Jonathan Mendez's Blog

Search Vs. Social: A Game Over Before it Started

I really like GigaOm but they fell prey yesterday at the end of a piece that was for the most part accurate about Search not being a demand-gen channel to the false prophet of Social Media advertising overtaking Search. They’re in good company underestimating the upside of Search. In 2003 Jupiter predicted paid search would grow to $4.3 billion in revenues by 2008. The actual figure was $12 billion. In 2010 the worldwide market for Search ads is estimated to be $25 billion - a number that far eclipses even the most bullish estimates of 5 years ago.

From the GigaOm piece:

"Google needs to be afraid of social and what it implies…. Google needs to find ways of incorporating the social element into what it does, or risk losing attention — and by extension, potential revenue."

Outside of gaming Social is maybe doing $2B a year in ad revenue. Google will do $20B this year… just in owned Search. That's too big a delta to be "afraid" of anything.

There’s no denying that Social data is an important layer. It could potentially become the most important data layer – possibly orders of magnitude more important than the pages and link data Google predominantly uses now to power its algos. But we’re a long way from that happening.

As I mentioned in late 2009 in a piece titled Waiting to Rule the Ad World: The Next Decade Will Shift to Search the future of Search monetization is secure and enormous.

"Direct mail (already data driven) is expected to decline 39% in the next five years - from $49.7 billion in annual spend in 2008 to $29.8 billion and will shift to search. Radio dollars (half local, half national) have not even moved into Search en masse. Then there are the remaining dollars from Newspapers. Looked at a circular lately? Mobile search also has billions more in untapped potential. All these dollars hit search in the coming decade."

Got upside?

• YouTube is now over 25% of Google’s Search queries and for two years has stood as the 2nd largest Search Engine. It is just figuring out its revenue model.
• Mobile Search is predicted to be $5B for Google in just 2 years
• Maps/LBS/Local Search...is a market that might be $100B worldwide once it is fully captured. Local Search alone has been growing at double digits every year…for the past 8 years.

The biggest diamond of all might be the hardest to mine. There has been little to no cross-media integration between the most powerful demand generation channel TV with the most effective demand capture channel Search. Once those silos breakdown and Advertisers truly optimize cross-media we might be looking at another $50-$75B in market potential.

Still, Google has not been sitting on the sidelines with Social. The best presentation on the challenges in Social Media…dare I say ever… is from Google a few months ago. A year ago Google began experimenting with Social Search. 150 million people are active on its primary Social Network, Gmail.

As I’ve said many times in the past Search is not a channel. Search is a behavior. Our appetite for this behavior and the ability for technology to deliver against it is hardly a decade old. Unless humans get rewired or technology stops advancing there is no end in sight to the growing value of Search to people and thus the revenues and returns associated with it for Advertisers.

 

My Thoughts on Online Privacy

Anyone that has followed me on Twitter knows that I have been a staunch defender of online privacy rights and outspoken against third-party data sharing practices of our industry. The reasons are twofold: one personal, one business.

I’m compelled to finally write a post on privacy after reading Esther Dyson’s comments on it. It’s a worthy read. I have tremendous respect for Ms. Dyson but I’m afraid she is falling into the opinion trap of framing her argument and solutions about “free content or not.” Since she’s speaking to me, an online marketer – I feel obliged to add my point of view.

Dyson says “I don’t know what privacy is.” * Here are my personal feelings on what privacy is online using an offline example that informed this opinion over many years.

Privacy:

I walk into a store understanding that the store has the right to videotape my every move. I understand I am a customer of the store the second I walk in.  I’m also fine with the store using whatever information they can glean from the tape to make the store a better experience, make it safer or just to sell more.

However, I don’t believe the store has the right to broadcast that video of me to whomever they please or make it publicly available for sale or inform a stranger that I am in that very location at that very moment.

In fact they don’t without consent.  Look at the back of any ticket to an event and you will see this legal language:

“You consent to use your image, likeness, actions and statements in connection with any live or recorded audio photograph or other transmission of or publication of the event.”

I’m not a lawyer however issues of consensual actions have many laws around them and many are framed around at what level does consent become ineffective. For me it is simple, once websites transfer online tracking data to a third party we cross that line where our personal consent is effective.

Business:

All this data is being collected for use with targeting display ads but display ads still suck. That’s right, as an industry we’re causing a maelstrom yet we all we’re doing is bringing our CTR up from .05 to .15 (if we’re lucky). We’re not using this information in a way that’s truly making the web a more relevant, helpful, interesting, useful, exciting place for people. If we were, hardly anyone would care. The tradeoff would be worth it - just as it is when you step inside your favorite stadium.

Liz Gannes at GigaOm framed Dyson’s comments as a marketing problem. I would rephrase it and say Marketers are the problem.

“A wild debate is on about websites using "tracking tools" to "spy" on American Internet users. Don't fall for it. The controversy is led by activists who want to obstruct essential Internet technologies and return the U.S. to a world of limited consumer choice in news, entertainment, products and services.”

This is Randall Rothenberg, leader of the IAB talking. When you have industry trade groups that discount the power of the technology and belittle or ignore the fears of everyday people you are adding fuel to the fire of those that say online can’t get it’s act together. You’re also not recalling the first two rules of fight club.

If anyone thinks the threat of privacy regulation sending us back to a world of limited choice on the web is going to be effective strategy then they haven't a clue of what the public thinks about the web. No one is going to be scared that the Internet will stop working one day. Most people remember it worked just fine before online advertising. I continue to quote Seth Godin who said it best:

"the Net is different. It wasn't invented by business people, and it doesn't exist to help your company make money.”

Technology:

What I loved about Dyson’s comments was that she was looking for a technological solution. At Yieldbot we’ve made a conscious decision to build a technology that can provide realtime and deep level targeting without the need for third party cookies. It is, as it is becoming called in the industry “pixelless targeting.” Another company (not a scrappy startup like us), Akamai has built its targeting technology in this manner. I'm certain this is the future.

As an industry we have been lazy – cookies and pixels are easy to grab easy to store and easy to match. This is easy money for now - but it is not forward thinking. If we challenge ourselves to come up with new ways of targeting and build new technologies I believe we can not only eliminate the issues with privacy all together but we can build better systems that actually deliver the relevance, help, interest, use and excitement that people would have traded their information for in the first place. Except, we’ll allow them to keep it.

Next Steps:

Industry self-regulation is wrongheaded. Not only will enforcement be impossible but it will end up making the industry look worse than it does now a year or two down the road. Also, by delaying the industry gives Google more and more power over the control of data and privacy and thus more ownership over the issue. That's probably not in the best interest of anyone but Google.

Legislation is inevitable. Now is the time to work together with academics and lawmakers to craft laws. This way everyone will know the rules of the game going forward and as an industry we can push with the velocity needed to keep up with our technology at the same pace our audience advances their use of it. Most importantly, we can invest in making sure the online industry builds into something that can scale and become the dominant advertising and communication marketplace over the next 25 years. 

*In all fairness to Ms Dyson I do not know the context of the quote but her sharing her own definitions about privacy would really help push this debate further and I hope she does it or someone can direct me to her previous thoughts on the matter.

 

Ten Intent Triggers for Digital Media

It has long been my belief that the ability to create intent would define web monetization but I had no idea it would play out (and literally “play” out as in Zynga et al) the way it has. Certainly we are at the dawn of a new age where technology powers marketing in more powerful and relevant ways. Never has more intent been created. Never has intent been more monetized and never has the cost of not creating intent been higher.

I thought I would share this list I’ve been using for the past few years with creating search and display ads and landing pages. Feel free to add any intent triggers in the comments below.

Ten Intent Triggers for Digital Media

Motivating Action - The psychological condition of reward is not new to marketing strategy but it forms the backbone of creating intent and persuasion. Understanding it and using it appropriately can yield great rewards…or stickers and badges.

Cause and Effect - This is really helpful for people in discovery mode on the web. Think how intent can be created for a loan refinance business by having a savings calculator on their homepage. An offline example is the calorie burn rate calculator updated in real-time while you are on a treadmill. This trigger can be very helpful to push people through online forms/applications as well.

Observation – Watching something can create intent. Voyeuristic tendencies and desires have been leveraged by marketers well before P.T. Barnum’s first sideshow in 1835 and Facebook today. According to Nielsen 80% of social network behavior is voyeuristic. Also, the gating of this behavior (paywalls) can create intent as can the very behavior itself (think porn).

Visual Attractiveness - It is incredibly important to note that attractiveness takes many forms online. From the design aesthetic of forms to landing pages to full sites to images, we know from testing that visual presentation is a key to creating intent.

Reciprocity - Digital Media presents a bevy of opportunities to create intent in this form. It is a core strategy of creating intent in social networks. Personally, I had never done a LinkedIn recommendation until one was done for me and I felt a desire to return the favor. Reciprocity is a social norm found in every society ever studied.

Trust and Credibility - These are two factors that often turn interest into intent. Their power can range from the most important of factors of influence to the least depending on the timing and placement of these messages. In a strange twist of fate it’s where all the ROI from branding dollars takes place yet it’s the most vulnerable to customer empowerment driven by the social web.

Incentives - If you incent, you will intent. Coupons, loyalty rewards, closeouts, sales -- these methodologies are tried and true intent creators. Email and affiliate marketing are two early examples of the technology shift that enabled offer marketing to gain power. Offers are by far the most successful way to create intent and encompass a number of underlying intent creation strategies. As technology advances I believe we will be able to use it to create intent in ways that incredibly more targeted, relevant and powerful than “Click to Get a Free iPhone.”

Disposition - An intention will also be more easily created if there is disposition that can be leveraged. This is the reason why some sites have higher conversions on the 15th and 30th of the month (payday).

Impulse – These triggers are in the context of a response or action in response to an intention. As every supermarket checkout person knows impulse is incredibly powerful for marketers. Digital is the perfect medium to create impulse because marketers can immediately deliver. On the web creating impulse is often a technology problem but that doesn’t mean it has to be thought of less strategically than other factors of motivation.

Competition – This takes many forms from keeping up with the Jones to the the Hashable leaderboard. It is obviously a key component of most social platforms as well as the online gaming and virtual currency spaces. Competition breeds virality. Competition motivates.

There are probably more psychological intent triggers than this list and certainly new executions of triggering are created everyday. An amazing place to learn more is the seminal book from 2002, Persuasive Technology.

What’s most important to understand with all these techniques is that to create intent our marketing must be emergent - meaning it must take people’s latent motivations and/or existing interest and deliver an ability to act. Intent triggers are an action suggestion or action tool -- ideally both. Intent triggers can be implicit or explicit but they must be realtime.

With the growth of realtime content delivery and new platforms for measurement, testing and optimization we are just beginning to create the technology that will trigger intent and power web monetization in the coming years. Exciting and profitable times are ahead for much of digital media and that is important, especially for publishers. My finger is on the trigger.