“The worst thing Google can do is to lose sight of consumer and partner concerns about their privacy and autonomy. It’s quite the case that a backlash can spread and once that tips, people could develop a real aversion to Google and abandon its products and services en masse.”

Andrew Goodman has been following the search engine game a long time. He co-founded the site Traffick in September 1999 and is president of Page Zero Media, a search engine marketing firm in Toronto which specializes n pay-per-click advertising.

He is well known for his ebook on Google AdWords — 21 Ways to Maximize your ROI from Google AdWords Select — and the book Winning Results with Google AdWords.

Andrew has a political science background, which means that some of his articles have a more academic and analytical slant than many regular search engine blog rants. Pandia decided to find out what this search engine marketing expert believes will be the future of search.

Where Google can go wrong

PANDIA: Search has definitely come a long way since 1999.

Pandia reported at the time that Yahoo! was becoming increasingly popular and at that time accounted for close to 56% of all search engine referrals. Norwegian Fast argued that they had the world largest search engine, while Google finally came out of beta.

Now, of course, Google is by far the largest search engine in the world, Fast’s AlltheWeb and AltaVista are just shells for the Yahoo! search engine, Excite and Go are no more and Yahoo! and Microsoft are struggling to keep up with Google. All this tells us, of course, that we can take nothing for granted in industrial development.

Still, once upon a time AltaVista was considered the search engine of the future and they messed it up by focusing to much on the portal side of their business and too little on search quality. What mistakes are Google likely to do? What may make them lose the throne?

ANDREW: Google’s dominance is analogous to Microsoft’s in its era, in desktop computing and OS. As such, it will be a long, long while before they lose traction. That might not be the sexy or exciting answer, but it’s likely to be the case.

Google is able to now begin diversifying while remaining focused on its core strengths. Like Microsoft, it’s also become an international powerhouse, beginning to plant the beginnings of what may become deep roots in international markets.

The “spread the economic development” philosophy also reflects a mature, politically-aware company, with major investments in Michigan, North Carolina, India, Ireland, and around the world.

The worst thing Google can do

The worst thing Google can do is to lose sight of consumer and partner concerns about their privacy and autonomy. It’s quite the case that a backlash can spread and once that tips, people could develop a real aversion to Google and abandon its products and services en masse.

Jakob Nielsen has famously written that search engines are “leeches.” What he meant was nothing so pejorative as its sounds when taken literally. Basically, if all the companies in the ecosystem are losing too much profitability to a single gatekeeper, it actually damages the economy.

History shows that bad consequences come out of poor distribution of the fruits of success; when disproportionate spoils go to the keepers of a “toll road”. (Here in Canada we have something sometimes called “Western Alienation” that dates back to high freight rates on grain shipped via railways owned by big central Canadian monopolists.) In short, Google would be wise to think about ways that their partners can succeed.

Internationally, being identified more as a U.S. company as opposed to an international, culturally-diverse company might also be an Achilles heel. At least they don’t suffer from a bad name, like AOL. “America Online Germany” to me always seemed like it had limited shelf life as a concept.

Google as a search or advertising company?

PANDIA: Danny Sullivan has been ranting about Google representatives calling Google an advertising company as opposed to a search company. Is Google loosing its focus or is this a natural development in a company that need to keep stock holders happy?

ANDREW: Growth does create its own pull, doesn’t it? Not only stockholders, but thousands of new engineers, salespeople, and product managers need to be kept fed and motivated now. It creates incredible complexity - but it’s less complex if everyone is more or less pulling in the same direction.

At times, I find that being an economic fundamentalist explains the world quite nicely. Google is, on that view of things, an advertising company. This year it will generate $14 billion in ad revenues. That’s 99% of their revenues.

But it’s a paradox. They only got there by recognizing that taking a user-centric view of ads, and being more focused on quality search than ads, was the best way to succeed in maintaining the large audience of users that drives profitability. Over 60% of Google’s ad revenue last year came from Google-owned properties.

For some time I’ve believed that Google is actually not losing its focus! It’s the secret that many don’t understand. Everything goes back to the same equation: ad revenues and consolidating the efficiency of its core search activities, while expanding into some other advertising areas. Everything else, from a profit standpoint, is smoke and mirrors.

Google looks like a classic exemplar of a focused company following the “hedgehog” concept, while competitors chase fads and potentially create their own death spiral. For Jim Collins fans, note also that Google’s CEO, Eric Schmidt, is a steady helmsman and a techie, not a “rock star.”

Microsoft and search

PANDIA: Microsoft is an industrial giant and should have all the money and talent they need to deliver high quality search results. The Xbox adventure proves that the company may get out of bureaucratic inertia if needed.

Still, they are still bleeding in the search arena. What are they doing wrong, and what should they do in order to catch up with Google?

ANDREW: They aren’t really doing anything wrong. People just wake up every day knowing they’re probably going to do a search on Google.

On other things that helped Google’s brand, to remind people of Google’s presence, well it’s a lot of details. It’s momentum.

GMail hasn’t surpassed Hotmail, but it’s a pretty cool product. Unlimited storage, fast AJAX era navigation, etc. If Microsoft was a great company, they would have released that first, rather than playing catchup.

Wasn’t Google Maps just a little bit ahead, and a little bit better? Didn’t you find yourself drawn to it? Again, the others are good, but they may be playing catchup.

The end result is the momentum leader becomes the first choice of savvy engineers and consumers alike, and that hole is hard to climb out of when you’re #3.

Microsoft hoped its control over browser market share and the OS would help them claw back some search market share, but this failed to materialize, as I expected.

Yahoo! has motivated people

PANDIA: Yahoo! owned at one time no less than three search engines: Inktomi, AlltheWeb and AltaVista, and inherited much engineering and ICT talent from all of them. Is their failure of catching up with Google a technological failure, or is it rather the result of different marketing strategies?

ANDREW: Yahoo is a more diversified company than Google. So they do have a lot of users for many properties, but less search usage.

For a time, it was a technology gap, and that 2-3 years is all it took for the momentum to shift.

The failure to monetize their existing search hurt them financially, too. I don’t think I was seeing things when I declared Google AdWords to be a revolutionary new platform in 2002 when it came out. It took Yahoo until 2006 to finally complete Panama.

But these are bygones. Yahoo has enough resources and enough motivated people that they’re rebounding nicely.

As many will tell you, it does seem that the company still has too much administrative clutter, and that they’re a bit light on the engineering side. They’ve taken some weak steps to address such problems, but I tend to think more radical effort needs to go into the technology side.

Again, it’s a paradox. You want to be a media company? What if that’s ethereal territory that can be easily snatched away from you?

So I’d like to see Yahoo create divisions (more so than now) that are heavily oriented to the research and product development side, and give a lot of talented junior engineers some play space to create. Contrary to popular belief, Google doesn’t have them all under their roof. Yahoo could aggressively recruit in certain areas, such as Eastern Europe, and up their geek quotient significantly. That’s not the only answer, but it would be a hedge against failure.

Yahoo, stay focused!

PANDIA: Yahoo! took over Overture, the pioneer in pay-per-click advertising once known as GoTo.

In spite of this Google managed to outsmart them in the advertising field, and Yahoo! seems to be struggling — in spite of the recent Panama upgrade of Yahoo! Search Marketing. What should Yahoo! do in order to regain lost terrain?

ANDREW: Stay focused and tell Wall Street to take a hike.

International markets are fertile. Yahoo is forming relationships in these markets and could do a bit more to acquire local properties and partnerships that would make them a very solid #2 player.

Just keep going. Last time I checked, Pepsico is in business.

Microsoft and pay-per-click advertising

PANDIA: Has Microsoft got a chance in the PPC arena?

ANDREW: They have a chance to stay #3. I certainly like their tools and recognize that people use their properties. But from a media buy standpoint, it’s a huge pain in the rear.

I wish they’d swallow their pride and re-partner with Yahoo. Why not undertake a major partnership that even includes search, and take back some equity in Y! so you cannot lose if Yahoo is the main beneficiary of said consolidation?

Google and DoubleClick

PANDIA: Google snatched DoubleClick away from Microsoft and controls now significant part of online advertising. What will, in your opinion, be the main consequences of this take-over?

ANDREW: This deal is huge even if Google overpaid slightly to ensure the deal got done.

It addresses a weakness, and allows Google to dominate a market they were trying to dominate but lacking key building blocks — contextually-relevant display ads in an efficient auction marketplace.

It allows them to experiment with several flavors of brokering the online media buying process, and to pick the ones that seem to be winning.

I recently demo’d a new offering from ContextWeb which threatens to make some major waves in that efficient middleman space. The ContextWeb platform is very promising, although little known as yet. The company talks about being able to deliver to big advertisers and agencies those high-volume buys in “well-lit” Internet spaces.

This was not the image Google AdSense and its content programs had with the major advertisers. So acquiring DoubleClick creates a 180 degree turnaround in that perception of Google.

The effect of personalized search

PANDIA: Google is actively testing personalized search — i.e. technology that lets them make use of your search and web history to identify your interests, and thus deliver more accurate search results. Where will this end, in your opinion and what do you think will be the consequences or the search engine marketing field?

ANDREW: Done right, it’s a natural extension of what search ought to be. The lite version of course simply orients results to likely intent, geography, etc.; it helps disambiguate queries; it shortens your path to results on short searches done on a mobile device - all the majors should be moving towards this.

The real question of course is how far can you take it and how far should you take it. Is privacy a concern? Definitely. I can’t predict how such concerns will affect people’s behavior down the road. It’s such a huge topic.

Look at the way you might have changed your own approach to email, though, especially if you work in a corporate environment. Do you take special care not to be too “candid” or revealing, knowing everything is public?

Most people aren’t too concerned about their search histories being used against them yet, but it’s interesting to ask oneself how that may impact behavior over the next decade. People may do less searching and rely more on their peer group. The search of course is always some kind of starting point, but people will be actively seeking more and more peer-to-peer recommendations.

They will start to think about why they’re letting Google see them search for info on “Chrysler 300 2007 review,” or “newest 2007 dolls” or “i hate the pussycat dolls” for that matter. It’s not an immediate threat to Google, but it points to future reliance on forms of peering.

People keep saying that “vertical search” will rise up. In some way that’s true, but it’s a long story to speculate as to how the global peer group will “granulate and coagulate” into search communities.

The invisible Web

A concept we haven’t heard much about in the most recent past is the “Invisible Web.”

There’s an assumption that future forms of peering will be open, but maybe not? If Google, the itchy one that wants to “organize and make accessible the world’s information,” finds locked doors everywhere it turns, does Googlebot run amok, Hal-Like, and begin signing up to every community and sharing everything openly, like the world’s biggest busybody? Does Google turn into a scraper company? Do scraper companies and other privacy and trademark violators pose a huge problem, even if Google doesn’t?

We’re supposed to think that shining a light on all information is unproblematic, but of course it isn’t.

Social media

A variety of fledgling ideas tried to do the “social search” and “open peering search” thing, but what’s happened is that the real deal sprung up seemingly overnight in places like Facebook and LinkedIn.

For search engine marketing, it’s long been obvious that a holistic view of search visibility and being concerned about your online reputation and overall bottom line is far more sensible than the early-generation obsession with ranking reports for where your company shows up on a certain search query in a fixed search engine index.

Ranking is important, of course, but it’s losing meaning somewhat. That being said, in most countries on most desktops you’ll see that I outrank SEO guru David Naylor on the query “Vanessa Fox Nude.” Old habits die hard!

PANDIA: Another important trend in search is the development of social media, where regular users contribute with content, discussions and their votes. We believe you are actively involved in the development of one such site called HomeStars.

The Wikipedia has already become a significant search destination in its own right, while we suspect that the search engines are giving additional weight to links from bookmarking and social networking sites. What will be the status of search and social media ten years from now?

ANDREW: Glad you asked! (Look for us to relaunch at HomeStars.com shortly, and roll out to 8 or more cities by Q2 2008.)

The “zero’th” (nonstarter) generation of directories and online recommendation services are these sites that are purely about referrals or lead generation for service providers. No third party information gets shared. The purpose is to constrain choice, so money changes hands, but the business model isn’t disclosed adequately.

Gen 1 of consumer review sites is still important, as much of a challenge as it is for users to sort out fact from fiction.

In fact, though, the workaround that deepens the exchange of information is to allow the development of communities. Rather than flat information on a page, active social structures are built behind the scenes, so now recommendations and information are placed into context.

This has happened since the beginning of online, since BBS services really. Mid-90’s discussion forums (think investing) always had user-to-user messaging and people going offline and getting involved via email and in-person meetups. (Scary, right?! Think of all the traditional media stories that have painted an alarmist portrait of all these people using online to initiate new relationships when we were all supposed to be heading to hell in a handbasket and bowling alone.)

It’s just that now, online communities of interest are being built with this type of functionality, and aspects of radically transparent information exchange, more explicitly in mind.

Is this Web 2.0? Sure, it’s one of the various benefits of this roughly-titled generation of online consumer apps and services. Whether it’s a purchase decision, the online, scaled analogue of your former offline relationships is extremely powerful and as an economic force, very important.

I suppose the counterargument is that there is a “Paradox” of choice - but overall I don’t see people being too stressed out about having more choices and more access to information that informs their decisions.

Anatomy

PANDIA: What do you prefer: Gray’s Anatomy or Grey’s Anatomy?

ANDREW: Check out this parody of Grey’s Anatomy!

The popularity of that show hit home for me when a group of women left the mingling at a Microsoft party in Las Vegas (Pubcon Las Vegas 2006) to enter a “bedroom suite” to watch TV for half an hour.

That party was held in a hipster “bowling alley suite” at the top of a casino resort. As usual, the people in our industry weren’t bowling alone. It’s not often you see sushi and bowling combined. I kept expecting that Seinfeld riff to play between scenes.

Search Engine Strategies

PANDIA: You are the conference chairman of the forthcoming Search Engine Strategies conference in Toronto in June

Give us the highlights! Why should people go to Toronto?

ANDREW: Where do I start! It’s been amazing to note the interest from top speakers for this one. So although it’s a shorter program than some, many of the top speakers are making the trip. We’re proud to have Seth Godin keynoting to lob his “mind grenade” into our community.

Some recent trends in social media, online “PR” as an extension of the traditional linking campaign, and local search are among the fresh aspects of the program, along with updated versions of some more fundamental tracks.

Anyone who has been to a past SES Toronto will tell you that it has a really fun flavor, that the events and networking are great. Combine that with our perfect weather in June and maybe a chance for a cruise across Lake Ontario to Toronto Island, or the widest choice of cuisines outside Manhattan, and delegates will enjoy a memorable time as well as a great learning experience.

PANDIA: Thank you for spending some time on this, Andrew!

ANDREW: Keep up the good work with Pandia, Per. Til next time!