Marketing is More Than Search

Today I spent some time at the Stanford AlwaysOn conference and the accompanying CEO Showcase.  The conference had a few very interesting panels, one of which put together one researcher from Yahoo and another from Google to discuss the search paradigm.  Normally, this would result in a fun panel where at the end, everybody thinks what a great company Google is.  Not when the Yahoo representative is Dr. Usame Fayyad, who I've known for a number of years and come to have a great deal of respect, especially when it comes to makings sense out of data.

It was one of the rare instances where the Yahoo representative was more insightful and more importantly held the intellectual high ground.  Question after question, Usama built the case that marketing is more than search.  Having a portal, and content gives the media company a lot of rich information about the user that could be more important than what that person is looking for at an instant in time. 

To drive this point home he gave an example of a marketing campaign that showed banner ads for a period of time, following text ads that referred to the banner ad.  In this case there was material increase, I heard more than 200%, in click through rates.  So you show some banner ads, educate the consumer, then you show a text and and voila! the click through rate goes up.  Makes  a lot of sense.  This is a differntiating data point for Yahoo to show because Yahoo can offer both to their advertisers, and Google can't.  You can do a lot better if you had a number of tools, as opposed to just search.  This was the gist of his message. 

All of this is true and interesting, but I think it misses something.  Sacrificing simplicity for efficiency is a mistake.  Google has some 100K credit card relationships with small businesses all of whom hate complexity.  Adwords works because it's simple.  How can you possibly have a self-service system where a small business has to optimize a number of banner ads following text ads?  They have to build the banner ad, figure out frequencies.  It would be a nightmare.

You can increase efficiency by lowering your price to the end user, but once you give up simplicity you lose the customer.  So all the properties Yahoo, has and all the information they collect about their users, is irrelevant unless they make it absolutely simple.  Yahoo needs to 'design the experience' for the advertiser around simplicity.

The moderator, Bambi Francisco, (who was unfortunately a lightweight to moderate this panel, and it showed) asked why Google didn't show historical frequencies of keywords, and the answer given was simply that it wouldn't make the solution simple.  They get it.

So this panel showed clearly where Google and Yahoo are coming from.  Yahoo knows a lot more about the consumer than Google, but needs to find a simpler way to bring that knowledge to the advertiser.  Google may not know as much about the person putting in the keyword, but they sure make it easy for the advertiser to put an ad in front of the consumer.  The catch is both companies have scale getting to customers, but the battleground is getting advertisers.

Comments

[Bambi]

Glad to see you got something out of the panel. I agree that my questioning could have gone deeper, but in what direction? There was the obvious 50k-foot view direction - asking what the data says about society and culture and whether the government has a right to that data. But then there were the immediate questions of why Yahoo doesn't use its personal data of users to improve its search results, or why Google/Ask don't use search history or click-throughs to improve banner targeting. Those are the type of questions investors (my typical readers/audience) want to know. Usama has great points about watching users assembling cars on Yahoo Autos and knowing more about them in this context. But the fact of the matter is Yahoo hasn't been able to drive people to those areas. The traffic shows. Hence the lower CPM rates there. True, maybe marketers will wake up and see that there is an opportunity to make money on those sites. Anyway, I agree with you that I could have a lot more probing questions. It'd be great to know what you would have asked.

[Baris Karadogan]

While I say it could have been better, it was a great panel overall, and it did make an impact on me that made me write my post. So I was happy to be there and listen.

What would I have been curious about? What does the data tell Google that they should be doing next in terms of advertising? I am very curious if they have a "bet the company" size project going on.

Are they researching new models of delivering ads? We are all used to seeing ads on the right side and above search results, and assume that's the way to do it, but who know if there is another way that would give much higher clickthrouhg. For example, some ads could be embedded into content, the analog of 'ad placement' traditional media companies use.

Hope this helps. Thank you for not taking my comments the wrong way. If I were up there, I'd probably do far worse.

[John Rodkin]

Your simplicity point makes sense. I think one reason Google has built such a huge lead is because they've made it very easy for the advertiser to get good results quickly, and they continue to move that direction as they integrate their Urchin acquisition better. For large advertisers, though, complexity isn't as much of a problem. They can afford to sacrifice simplicity for efficiency because efficiency is worth so many dollars to them. Eventually, there will be a middle layer where the small guys who Google serves so well will be able to buy efficiently AND simply. That's better for everybody.

[zheng]

I think google's ads work well because they catch you at the "right moment": the moment when you are looking for something (to buy or to find out more).

When people are not in those moments, they mentally turn off ads. How many time do we click on ads when we are checking email or stock prices?

Yahoo needs to spend more efforts in creating such moments, e.g., in their finance home page, instead of graphic ads (which do not work), they could display the min/max cost of car insurance for major cities, this may get people to think about their car insurance and bring them to the right page.

[Joe Agliozzo]

Interesting post, but you are drastically overestimating the ease of use of both Google and Yahoo (for small advertisers who don't have time to really learn how to use the systems). We specialize in small business customers and have MANY who were spending say $2K a month on Google with very little return, simply because they didn't know what they were doing and didn't have the time to learn. Search engine marketing is still incredibly intimidating for anyone who wants to spend most of their tim running a business.

Your observation re Yahoo and the text ad/banner ad is also interesting. Yahoo is REALLY missing the boat with the 5 or 6 year old campaign management system they have for search engine advertisers. Missing the release data on Panama is costing them so much money and I would think there would be much more "bang for the buck" in terms of revenue and profitability in getting that right (and released) instead of worrying about sophisticated mixed media campaigns like text and image ads. Google monetizes each page view so much more effectively with 2 extremely simple concepts that Yahoo still doesn't have: (1) CTR counts when determining ad placement and (2) multiple ads are easy to run against the same keyword bucket.

Look forward to talking to you Wednesday (along with my co-founder Ben).

[Baris Karadogan]

Thanks for the thoughtful comment. Looks like we are going to have a good time on Wednesday.