Winding down a business is like winding down anything else. It is important to try to reflect on the good and bad, the lessons, successes, disappointments and to try to take from the business… It is good to take things to apply to the future, to help in the future, to make the future better than the past. To avoid the wrong path in the future, to the extent that the business that you are winding down isn’t the right one.
Did the employees, leaders and board members of Borders Books learn from the failure of their business? What about Circuit City?
“Pain is temporary but quitting lasts forever.” Lance Armstrong
I would add that Pride and Integrity can be forever too. Sometimes the pride that comes from having integrity is stronger than the pain that comes from being labeled a quitter. Sometimes going forward on a new path is VERY different than quitting the old path. Quitting the wrong path is not the same as failure.
Is Netflix quitting on their idea of splitting the dvd-delivery portion of their company from their online streaming? I think they’re just going in a new direction. Maybe seeing Forbes pronounce the decision “incredibly stupid” was good incentive to find a New York Times quote)
Realizing you are on the wrong path and taking a new path is essential, beneficial and sometimes necessary.
Not all quitting is failure. Know when you are quitting the wrong path and have the courage to change!
Jon Buscall wrote a nice little blog entry where he called Mobile Marketing “the new land grab” – where if you “dont grab a piece now, you could be in trouble”
If I wanted to fit my thoughts on Mobile opportunity into about 140 characters, Id say something like: “Mobile is a Huge opportunity for sm-ALL business. It is ubiquitous, engaging, locational, demographically strong, growing and underutilized.”
How ubituitous? ENORMOUS Here’s a graphic.
How much is it growing? - try 20% GLOBALLY in the first quarter of 2011.
Whats the demographic strength? Near 100% – and more importantly, 66% of 18-44 year olds would try mobile coupons, and 50% of 18-34 year olds would give their phone number to a business in exchange for a coupon. Small businesses that get phone numbers can establish relationships with customers.
Mobile advertising in 2011 should double from 2010, and keep growing through at least 2015.
Why the explosive growth? Because a small business can target an advertisement to a search result and because mobile advertising puts a customer buying decision into every potential customer’s hand. Whats the RESULT for small businesses? Mobile equals customers, sales, and growth because mobile puts a buying opportunity where a customer wants it when a customer needs it, and make it amazingly convenient.
Here’s an example: I manage two google ad campaigns for a local automotive towing company. They have a web campaign and a mobile campaign. If someone NEEDS a towing company, they may need it because their car is broken down on the side of the road. In that case, the mobile advertisement allows them to call *from a search result* without ever seeing a website. No need for facebook, no need for twitter, no need for anything but search-click-call. Great for customers = great for a small business… and mobile is only getting better.
I was at a business meeting last week. Everyone in the meeting had a laptop, and a cell/mobile/smartphone – split between Blackberrys, Android phones and iPhones. Half of the people in the meeting had tablets. (ipads, Samsung Galaxy, Viewsonic G, etc), and a couple of the people also had Kindles. I was struck with the notion that as powerful as smartphones are, they could mostly replace tablets and netbooks now… as powerful as tablets and netbooks are, they can mostly replace laptops. Given the pace of change, going forward, it will make less and less sense to make a “mobile app” but more and more sense to make a platform-neutral app that works just as well on mobile devices as it does on tablets, netbooks, and pc’s (or Apple Mac’s). Addressing that now could mean that your app becomes your customers *preferred* way of doing business.
It is fair to predict that two years from now, your customers will likely have phones that can do everything that a laptop can do today… As a business owner, a business leader, either you will be addressing customer needs, or your competitors will. That’s your choice.
Today I was asked for the second time this week – “Hey John, with the scary-fast pace of change, how do you stay on-top of changes in business and technology, and the complex changes going on in the grey overlap between business and technology?”
That is a great question. I read all the time, but that may not be a helpful answer because not everyone has enough time, and not everyone has the burning curiosity to follow business and technology. It is a passion for me, not a chore. I think it is incredible fun to absorb information on business and technology. When I want or need a new SmartPhone, I don’t mind watching 2 dozen of Bonnie Cha’s CNET video reviews – like this one on the HTC Inspire 4g because I’d rather listen to her than spend 2 years with a bad phone.
But not everyone needs to. I think YOU can stay on top of business and technology in 10 minutes a day.
Pick 4 of the web sites that I listed below, and read headlines on them for 1 minute each, every day.
Don’t pick the same 4 sites each day. When you have found items of interest – take another 6 minutes to dive down into the articles, read the information, follow the links, or research whatever interested you, or whatever you saw that didn’t make sense. Be firm and limit yourself to 6 more minutes of digging, but be sure to do it every day. I find that it helps to make things like this a part of my daily routine. To get the most value, add it to your routine wherever it best fits. Perhaps take 10 minutes just before, or just after checking email, just before turning off the computer, just before going to lunch, or whenever. But do it regularly. Ok. Here are the sites:
Infoworld CNET News Forbes Technology CNN Technology
Engadget CIO Wall Street Journal Technology Slashdot Computerworld
TechCrunch Forbes CIO Network CIO Solutions ZDNET
As another approach – whenever you hear any technology-business headline type information that makes no sense to you – go to a couple of these sites and see if there is a headline – if not, go to a couple of them and do a search. Want to know about Epsilon? Want to know why the Sony Playstation hacking problem is dangerous to you personally? (and the SECOND Sony information leak?) Look at a couple of these sites.
Some of these sites are more business-focused and some of them are more technology-focused. Some of them might not appeal to you. Some of them might captivate you. Some articles will be pure eyeball-bait. They are only designed to get people to read them to click on through without really imparting any useful information. Some articles are pure speculation. You will get a knack for knowing the difference quicker than you might think. The Wall Street Journal is easy to tell from the National Enquirer. Others are a bit of a pure blend and your eyes will learn where the important things lie, and where the lies are unimportant.
If you do this, and do it regularly, it could be the most valuable 10 minutes of your day, every day.
Give it a try – let me know how it works for you and let me know if you know of other valuable sites. Add a comment here, or drop me a note.
Diana Adams has a great post on Bitrebels.com titled “16 ways to use your wrist now that watches are obsolete.” Her post includes some really funny suggestions, with comical illustrations from Lunchbreath.com … including “Backup urinal cake” and “Portable Pot Pie.” (do not confuse)
There is advertising on Bitrebels.com – and I’m sure somebody is paying fror those impressions and click-thrus. Of course, some of the best advertising is content-specific. If you can put your product in front of a person who is already interested, you have a much higher probability of making a sale. Google makes Billions from this concept. Other companies, and many people also make big heaping piles of money from this simple concept. But sometimes it fails. Sometimes the best content algorythms and the smartest advertisers promote their product in the wrong places. And sometimes those failures are remarkable.
Here’s an example: If you are reading an article discussing wrist-watches, how obsolete they are and suggesting a direct relationship to… say… buggy whips and egyptian pyramid blueprints… are you really looking to BUY a wrist-watch? Maybe not. The content is there, but the CONTEXT makes all the difference. Here’s a screenshot of the advertisement, on the page focused on ”Wristwatch Obsolescense.”
Although I have a great appreciation for why the watches are up to 80% off, seeing that advertisement on that page doesn’t leave me inspired to buy one. (as an fyi – the link from the advertisement was this: http://googleads.g.doubleclick.net/pagead/imgad?id=CP6jxPL3spWLVBD6ARjvATII8BFY93VjUEI ) I suspect Google’s advertising bots, smart as they are, are still learning… but context is an enormously difficult thing to learn.
Andy Rubin has only ever made 2 public tweets and only follows one person. His twitter page links to Spies.com – which was last alive as a website with a binary dog portrait in 2008 or so. This morning he tweeted: “There are over 300,000 Android phones activated each day.” (Andy Rubin is also VP of Engineering overseeing Android at Google, and he knows how to design products that customers LOVE.) @Engadget pointed out that 300k Android Phones Activated DAILY is an increase from August when only 200k were being activated daily. A 50% increase in 3 months is an incredible business trend.
|THIS seismic shift will bring a tsunami of opportunity for businesses that are creative enough to harness it. Tsunamis are destructive too, but thats another story.How significant is this? Two days ago, Penny Crosman in Bank Systems & Technology published “Who will be the Google of Mobile Payments” and discussed the tangled mess of providers, banks, systems and technology.
She didn’t make the case that the “Google” of mobile payments could be GOOGLE. Given 300,000 Android Phones activated *DAILY* that has to be worth consideration.
So – that is only mobile banking, and that is just a ripple. The tsunami has to be understood creatively, by the businesses who will use this explosion as competitive advantage. Want to sell a mobile app? Android has 300k new users each day.
Even considering Android as one of the big 3 or 4 types of smartphone – with Blackberry and iPhone, and … others, it is very safe to say, the trend is for Android smart phone domination. There are only a few models of iPhone, and only one manufacturer each of iPhones and Blackberry phones. (The key corresponding fact, is that Android is on dozens of phones made by an array of companies, and Google shares success with all of them… Motorola, LG, Samsung, HTC, etc.) To flesh that out a bit… It is in the corporate interests of all of those cell phone producers to help Google succeed by selling more android phones. Even Google’s competitors are selling phones that spread Android. For instance – Google opened their bookstore 2 days ago. As ironic as this can be – Amazon is discounting the Droid Pro to $19 each. Google is smart and they ARE going to take advantage of this installed base.
When your platform is exploding, and your fiercest competition contributes to your expansion – well, that is a bit like IBM selling PC’s and including Microsoft’s DOS as the key component that made a PC “IBM-Compatible.” Good for IBM, but VERY good for Microsoft.
Beyond Cell Phone manufacturers, Android users use more data than other smartphone users, which will make them a favorite of cell companies who want to profit from data transmission. “Samsung Galaxy users typically upload 126% more data than iPhone 3G users, and HTC Desire users download 41% more data” (Arieso)
Want to be available to mobile users? 300k per day is a trend that you MUST account for.
I am at Internet Summit 10 and I have noticed that Mary Meeker’s quote about smart phone numbers exceeding personal computers by 2012 has resonated with everyone. To refresh, her quote is: “smartphone sales will surpass PC and laptop sales in 2012, with more than 450 million units sold.” So – the panel is talking about technology, infrastructure, net neutrality and how important it is to focus on customers…
Dana Todd asked, “For marketing people like her, how do they deal with that technology” She meant the increase in smart phones, the changes in how people use technology. She wants to know how the increase in mobile information technology will impact what she needs to do as a marketer. When mobile users exceed laptops, netbooks, ipads and other personal computer devices – how can marketers best deliver what customers need?
How will Mary Meeker’s projection change what people need? How will it change what people buy, what people use, what people want and what is important to people? (assuming that people = customers)
These are great questions – what do you think?
Media is changing, rapidly and thoroughly. I think the only certainty about this seismic change is that if you could ride a Delorean 10 years into the future, what media will look like then bears absolutely no resemblance to what it looks like now. How will it change? Opinions vary wildly based frequently on the benefits seen by the person expressing the opinion.
Avner Ronen, Boxee’s CEO thinks that a payment platform will win over TV networks. Bruce Eisen, VP of Online Content Development and Strategy for Dish Network thinks tomorrows media distribution model will be today’s, unchanged. But things are already changing in extreme ways. Greg Kampanis, an executive from South Park Digital Studios has seen that offering all of their shows as free content online has resulted in “an increase in ratings along with online advertising revenue.”
And Michael Willner, CEO of Insight Communications asks if Hulu is bad for Broadcasters.
Mr. Willner’s most essential point is about the viability of the current distribution model. To quote: “Eisen’s argument is that even if putting this content online for free has short-term benefits for broadcasters ultimately it will encourage more users to cut ties with their cable or satellite provider, undermining the current distribution model.” (I added that emphasis, here, to make my point.)
The current distribution model is like a woolly mammoth and broadcasters are like little birds that ride the mammoths. At some point, the woolly mammoth became a species doomed to extinction. Some birds hopped onto elephants instead. Some found other ways to survive their ever-changing, evolving environment. Some of the birds didn’t make it. Some of the elephants did. The ones that thrived were the ones that were both smart enough to recognize the changes and fast enough to react.
I think that Bruce Eisen is in a difficult position, and if he thinks that South Park’s benefits are only short-term. Things are not going to settle back to a 1980′s paradigm where media is controlled by the current industry giants. There are so many disruptors in the current woolly mammoth-dominated media environment. Although many things are difficult to predict, the future of those mammoths isn’t. The smartest will see that the “current distribution model” isn’t the same as the future distribution model. Acting like those things are the same, is understandable, and protectionist, but isn’t the most productive long term strategy.
A better approach is to consider, given the current distribution model, and the currently known disruptors, what other distribution models can simultaneously deliver value to viewers and profit to companies that act as media managers, creators, producers and aggregators.
I think Netflix is poised to deliver on that simultaneous-value sweet spot, and their freely-available corporate strategy/playbook suggests they already know it.
Who will their competition be? Will they succeed? Will Dish?
What do you think?
Killer gadgets today are killer because they let us do everything. Is your newest latest Droid/Blackberry/iPhone a killer gadget? Maybe it is, but maybe not. What about the Kindle that only does one thing? Maybe a better question is, do you want more “killer gadgets?” Or do people need one device that does one thing?
From my perspective, the Kindle is better than a killer gadget. It is a paradise device and a paradise business model. The Kindle does only one thing, really well. That is the point. It is killer BECAUSE it does only one thing. It is paradise because it does only one thing. It can give YOU paradise if you have one, and it is paradise for Amazon. The proof is in this delightful, engaging, brilliant Kindle Ad. Please watch it because it explains everything: http://www.youtube.com/watch?v=HGmRKSds9OY
On the surface, if you have $140 sunglasses and love sitting poolside reading your Kindle, it is an easy sell that your Kindle will work better than other multifunction book-type devices. (iPad) Depending on what statistic you pay the most attention to, Amazon is selling either 143 or 180 digital books for every 100 hardcovers sold. Amazon’s CEO Jeff Bezos says it is “astonishing when you consider that we’ve been selling hardcover books for 15 years, and Kindle books for 33 months.” That is a tipping point!
Back to the Kindle Ad! The great irony is that Amazon’s Kindle mirrors the most successful single purpose device in the last decade, in every meaningful way – the iPod. The iPod is a singular-purpose device created a billion-dollar digital download store for Apple. (Perhaps $15 billion) Amazon’s Kindle is another killer gadget, but it is better because it is a single purpose killer gadget. The single-price digital music pricing model has simultaneously destroyed and reformed the music industry and it might yet do the same thing to the motion picture industry. Meanwhile, the publishing industry is being pushed and perhaps dismantled by Amazon’s amazing digital sales… driving per-copy prices down way past where publishers want.
So – coming full circle, here is the situation: iTunes drives Apple revenues with a product to be used on Apple’s iPods. Amazon’s delightful advertisement with their Paradise Device is thoroughly brilliant. It takes Apple out of the black turtleneck cool and plops it down. Where? in a the gut of a man wearing a semi-yellowed white-ish t-shirt over wrinkly khakis (1) at a pool with an iPad (2), sitting side by side with a kindled-up bikini girl. Mr. Apple-man is without sunglasses and looking kind of uptight and stressed, but she finds every relaxed way to look simultaneously hot… and very cool. People might not notice in the commercial, but there is a subtle plate of apples in the background (3) Back to the stress… in this commercial, this alternate vacation reality – it is the iPad that is stressing him. His iPad is not relaxing and is not helping his vacation one bit! It is not helping him find paradise and it sure didn’t help him select his poolside wardrobe.
When you look at these two people, you can tell neither is married. (4) You can tell that she is enjoying her vacation in paradise. She has the shades, the attitude, the smile, the perfect hair, the perfect black bikini, and the perfect device with which to download digital content… and reading. Why is it so great that she has a single purpose device? Everyone wants the paradise that comes with no deadlines, no meetings, no emails, no texts, no web to browse, no pdf’s, no buzzers, no noise, no distractions, and nothing at all beyond reading. It is only one simple pure function. Yet, nothing is getting between her and her Kindle. It is almost an intimate connection. A bargain that cost less to her than her sunglasses.
In a cluttered world filled with multifunctional device Swiss army knives, the Kindle is a Katana – sharp, purposeful, effective and to enemies, it must seem splendidly frightening in its potential and its execution. In the advertisement, everything in the girl’s vacation is elegant, relaxing and perfect. She is lost in the Kindle, lost in her reading. She has reached that intimate Kindle-paradise and left the stresses of her life behind. It is exactly the moment in exactly the vacation that everyone could use – everyone with lives that are torn by a never ending assortment of multifunction devices that sing like canaries in a mine full of hyper stimulated under-satisfied stress. Matt Richtel wrote a great piece in the New York Times about how “Digital devices deprive the brain of needed downtime.”
So – she is cool… she is hot… she is on vacation… and she can read her Kindle in direct sunlight, with her high-end fashionable sunglasses on. Why didn’t he bring sunglasses? Was he too busy in is iPad world with stimuli hitting him everywhere? Was he really TRYING to read or was he hitting on her? Does he not know how to adjust the brightness and contrast on his iPad? It doesn’t matter at ALL to her. She doesn’t have a care in the world. She is on vacation in paradise. She can relax perfectly with her kindle on her vacation reading her book in her world without interruption. That is exactly what she wanted. She didn’t want the sunlight to blind her. She wanted to be fashionable. She wanted to relax, cool by the pool, and her Kindle is exactly what she needed. Suddenly the Kindle is black bikini cool in a world of drab white t-shirts. It is a single word, a single device with a single purpose, and it is simultaneously cool, hot, functional and inexpensive. Does he need a pair of $150 sunglasses to read his iPad? No, he needs to ditch the iPad for a Kindle. The Kindle is EVERYTHING he needs. The Kindle is singular in purpose and effect. It is the paradise that he seeks, even on a perfect day when he is actually IN paradise.
The Kindle is exactly what Amazon needed. It isn’t perfect, multifunctional, or multitasking. It doesn’t read all the formats. It doesn’t try to make nice with the Nook or other devices. It is a single-purpose device in a world of multipurpose devices that gives people a way to escape all those other intrusions on their lives. The Kindle is the device that wraps an ADHD world into a single stimulus that can draw you in and encompass you the way that an afternoon with a good book could in a world that has gone by, long ago, far away. And for every Kindle Amazon sells to turn your life into a paradise, it will sell, based on current averages, 24 digital books.
Narasu Rebbapragada writes about people who pursue “any machine that does as many things as possible, that’s what I want” but also talks how the Kindle “retains the fundamental characteristics of the printed page, (and) encourages deep attention to story.” Deep attention to a paradise where one device does one thing and doesn’t interrupt itself and you.
Books are to the Kindle as music was to the iPod, and anything more is unnecessary and detracts. You might say that with Amazon’s paradise device, Apple just got Kindled.
Having less clicks in an advertising campaign can be both good and bad, but not for the most obvious reasons. It is important to remember the business objective behind the advertising so that when you create an advertising campaign, so you can use the campaign to reach those objectives. It is important to measure those objectives and it is important to try to improve your results. There are times when fewer clicks can be good for meeting a business objective. So lets talk about clicks.
Generally when you develop a Google ad campaign, your ads are shown on Google as a response to a search, and you pay when people click on your advertisement. (generally meaning that they are taken to the particular landing page on your site where you try to convert that click, and that specific interest in your products and services into an action – a sale, a registration, brand building or whatever)
The theory behind developing your advertisement is to develop the ad that converts the highest possible percentage of ad-views into ad-clicks. Here is an example: If you have 1000 people search for “Buick Regal” in Winston Salem, NC, and you sell Buick Regals in or near Winston Salem, NC, and you develop an ad campaign, you want to get a high percentage of those people to click on your advertisement. You might have a text based ad campaign that says something like this current campaign from Vestal Cars:
If you click on Vestal’s advertisement, you come to an inventory page that shows their current inventory of Buick Regal automobiles. That seems well formatted, well directed, and as effective as possible. If someone is searching for a Buick Regal to purchase, Vestal Cars is showing them exactly those cars, in that location. If a potential customer searches for that, and clicks that, Vestal has done everything right to (a) convert views to clicks, and (b) convert clicks to action. In this case, the business objective is to sell cars. To sell cars, they need customers to consider their cars, to look at their cars, to visit their car lots, and ultimately to find a car they want. Vestal Cars wants to get people who are already searching on Google for a particular car to see their inventory of that car. Their thought is likely that a person searching for a particular model of car is apt to be interested in that particular car. In the nebulous world of search-advertising, that is a pretty logical assumption, and I think their well-crafted advertisement is as likely to sell cars for them as anything. I’m not sure why they’re returning 2010 Buick Regal information instead of 2011 Buick Regals, but apart from that very minor quibble, I really like their advertisement. For the most part, they have done it right. In their case, a higher click through rate will likely support their business objective – and fewer clicks would be bad.
Google’s Adwords are a very effective way to advertise, and per-click charges make billions of dollars of revenue and profit for Google each quarter. Large companies spend millions of dollars on campaigns annually, and for particular events. (AT&T spent more than $8m on the iPhone 4 release, and BP spent more than $3.5m for “oil spill” related searches recently.) Those companies, however, are really enormous.
There are cases in which smaller businesses, and entire categories of smaller businesses might not want someone to click their advertising. Think about that. For particular categories, an absolute minimal % click rate might be optimal. For these businesses advertising campaigns, fewer clicks would be wonderful. Why? Why would you develop a campaign to target less clicks? That campaign would be done where less clicks is a more effective way to support the business objective. What would that look like?
Here’s an example where the fewest clicks possible produces the best results – the most optimal business results. Although that is good, not for the obvious reason, it is also bad, and also not for the most obvious reason.
I recently put together a campaign for Twin City Towing. Their business objective was to increase their volume of towing. To do that, they want Google advertising to increase calls to Twin City Towing for people who want Towing services and the other services that they offer: Here are the two advertisements that I put together as part of this campaign.
This campaign was designed to target searches that were done in and around Winston Salem, NC for about a dozen terms like “Auto Towing” “Local Towing” and “Tow Truck.” All of this is pretty straightforward. I also targeted the advertisements for good placement.
Here is my most important point: A perfect response to this advertisement would be someone who saw the advertisement and called Twin City Towing to get towing services. (not a person who clicks through to Twin City Towing’s website.)
Because the advertising is charged per click, I want great placement on the advertising, and I also wanted the highest response to the advertisement for people, but I also want the lowest possible click conversion. Here are possible response rates and their implications: If there is a click through rate of 2%, and 100 advertising impressions shown at a cost of $1.00 per click, my cost to reach 100 potential customers is $2.00. If I have a 20% click rate, my cost of reaching those same 100 potential customers is $20.00. (or, for the same $20, I can reach 1000 customers.)
Think about this: If a business wants someone to CALL for a tow – why bother getting them to click to a website that tells them what to call? Why not simply include the phone number in the advertisement? Including the phone number in the advertising means that a stranded motorist who does a mobile phone search for tow truck doesn’t need to click through to a website, he needs to call a tow truck. Including the phone number saves the customer a step. It is simply more convenient for someone that needs to get towed, and that should increase business. This is a case in which a lower click through rate simultaneously gives customers what they want while increasing business more cost-effectively. So what has the response been for this ad campaign? From August 31 to September 6, 2010, here are the actual raw statistics:
Impressions: 959 – Clicks: 4 – Click-rate: 0.42% - Cost per click: $1.29 - Total cost $5.15
For most campaigns, that would be an extremely low click-through-rate. If the campaign continues at this rate, a theoretical advertising budget of $100.00 could last for almost 20 weeks and reach almost 20,000 people. If the business has added two tows this week, their cost for adding each tow will be approximately $2.57. That is extremely cost-effective advertising, built on a counterintuitive philosophy of Less Clicks.
So – that seems good, but it is actually both good and bad. Where is it bad? Earlier I described search advertising as nebulous. The downside of advertising for a response that does not result in a click is that without other changes, it will be impossible for Twin City Towing to know, based on their call volume, and also impossible based on Google’s advertising campaign statistics if particular towing calls are actually coming from Google Advertising. If there is an increase of call volume from towing customers, it might be cyclical, it might be due to a decrease in car reliability. It might come from Bing, or Yahoo, or perhaps the yellow pages. Because the response is NOT click-based, the perfect response to their Google advertising produces zero in specific and measurable statistics.
So is this a good ad strategy? Would it also work for cab companies? Would it work for other business segments? Are there better ways to quantify how this ad campaign meets the intended business objective?
What do you think?
There is an important equation for the competition between Google and Facebook.
Google and Facebook are both enormous companies, both are Internet companies, and both are at their core, fueled by competitiveness and greed. Sure Google has that “Don’t be evil” philosophy that was their corporate value at one point. I think Google abandoned that when they joined Verizon in the destruction of net neutrality.
But that is not the issue here.
The issue is a string of Tombstones the people erect at Google’s feet, as if Facebook has vanquished it at something. These are ironic and irrelevant tombstones, and thoroughly inaccurate and deceptive. Adam Rifkin wrote a good one yesterday on ”Why Google has no Game.” His main point was that Google doesn’t really get social engagement. His underlying idea is that social engagement is a sort of be-all-end-all of internet value.
My initial reaction was that he was wrong. I read comments on his blog like this one: “if Facebook shut down today it would not impact on my life in any tangible way. However, if Google shut down, I’d be in deep trouble!” (attributed to Kullar)
I agree with that, and would take it a few steps further.
For me – I would miss neither, but by a narrow margin, I would miss Google more, and here’s why. Google does things with the Internet, on the Internet, to the Internet and for the Internet. Facebook wants to be its own “internet.” That strategy didn’t work for AOL. Facebook is inherently more profitable than AOL because Facebook tries to be its own “internet” without the costs that AOL had in creating its own content. But that is a moot comparison because AOL isn’t AOL anymore. A better question to ask is whether Facebook more profitable than Google. Is it? No. absolutely not and it is not even close.
Why is Google more profitable? Facebook screams “We have 500 million users.” but users don’t translate directly to profitability. Google is more profiable because it is just inherently more valuable. Why? Because Google has enormous data on what people DO, around what people WANT, and around what ultimately inspires people to ACT – essentially Google knows who, what, where, when and to some extent, why people want, what they want, what they do about it, and what causes or inspires them to act – across the entire scope of the Internet. (not just Facebook’s 500 million members – but the ENTIRE internet) Facebook only has data around what people SAY on Facebook. I think Google’s data is inherently more valuable, more relevant, and I think it will only sap their energy if they chase Facebook. I don’t see any benefit for them. Where is the profitability in chasing Facebook? Particularly when Facebook is a mastadon, big, plundering, and at some point, Facebook’s sub-glacial pace and lack of creativity and profitability will doom it to extinction. Google has all that data, and as the icing on their profitability cake, they really know how to monetize their data.
I think it is all about money. Follow the money, the revenue and profits. In that regard, Facebook is not really any competition for Google at all. People have been surprised by estimates that Facebook’s 2010 revenue could be as high as $1.2b. This is so surprising because Facebook’s 2009 revenue was estimated at $800m. ON that view, Facebook has increased income by 50% year to year. That seems great, but there are two critical issues with those numbers. One is that Facebook’s numbers are unaudited. It is a privately owned company, so there’s really no hard firm way to know if those revenue numbers are accurate. The second and more important problem with those numbers is that they are only stating REVENUE… not Profits, not Income.
How does that compare to Google? A quick glance at Google’s AUDITED and reported numbers shows that Google’s Q2 revenue was 6.8b – their revenue for 2009 was $23.6b
Google’s net income was >$6.5b in 2009. That is INCOME. Profit. That is actual money that they made. Here’s another interesting statistic.
Google’s Q1 and Q2 revenue last year was about $5.5b each quarter.
Google’s Q1 and Q2 revenue THIS year was about 6.8b each quarter.
To put this in another perspective -> Google’s QUARTERLY INCREASE in revenue this year over last year is about $1.3b. To emphasize, that is the INCREASE PER QUARTER, and it exceeds Facebook’s annual revenue estimates.
Google is chugging along at a roughly 28% profit rate. Again, since Facebook is privately owned, nobody really knows if Facebook has ANY profit, or what their profit rate might be.
So – what is the Google vs Facebook equation? $ = G > F. It is that simple.