Telepocalypse

Google's gaffe

The Register has an article on Google from the barbed quill of Andrew Orlowski. It correctly points out that Google is really two businesses: a media buying agency, and billboards that attract eyeballs into the vicinity of adverts. Andrew thinks that Blogger is their sole billboard: I would say that the search site is their main billboard. I would also personally say that Andrew is wrong in stating there is no such thing as a search engine business — clearly, the search billboard has real stand-alone value. No matter. The important bit is this quote:

So apart from Blogger.com, Google doesn’t own its own billboards. It can pursue either one of two strategies, or more likely a combination of both, to remedy this. Firstly, it can buy or develop more of its own billboards: features which make Google’s own pages more ‘sticky’. By definition, Google’s search results aren’t sticky: you’re on your way somewhere else. Email, a dating service (Google reportedly bid the bubblicious Friendster.com the San Jose Mercury reports today) and beta services such as Froogle could all come into play, turning Google into a mini-portal.

I would be tempted to argue that the flaw in Google’s seach engine billboard is their failure to develop stickiness. Search results are not tailored to me. Indeed, there is no feedback loop at all. Recently I have been searching for hotels in Helsinki (don’t ask) and car rentals in Dodge City (I really mean it!). Googlespam link farms have made it very hard to find what I want. If Google started to ignore domains that people don’t click on in the results page, the search would get better over time, not worse.

This is probably a limitation of technology at the moment. Google is a marvel of the information age as it is. But they seem to have lost their way about two years ago when the main service stopped improving, and all their energy was diverted into side services that the customers rarely use or don’t value much. (Anyone having images of voice command systems here? Screen savers? Celebrity voicemail greetings?)

Ultimately, this is a question about their business model, and it has a very close parallel with the telco industry. Google faces pressures to disaggregate the components of its business. Their very own advert syndication system (AdSense) separates the service from the underlying transport of the search engine. One component involves staccato user interactions (think: telephone calls, search results). The other is a long-running relationship with advertisers.

It is possible to build a customer intimacy business model even in the space of transient search results and phone calls. Once the system learns about you (e.g. I never answer calls from strangers between midnight and 6am, I never click on the domain helsinkihotelstoday.com), it can adapt and intelligently act as your agent. Leaving the service is like getting a divorce: it’s painful to train your mistress to adapt to all the quirks your wife got used to decades ago.

I wouldn’t buy Google shares when they IPO, because their business is too unstable. But then again, I’m up to my neck in telco stock, so you should discount my advice accordingly.