What You'll Learn on "Planet Google": Part 1
About a month ago a manager at Google invited me to attend the "Reaction B2B Executive Summit," an invitation-only event to be held July 31 and August 1, 2008, at Google's headquarters in Mountain View, California. What I learned in that short time on "Planet Google" -and why they invited me there-is eye opening.
Google brought together about 200 managers from their largest AdWords users, such as Cisco, Seagate, Oracle, 3M, and their ad agencies, as well as lesser known companies like BuyZone.com, VistaPrint.com, and others. The idea was to learn from each other to improve each company's "reaction" to the changes the Internet is driving in their business.
Soon to be a mere 10 years old, Google's mission ("to organize the world's information") has already affected most companies in one way or another. Theirs is an intimidating goal, especially given the Internet's continued stupendous growth:
- Every minute of every day 13 hours of video are being uploaded on YouTube. (This is up from 11 hours of video uploaded per minute three months ago.)
- More than 1 billion pages of content are being added to the Internet every day. Social networks now account for 50% of the page views in the U.S.
- Obviously, the world has rarely seen a shift of this magnitude happening so fast. The magnitude of the Internet's and the search engine's impact on the world is up there with the internal combustion engine, the light bulb, the telephone, and the integrated circuit.
One challenge Google's executives shared is the technical one: How to integrate various media, such as published books ("Sales and Marketing the Six Sigma Way" and many other books will soon be fully indexed) and especially video into Google's search capability.
You and I will see Google's ultra-simple search page continue to provide even better results. Making that simplicity possible, however, requires Google to build an incredibly complex machine capable of giving us what we want.
Another challenge Google executives face is educating people about the value of its offerings. The search engine is such a radical technology; it takes a while for people (including Google!) to realize the possibilities.
A Historical Example for Comparison
Years ago, I read an article describing the trouble created by the advent of the automobile at the turn of the last century. A milk delivery company tested a gasoline powered truck to see how it compared with the horse drawn carts it was using. Of course, it was noisy and smelly and scared the horses in the loading barn. It had no trouble pulling the load and its fuel was cheap, but it cost more to buy than a horse. They determined it didn't save that much in the long run so they decided not to purchase.
A few years later that company was out of business. Rather than simply replacing horses on its existing routes, a competitor had redrawn its routes to take advantage of a vehicle that could work longer hours without stopping for a rest. This enabled them to make a higher profit while offering better service and lower prices.
Needless to say, better educated customers bought more automobiles. Likewise, Google believes educating its customers is a good investment.
Would You Have Predicted These Pay-Offs?
The potentials for new technologies often seem hidden at first. Google has demonstrated an ability to find pay-offs that is not obvious to outsiders. (Or even insiders: A credible source told me that Guy Kawasasaki, the famous technology evangelist, once turned down an opportunity to be CEO of Google, saying "... nobody can make money from a search engine.")
Check your memory:
Would you have guessed that making the content of published books available in a search engine would increase the sales of those books? Studies have shown that they do. That's how Google is persuading old fashioned publishing companies to open up their content.
Would you have guessed that offering advertisers the opportunity to pay per "click" instead of per impression (the traditional pricing model for advertising media) would create a landslide of business from virtually the entire economy?
I wouldn't have.
Now check your assumptions: What possible profit is there in Google's "too good to be true" policy of offering complex software applications (Google Analytics™, Google Docs™, etc.) for free?
Certainly, Google has amplified its impact on the market with this strategy, but people don't yet see the long-term sustainability for such huge investments. Attendees at the "Reaction B2B Executive Summit" asked Google executives Penry Price, VP of North American Ad Sales, and David Fischer, VP of Online Sales and Operations, whether Google intended to start charging for those services in the future.
The answer was no.
Now that they are a publicly traded company, how can they do that? What is their strategic justification?
I think the answer lies in Google's need to educate its customers. Like many companies, Google needs to teach its customers not just how to use its products, but why to use them as well.
Next week in part 2, I'll tell you some of what Google is educating its customers about, and why they handed out copies of "Sales and Marketing the Six Sigma Way" to many conference attendees.
Michael J. Webb
August 5, 2008