Search is disrupting the media business by making complexity simple.
Search engines organize information (live and recorded text, pictures, videos, and physical objects) to assist people in where to find things. They make money by aligning advertisers with likely prospects, predicting interests from search words. Internet retailers like Amazon taking a similar tack. They suggest products from purchase pattern analyses to make purchasing easy. What makes this model powerful is the value that consumers place on these “assistance” services. They trust the services to be helpful, and show their trust with loyalty. This trust “of being helpful” then becomes a strategic lever to sell to people’s interests.
The “magic sauce” is to have sufficient information and technology to make sense of what’s helpful. Google jumped into the pole position by applying technology to deliver help. Despite the powerful impression that Google’s mono-focus on technology has made, there are many recipes to a good sauce with room for differentiation.
What companies require is a laser-focused mission to be helpful. It is here that their value rests. Any expansion of service needs to be done with careful, balancing new ventures with their ability to be helpful. If companies dilute their usefulness, their trust deteriorates.
Recipes for helpfulness…
Foremost, companies need information to be helpful. Even technology bound Google needs the direction of search words and the massive relevancy cataloging of the Internet to be helpful.
Microsoft, Yahoo!, and Google are experimenting with growing helpful relationships.
Early on Microsoft and Yahoo! provided email to capture relationships but failed to monetize it. Now most portals offer free services for information. The latest iteration is free search engines for personal computers with the offer of getting better answers to questions while providing a better way to manage personal or business information. Microsoft’s new “Live” versions of Windows and Office are intended to extend this thinking into traditional software. This experiment may become the core of a new sponsored or partial fee revenue model.
The quandary is how to optimize revenues without invading the trust. Of course, Google’s sponsored search results are a famously good idea. It maximizes the value consumer “search words” to Google; it gives advertisers transparency on competitive pricing; and it provides consumers with focused helpfulness.
What makes this idea work is the auction of successful clicks. Google tracks the click rates of advertisements associated with search words, and gives top billing to highest value (the product of click volume times advertisers bid for the search word). Advertisers judge the value of the words based on competitive pricing for clicks.
The obvious next step is to enhance the information around the clicks being auctioned for better auctioning. Imagine databases like MRI, Simmons, NPD, NetRatings, comScore, ACNielsen, IRI, Experian, and/or Personix describing who is clicking. The simple technique of name matching can provide Google with a deep understanding of who is typing in the search words. Google can capture names by promising better searching for users who sign in. Google can provide better searching by enhancing their PageRank algorithm to incorporate this deeper knowledge about the searcher’s behavior. The searcher name provides a pattern of searching behavior over time and may also match one of the research databases. The names that match can qualify search patterns with deeper information. Heuristic analyses of search patterns can score the probability of patterns relating to deeper name matched data. Pattern scoring means all signed-in searchers can be better helped by Google and better targeted by advertisers.
Advertisers would certainly pay more for click that are qualified with consumer attitudes and behavior.
Or imagine the less obvious enhancements. People find themselves surrounded by digital devices, from televisions to gameboys to iPods to RFID chips embedded in everything. Imagine a WiFi device that catalogs and links all these devices. Then to make complexity simple, people decide to provide Internet companies with controlled access to their domain of digital devices. When the Internet becomes the single source database of exposures, purchases, and ownership, search will go through iterative disruptions and going through revolutionary cycles.
Just think about radio-frequency IDs… RFID tags have been helping the US Armed Forces manage their equipment and parts for years. Now that RFID prices are coming down, Wal-Mart and others are embedding them in products to manage low cost stock items. Forget plastics and think logistics. Think about walking into a RFID aware household that keeps a live catalog of product information (“walk in” date, “product state” meaning freshness or condition, current location, and use-to-date.) Imagine a search tool that helps you find things around the house, conjures recipes from in-house items, suggests shopping lists, and manages warranties and associated product services. Then if you like, it suggests ideas and recommends new things from its database of similar people.
Add GPS to the RFID chip, and people become mobile catalogs, ready to be “informed” with timely advertiser advice. This sounds extreme, but all this technology already exists today.
Maybe Microsoft and Yahoo! should stop worrying about Google and just march forward.
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