competition
As Michael Madej points out in Google's erratic behavior and relevancy declines -- is Google getting greedy?, Google could be dethroned as the king of search, either through its own missteps (possible, though "google" has become a verb and habits are hard to break) or through the emergence of real competition, though "a new player would need Rupert Murdoch kind of money to even make a dent."
The most likely candidate is (was?) a Microsoft-Yahoo combination, though even with the intervention of Carl Icahn, both sides still appear too incompetent to consummate the union. Besides, even with Steve Balmer's reported determination to "f***ing kill Google" the company's past acquisition activities in this space have been mostly ineffective flailing. And how comfortable can anyone really be, recalling the Bill Gates is Satan hysteria of not-that-long-ago, with the idea of Microsoft as a savior?
Furthermore, Steve Baldwin speculates in Inside Microsoft’s War Room that in the "titanic clash between Microsoft (aka 'The Evil Empire') and Google aka 'The Don't Be Evil Empire'), Microsoft may already be thinking of throwing in the towel and making "contingency plans for a Google-ruled web."
Sean X Cummings in The X Factor: The ad network you'd kill to buy on tries to make the case for IAC as a Google killer, but being that Google gets 15 times the search traffic of Ask, is that really realistic?
Legal Action
C'mon, if Google really, intentionally, harmed someone, that individual or organization could sue, right? Sure—but don't count on beating the search giant in court. As Eric Goldman reported on his Technology & Marketing Law blog, a company called KinderStart sued Google in March of 2006: "Google has been sued for downgrading the PageRank of websites in contravention of its stated 'objective' policies. In KinderStart's case, they got kicked out of Google in March 2005 and immediately lost 70% of their traffic."
One year later, Goldman reported on the outcome of that suite in his follow-up piece, KinderStart v. Google Dismissed--With Sanctions Against KinderStart's Counsel: "Google has won big in the lawsuit brought by KinderStart due to their unhappiness with their search engine placement. Not only did Judge Fogel dismiss the complaint...but he issued Rule 11 sanctions against KinderStart's counsel Gregory Yu--meaning that Yu will have to pay some of Google's legal fees."
What the judge said essentially was that a site's search position on Google for any given term is determined by Google's algorithm, which is...whatever Google wants it to be. There is no intrinsically "right" or "wrong" search position rank for any website on any term. No matter how highly a particular site shows up for a specific search phrase, or how long it has enjoyed a high position, if it falls to page 40 tomorrow such is life.
Still, people keep trying.
A Different Kind of Farmer
One obvious argument to make here is that Google is more like a dairy farmer than a turkey farmer—it doesn't profit from butchering its dependent domestic
True, though even the dairy farmer can turn cows into hamburger if they don't produce. Remember KinderStart above, and there is the case of Wikipedia: there's no question that it wouldn't have become the seventh-most visited site on the Web without serious help from the #1 site. As Michael Gray demonstrated in Google Loves Wikipedia - Even the Empty Pages, Google seems to rank Wikipedia pages highly even when there is little or no content on them. It will be interesting to see what happens to the Google position of Wikipedia pages once Knol is launched, no?
Self Interest
But I promised a happy ending and here it is: Google will ultimately refrain from going completely over to the dark side purely out of self interest, and an understanding of history. After all, even the biggest and most powerful companies can falter if they screw up badly enough. Think General Motors and Sears, for example. After reigning for nearly a century as the world's largest retailer, Sears lost the top spot back in the 80s and is now in ninth place.
Searchers expect highly relevant results, and advertisers expect advertising that produces a reasonable return on investment. One KinderStart is a minor distraction, but lots of them could cause real problems. To whom much is given, from whom much is expected (Luke 12:48). The marketplace has given Google a great deal of power. If Google uses the knowledge its tools enable it to gain for the benefit of advertisers and consumers, it will be difficult to topple. If not, Steve Ballmer—or someone else—will take it down.
*****
Contact Mike Bannan: mike@digtialrdm.com
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