The Art Of The Nudge: Why Google Wants To Be A Wireless Carrier

From my Forbes blog:

Confirming rumors circulating for some time, Google today said it will indeed launch its own wireless Internet service later this year. But the Internet giant said it plans to do so on a small scale, to prove there’s a better way to combine free WiFi-based phone and data services with cellular networks.

Sundar Pichai, Google’s senior vice president of products, told an audience at the Mobile World Congress conference in Barcelona that Google will announce more details of its plan to become a Mobile Virtual Network Operator, or MVNO, offering service for smartphones under its own brand. Recent reports said Google will work with T-Mobile and Sprint to provide cellular network coverage in cases when WiFi isn’t available, even to the extent of resuming a call on those networks if it gets dropped.

It’s yet another in a long line of moves by Google to push often recalcitrant industry players along. That includes its Android mobile software (which arguably has become a profit center of sorts if you count some $10 billion in gross app revenues), its Nexus phones and tablets (which surely don’t bring in much if any profit), its fiber broadband service in several cities (probably the closest analog), all the way back to its 2008 bid for radio spectrum (which it lost, perhaps purposely, to get Verizon and others to buy it and eventually expand wireless Internet access).

While Google at times in the past has been more cagey about its intentions when it introduces products and services outside its core, this time it was quite clear about why it’s doing this. It isn’t trying to become a large-scale wireless operator, Sundar Pichai, Google’s senior vice president of products, told attendees:

“We don’t intend to be a network operator at scale. We are working with carrier partners. You’ll see our answer in coming months. Our goal is to drive a set of innovations we think should arrive, but do it a smaller scale, like Nexus devices, so people will see what we’re doing.”

In other words, it’s the latest example of how Google has become a master of the nudge. All of those moves are intended to push software developers, hardware partners, carriers, and competitors to improve their products and services, because the better the hardware, software, and Internet access they provide, the better Google’s advertising business does.

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What’s Next For Google+ Now That Its Leader Has Suddenly Left?

From my Forbes blog:

Google+ has never gotten the respect its creator hoped, let alone gained much ground on its supposed target, Facebook. Now, Google’s attempt at a social network has lost its leader and chief evangelist, Vic Gundotra, who announced today that he’s leaving Google after almost eight years at the company.

Gundotra, a former Microsoft executive, gave no clue to his next steps. His own post, musing on the death of his wife’s uncle and her father’s attitude toward life, implied that he was simply ready for a new challenge after a career at Google that you’d have to consider a success. Google+ failed to make a dent in Facebook, but it’s a solid service with a loyal following and, probably most of all, a powerful source of data for Google’s advertising machine. And Gundotra’s previous work courting developers for Android obviously paid off bigtime, as the mobile software remains the only credible rival to Apple’s iOS.

Still, Gundotra’s departure, effective immediately, is rather abrupt, despite recent rumors that he was interviewing for other jobs. There is speculation that he didn’t get along with CEO Larry Page’s “L Team” of top execs and with some employees who called him the “Victator,” though Page himself provided a quick bit of praise for Gundotra today. Other sources at Google have told me that Gundotra, known for his very public profile and more charm than many Google executives, was resented by some inside Google for self-promotion and a tendency to run over other execs in his drive to get things done.

What matters more going forward is what will happen to Google+, which has suffered most of all from a confusing vision of its core purpose. Gundotra and his lieutenant, Bradley Horowitz (who mysteriously was not chosen as his successor), have taken pains to define Google+ as not a social network, but some sort of social glue for all of Google’s services. But their insistence, coupled with iffy numbers of people supposedly using it, always rang a bit hollow, so Google+ continues to be compared to Facebook. And as a place to share your life with friends as people do on Facebook, it’s clearly a failure. …

Here’s the thing: This could actually be an ideal time for Google to forge a completely new vision of social networking and communications, rather than keep trying to explain what Google+ isn’t. Indeed, at a time when even Facebook CEO Mark Zuckerberg is talking up the virtues of private communications, Google+ could position itself as already well on the way to this new world of more nuanced online communications. …

Gundotra’s departure may be a blow to Google’s social ambitions for now. But it also could be an opportunity to start anew. And it’s an opportunity Google can’t afford to waste this time.

Read the rest of the analysis.

Google’s Next Big Battle: A Conversation With Ad Chief Susan Wojcicki

From my Forbes blog:

Straightforward and unflashy, Susan Wojcicki doesn’t come off like the most powerful woman in advertising that Forbes and others have labeled her. When we meet outside her office at the Googleplex in Mountain View, she’s dressed in jeans and a simple maroon top and speaks with an almost self-deprecating lilt.

But as the search giant’s senior vice president of advertising and commerce, she is indeed the exec leading the development of some of the most disruptive ad technologies of the past half-century. I interviewed Wojcicki (pronounced wo-JIT-ski) for my article in the current issue of Forbes on how Google is gunning for brand advertising, the image advertising still dominated by television and the dwindling pages of slick magazines.

After picking up “detox” lemonades at a juice bar, we walked past a T. Rex skeleton sculpture festooned with plastic pink flamingos to a set of tables to talk about how the company aims to wrest away brand advertising budgets, which still constitute the majority of ad spending worldwide thanks to the persistent popularity of television among advertisers. Over the slap of spikes and serves from a nearby volleyball court and the occasional caw of a crow resting in the nearby trees, she explained her vision of Google’s next big step beyond search and plain-vanilla display ads. This is an edited version of our conversation.

Google senior VP Susan Wojcicki

Google senior VP Susan Wojcicki

Q: Lots of brand marketers and agencies say they can get truly large audiences more easily on TV than on YouTube or elsewhere online. Why haven’t online ads been able to provide similar branding opportunities as TV and other traditional media?

A: Most advertising is a portfolio of different types of advertising. TV definitely is effective for lots of advertisers. If we want to talk about the long-term future, the question is: Where is TV going? Will all TVs be Internet-enabled? And if they are Internet-enabled, what does your TV look like then? Is your TV then basically a screen attached to your computer in your living room? There could be all different types of things your TV looks like in the future.

Q: You still hear the argument that TV is a lean-back medium and people in that kind of environment are always going to be more receptive to brand messaging. Are people ever going to be as receptive online?

A: Even in TV advertising, they try to target specific types of users. That’s why they’ll say, “We want users who watch sports,” because that means a certain type of demographic. Users are opting into seeing specific shows on TV, and I think it’s similar with digital. They are choosing specific shows to see.

I’m not really sure that lean-back vs. interactive necessarily means that the user is more or less receptive. It’s counterintuitive that something where you’re engaging, you’re less receptive. If users are engaging with something, they’re choosing to see something. That’s the whole concept of what we’re doing with TrueView [YouTube ads that viewers can skip and that advertisers pay for only if they’re viewed], where users are choosing to see something, so they’re engaging with it. …

Read the rest of the interview.

Display Ads As Compelling As TV Spots: A Conversation With Google VP Neal Mohan

From my Forbes blog:

In the lobby of Google’s Building 900 at its Mountain View headquarters, there’s a display of Google-colored squares and rectangles that looks like a bland abstract-art piece. It turns out these are the shape and relative size of standard display-ad units that run on nearly every commercial website.

The “display” display exposes the paradox of Google’s attempt to extend its dominion over online ads to the realm of image advertising done chiefly on television and in glossy magazines. To get the wide reach of television, the company needs to shoehorn image ads into those standardized, easy-to-buy units, but it also needs to provide technology that allows marketers to do more compelling pitches inside those boxes. Resolving that paradox is the job of Neal Mohan, Google’s vice president of display ads.

After joining the company with the $3.2 billion acquisition of display technology firm DoubleClick in 2007, Mohan has helped build or buy what’s likely the industry’s broadest set of technologies needed to create, place, and measure the impact of display ads. In an extensive interview for a story in the current issue of Forbes, we talked about how he and hundreds of engineers in Mountain View and New York City are trying to apply that technology to wrest billions of brand advertising dollars from TV. This is an edited version of our conversation.

Google VP Neal Mohan

Google VP Neal Mohan

Q: Could you lay out the key challenges today in getting more brand advertising to move online?

A: The primary use case for advertisers online is generally performance-oriented. That applies not just to search advertising but frankly to display, and even video ads have been performance-oriented. That’s done the industry well. There’s been a lot of growth around impressions and clicks and conversions.

But the next big opportunity for the industry if we are going to grow it not just X percent a year but 10X over the next few years is to crack this brand advertising nut. It’s not about display banners or text ads or rich media or video or mobile. It’s really about all of the above, and what the objectives of the brand advertiser are. It’s more upper-funnel campaigns where brands are looking to establish their brand or a new product that they’re looking to bring to market.

Q: Why the focus on brand advertising now?

A: There are a couple of things coming together that make this the right time for this opportunity to be addressed. The first is just the fundamental consumer trend. Fifty-seven percent of media consumption is online now, greater than any other channel combined, including television. …

Read the complete interview.

Look Out, Television: Google Goes For The Biggest Advertising Prize Of All

Google's BrandLab at YouTube headquarters

Google’s BrandLab at YouTube headquarters

From my Forbes magazine feature story:

IT’S MID-SEPTEMBER, and Volkswagen of America has a problem: It won’t have any new models coming out until the spring. Keeping VW front and center in consumers’ minds has drawn a group of marketing folks from the automaker and two of its ad agencies to Google’s BrandLab at its YouTube headquarters south of San Francisco. Dedicated to “evangelizing the art and science of brand-building,” the richly appointed meeting space is basically a man cave for ad creatives, complete with overstuffed couches, booze and the mother of all big screens, an assemblage of 32 flat-panel displays massed into 300 square feet of video overload.

In one corner of the BrandLab, Google’s Jeff Rozic goes to work running VW’s folks through a rapid-fire succession of video ad campaigns the BrandLab feels have worked. His earnest delivery is well-honed, courtesy of 100-plus similar “private workshops” held for potential advertisers from Coca-Cola to Toyota over the past year. VW has some catching up to do, a point Rozic makes intentionally or not by highlighting 13 travel vignettes produced by a rival, Nissan Mexico. His larger point: Don’t clutter a story with too blatant a call to action. “We shouldn’t apologize for trying to sell cars,” one VW exec protests. “Sure,” Rozic shoots back, “but you have to be careful to distinguish when you’re telling a story and when you’re selling.”

Fair point. Rozic is clearly selling–and it’s a product intended to change Google’s path. The king of the click is now lecturing one of the world’s most accomplished advertisers to forget those clicks and amp up the image ads. CEO Larry Page can go on as much as he wants about self-driving cars, wearable computers or any of the company’s other “moon shots.” But Google fundamentally remains the most disruptive advertising company of the past half-century. As its total advertising-revenue growth rate has halved in the past two years, from 29% to 15% (thanks in part to Facebook and Twitter), it’s now charging full-bore toward the biggest pot of advertising gold it doesn’t own: brand advertising, the image ads you see in glossy magazines and on television.

Most online ads–the banners that litter nearly every commercial website and, most notably, Google’s search ads–have failed to help marketers move the needle on classic advertising measures like brand awareness and intent to purchase. Instead, they mainly drive people to a product page to click the buy button. Direct marketing is lucrative: Search is still upwards of 60% of Google’s ad revenue, helping it earn an estimated 15.8% net margin in 2013–but image ads will come to dominate digital advertising in this decade.

Look at the numbers: Digital brand advertising is an $18 billion market this year, according to eMarketer. Its forecast implies that number will double by 2018, at which point it will have passed search and direct marketing, with plenty of room to grow. Television advertising, comprising almost entirely image ads, is currently a $200 billion global market. And it’s a vulnerable one, as the medium’s iron grip on the bulk of ad spending looks a little less firm as younger people scatter to YouTube and Netflix when they aren’t Snapchatting or Instagramming on iPhones or skipping ads entirely on their DVRs. Some 75% of respondents to an Interactive Advertising Bureau poll of 5,000 ad execs expect to see some spending move from TV to digital video in the next year.

This explains the man cave. YouTube remains one of the greatest acquisitions of the Internet era. Larry and Sergey paid $1.65 billion in 2006 for a business that today would conservatively be worth $20 billion as a stand-alone. So what’s another $400 million or so to build out a brand ad business? …

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What The Heck Will Google Do With These Scary Military Robots?

From my Forbes blog:

Let’s see, we have a company that already knows everything about us, has possibly the world’s largest computer network, has recently built one of the biggest artificial-intelligence teams in the world–a company so powerful that it feels the need to soften its dominance with the informal motto, “Don’t be evil.”

And now Google–yes, of course we’re talking about Google–has bought a military robot company call Boston Dynamics. Not just any robot maker this time–after all, it has already quietly bought seven others over the past year, apparently to provide former Android chief Andy Rubin another chance at a moonshot project. No, unlike the other robot makers, this company makes machines by the names of BigDog, Atlas, and Cheetah that can variously outrun Usain Bolt and hurl cinderblocks 17 feet.

So, we’ve got the potential for killer robots that know where you live and can outrun you when they find you. What’s not to like?

All jokes about Skynet, Terminators, and Robocops aside, the latest acquisition raises a serious question about what Google has in mind. It looks for all the world like it’s pursuing yet another seemingly crazy side project that has nothing to do with its mission to organize the world’s information and make it universally accessible and useful. It’s now trying out self-driving cars, home package delivery, wearable computers, and anti-aging technologies.

Clearly it’s time for Google to update its mission statement, not to mention the “Ten things we know to be true,” a list that includes such outdated gems as “It’s best to do one thing really, really well.” …

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Meet Hummingbird: Google Just Revamped Search To Answer Your Long Questions Better

google15bday1

From my Forbes blog:

Google has updated its core algorithm that controls the answers we get to queries on its search engine in a bid to make them work better for longer, more complex questions.

The update, code-named Hummingbird, is the biggest change to the underpinnings of the world’s leading search engine since early 2010, when Google upgraded its algorithm to one it called Caffeine. Google made the change about a month ago, it announced at a press event in the garage of the Menlo Park (Calif.) house where Google started. The event also celebrated the 15th anniversary of Google’s founding, which is tomorrow.

Most people won’t notice an overt difference to search results. But with more people making more complex queries, especially as they can increasingly speak their searches into their smartphones, there’s a need for new mathematical formulas to handle them.

This update to the algorithm focuses more on ranking sites for better relevance by tapping further into the company’s Knowledge Graph, its encyclopedia of 570 million concepts and relationships among them, according to Amit Singhal, Google’s senior VP of search. (For example, there’s a Knowledge Graph “card,” or information box, for the Eiffel Tower, and Knowledge Graph knows it’s a tower, that it has a height, that it’s in Paris, etc., so Google can anticipate you might want to know some of those facts.) Caffeine was more focused on better indexing and crawling of sites to speed results.

After the event, Scott Huffman, a key engineering director at Google currently working on natural language, told me that part of the impetus for the change was that as more people speak searches into phones, they’re doing so in a more natural way than they type in queries–which is to say more complicated. So Google’s search formulas needed to be able to respond to them.

Partly that is through even great use of the Knowledge Graph, so obvious discrete terms can be identified quickly. But it’s also interesting that although queries are getting more complex, that doesn’t always mean it’s harder to find the right answers. The more terms people use, Huffman says, the more context Google can divine. So those extra words, even if they’re in a more complex query, can give Google better information–but only if the algorithms are adjusted to be able to recognize the relationship among those terms.

Ultimately, he says, “we want to get to a natural conversation” between people and Google search on whatever devices they’re using. …

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