I happen to know a mid manager at GOOG. We were yakking about the mechanics of Adwords. I told him that I thought GOOG's entire biz model was flawed because Adwords was a disaster. Of course, he thought i was crazy. How could I utter such heresy?
Adwords replaces Yellow Pages from physical print space with virtual print space. Yellow Pages has a fixed price model. An advertiser pays a fixed quantity of money at the beginning of the year to run an ad in the phone book for the year. In contrast, Adwords has a variable price model. An advertiser can vary the quantity of money applied to Internet search discovered ads. Yellow pages locks you into one or several page display ads. Adwords allows zillions of ads that can be changed completely during the year, both in content and presence. One can see in Adwords a great deal of flexibility and that implies a great deal of variability in total return.
As long as Adwords is in a growth period where people transition from old media to new media advertising GOOG should do well, because variability of total return is small in comparison to increments of growth. At maturity variability becomes a big problem unless there's a way to add to search discovered ad value. In pursuit of such added value GOOG has created all sorts of gadgets that change the original simplicity of search. The consequence of this need has been nothing short of disastrous as any of you can confirm or admit.
Search on GOOG is impossible. It's counter productive to its intent since it delivers endless, irrelevant, misdirected matches, no matter how you qualify your search. You find yourself chasing all over hell and gone looking for your tail. Never do you quite get to what you're looking for and usually you forget what that was way before you give up searching.
Also, the entire money pyramidal priority approach alienates the advertiser through its tendency to deeply bury a competitive ad, and the advertiser learns that there's added value by reducing CPC without reducing response!
An advertiser has a better chance with the fixed display ad model of the Yellow pages to connect with a buyer. Thus, why not emulate the display model electronically? Instead, GOOG persists with text based disaster.
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