Excuse Me, But Where Did Google's Organic Search Results Go?

Nov 6th

In the past many SEOs have called organic search results the results on the left side of the page and the pay-per-click / AdWords results as the results on the right side of the page. As Google has grown more aggressive with promoting vertical/universal search I think a better way of defining the portions of the search result page are ABOVE THE FOLD and BELOW THE FOLD.

As recently as yesterday Google stripped the phone numbers off of non-sponsored map listings, even if you were doing a navigational search! And that shows that the primary goal of the maps is as filler content (rather than utility).

Update: it looks like Google claimed the phone number removal was a bug, but weird timing that the bug appeared at the same time they started selling premium local ads that appear on the regular search results.

So lets redefine these search result pieces as they are...

  • AdWords Ads: the ads at the top of the search results and those which run down the right rail of the search results.
  • Universal Search Results: filler stuff to put in the search results to a.) drive the organic search results lower down the page, while b.) driving additional incremental click volume to other Google properties which display ads.
  • Organic Search Results: the results on the search result page that are determined algorithmically and appear below the fold. On some larger monitors a listing or 2 from this category may appear above the fold, at least for the time being.

In the future A LOT of verticals (movies, music, books, news, ecommerce, travel, etc.) are going to look more and more like local, where Google in some cases has at least 15 ads above the fold AND filler pushing down the organic search results...quietly building a backdoor portal that sends Google the second click if they were not able to monetize the first one.

To me this screams the importance of working the tail of search, because the more obscure a search query is the greater the risk to Google if they pollute it with junk from vertical search databases.

As Google gets stingier with their traffic that will increase the importance of relationship development and lead capture, as well as developing distribution channels outside of Google.

This new search result layout also highlights the importance of being #1 for your most important keywords...if only 1 result is going to show above the fold then there is little point being #2. So that will really help/force you to decide which words are practical to target and which words are not. If you have some valuable #3 or #4 listings you better start marketing them today before they end up below the fold tomorrow.

The last important thing this search result signals is the importance of increasing conversion rates and lifetime customer value...if/when search becomes pay-to-play in your market, will you still be able to compete? If not, what can be done to help bridge that gap?

More Ways for Google to Embed Themselves in Your Conversion Stream

Nov 5th

The Free Credit Report ads have caused such user confusion in the marketplace that the government has felt the need to create a spoof site with $100,000 worth of amateur video to mock Free Credit Report.com. And yet even if you search for the official website [Annual Credit Report] to this very day Google is cashing in showing 3 PPC ads ABOVE the organic search results for that NAVIGATIONAL search query...sorta like how they were cashing in on eBay's brand recently.

For [Annual Credit Report] the government has stepped in and said what is right for the consumer. But the Google AdWords team has different ideas. "Increasing user choice" means the official site at best ranks #4.

It doesn't matter if you are a white knight SEO. This free credit report link doesn't matter if Google is going to put scammy AdWords ads at the top of the search results where most searchers think those are the most important results.

Google is cashing in on searcher ignorance and misplaced trust, at least while they can - just like other scammers pushing reverse billing fraud would do.

Search competition is important, because without it, consumers lose out on choice. You can see the absurdity of Google's position when they claimed sitelinks on AdWords ads increase user choice. Giving the most dominant players in any market more share of voice only aims to consolidate the marketplace further. If they wanted to increase user choice they would show more result diversity on the page and/or more search results on the page, not just show you more from a big spending market leader.

When you think about Google moving into lead generation and becoming an affiliate play you can see they have massive upside potential. Why? They are the default way most people search the web. So even if someone is searching on a brand and making a navigational search, Google still gets a bite on the apple and shows up as the source of conversion. Don't pay Google their tithing? Too bad, they will sell your brand to leading competitors.

And they are aiming to extend out with this strategy. Not only did the Google Chrome browser replace the address bar with a search box, but Google has been pulling back on data they put in some search results to drive a second click onto other Google properties.

Here is my favorite local Indian restaurant on Google

Up until this past week that listing had a phone number on it. Now it doesn't. I am required to make 1 more click so Google can show their large local search marketplace and their dominance over local/maps search.

In the short run Google makes it easy to embed themselves in your business. Analytics and testing are free. They provide services at a loss to gather data and destroy marketplace competition - exerting their monopoly power without being called a monopoly. Cell phone providers get the Android operating system for less than free. Ecommerce players get a new commerce site search option. Content players get an enhanced Friend Connect. In the short run they make life easier and margins thicker. But after competition is removed from the marketplace look for Google to claw back on partners - just like they did to LendingTree, domainers, and anyone with a brand or a local business listing.

BEWARE: Information wants to be free. Attention wants to be monetized. After net-neutrality will we need a Google neutrality?

Google's Conflicting Push to Move Beyond Search

Oct 28th

As Google has looked to increase revenues and move beyond being "just a search engine" they have put themselves at the top of the food chain in multiple categories. Power corrupts and absolute power corrupts absolutely, etc. ;)

If you search for books their book search is the result in natural search and when you search for movies they push their iGoogle application in paid search. Every holiday season Google tries to make further inroads in ecommerce by doing things like offering free Checkout services (at launch of Google Checkout), integrating Google Checkout with AdWords ads (and claiming this increases ad CTR by ~ 10%), and promoting Google Base / Google Product Search more aggressively in their navigation and organic search results. Some early Google Checkout users also got free links.

As Google dives into music services a new one-box with links to selected partners will appear at the top of the search results. And as Google makes tie-ins with more software providers you can look for Google to promote Google pack and other such offerings across the spectrum of search results.

Google has tested creating a mortgage marketplace in the UK and LendingTree is suing a business partner because they heard that the company might sell data to Google.

Everything is a beta and everything is a test. And then one day a new competitor appears from nowhere.

At times Google seems unbelievably savvy, but at times they seem unbelievably conflicted. Google claims that searchers are expecting more for advertisers and that advertisers need to start acting more like magazine publishers who publish (and advertise) great featured content. Sounds good, maybe. But then Google launches an AdWords ad translation kit. It is pretty safe to say that if a machine translates your ads in a competitive marketplace you are wasting an awful lot of profit margin.

Google claims to like brands, that brands are how you sort out the cesspool, and to show brands for generic keywords to increase user satisfaction.

But lets look at a recent search result for the eBay brand. Google knows that eBay.com gets a 90%+++ CTR, that the keyword is a trademark, that the keyword is navigational, etc etc etc. And in spite of eBay even bidding on their own brand, this is perhaps the first time Google takes a valuable partner hostage.

If Google claims that they need to show brands on generic search queries to increase user satisfaction then why do they pollute the associated brand search results with irrelevant nonsense? Navigational searches are the easiest ones in the world to get right, and if a site has historically got a 90%+++ click-through rate for a keyword, why would it ever make sense to risk putting a universal search result or a marginally relevant ad above the obvious #1 result?

If people are looking specifically for news when entering a branded 1 word trademarked keyword then surely they would skip past the #1 result for the official site. Sure there is money in promoting apps for eBay, but it seems so counter to Google's messaging when justifying their algorithmic editorial philosophy elsewhere.

Google Localizing Search Results Based on the Search Query

Oct 25th

David Naylor highlighted how some Google UK and IE search results are showing primarily Australian websites because some of those keywords are most frequently searched for in Australia. Conversely some Australian search results were returning primarily UK websites for keywords that are more popular in the UK.

If you can't rank for a specific keyword it is worth looking at the composition of the search results and seeing if Google is localizing it to another region. Yet another reason to have a multi-domain strategy if you are targeting many markets.

We Are Just a Search Engine, Honest Guys ;)

Oct 21st

The WSJ reports that as soon as next week Google will begin selling music in the search results:

Google Inc. will soon let users buy songs or listen to them for free, right on its main results page, as part of a broader push to enhance the offerings on the leading search engine, according to several people familiar with the matter.

The music offerings, from four online music services, are to be packaged in what Google calls a "one box" at the top of a results page, similar to the site's presentation of weather and financial results.

To lock up these sorts of deals, some of the largest players in dying markets are given a sweetened deal where Google does not directly generate revenue. But after the deal exists for a few years (and Google becomes a leading destination for that type of media) look for a sharp re-negotiation on pricing. And at that point smaller players better cough up the cash if they want to play.

This is why search is such a powerful market position. Google can wedge themselves at the top of any industry with instant, free, and massive distribution. And they can experiment with the business model and integration while starting off free until they have something that works.

Meanwhile the contracts behind such deals often have a strict NDA. So as long as you trust Google it should end up maybe ok. Except for when it doesn't. In the next couple years this partnering with rights holders and market leaders will hit dozens of markets - further consolidating them. You are either big enough to be #1 or you are #10. If your business model gets crushed when Google starts competing directly against you then it might make sense to invest in other traffic distribution channels and/or other points of differentiation which they can't clone.

Brands vs Query Refinement: Is Google Using The Second Search?

Oct 16th

Patrick Altoft highlighted how Matthew Trewhella (from Google) may have tipped Google's hand a bit about what was known as the Vince / brand update:

Matthew [said] the brand update is about Google minimising the number of times people have to search to find the products or information they are looking for. Every time a user has to perform a second search Google regards it as their failure for not bring up the right result the first time.

So what Google is doing is testing which results are going to give the least number of secondary searches and displaying those. In the past somebody might have searched for “travel insurance” and found a few good sites before remembering that the Post Office does travel insurance too and searched for them to get a comparison. For Google this is regarded as a bit of a failure because they didn’t bring up the Post Office in the first place.

Understanding the bold part above also highlights why Google dislikes many affiliate based business models. Google views itself as the affiliate, and if Google sends the searcher through an affiliate page which does not add significant value (ie: no coupon, no in depth original editorial review, no value add comparisons, etc.) then they feel the extra click was a failure.

Microsoft's ad lab offers a search funnels tool which allows you to view what searches occurred prior to or after a search for a particular keyword.

If you look at some of the above branded keywords associated with credit cards you will see those brands ranking in Google's search results for credit cards.

About 3 weeks ago Dave Peiris highlighted a similar set of theories about the Google update, noting how some of the related searches seemed to be driven in some cases by the next search query. If user satisfaction remains constant or increases slightly (as one might expect it to, since brand is in part driven by exposure, and we tend to like & trust things that we are aware of more) with such algorithmic changes then you can expect Google to keep pushing them on more and more keywords (at least until it starts to harm relevancy slightly). Why?

  • Google would prefer to police a few thousand companies rather than policing millions of individuals (this is equally true for organic search and AdWords)
  • AdWords is approaching a natural price ceiling in many markets based on direct advertiser ROI (and perhaps some related measures like lifetime customer value)
  • as Google's display ad network grows they will get more taste of the branding ad dollars (from when you try to advertise to build a brand right on through when they are cashing in on your branding efforts by selling ads against it)
  • promoting brands helps promote irrational and wasteful and abstract advertising campaigns that can only attempt to be justified when thinking about (and guesstimating) the broader branding impacts of the additional exposure
  • advertising creates search volume. with fewer and fewer people clicking traditional display ads (8% of the Internet user base accounts for 85% of all clicks) Google needs to find a way to ensure that publishers are still getting some credit AND as Google plasters ads over 75% of the web they want to can claim such ads indeed did help drive conversions to further help justify the ad spend (hence the recent view-through conversion AdWords data-point)

Many thin website models (unremarkable thin affiliate, AdSense publisher with thin keyword-targeted content, etc.) will slowly get chipped away at by such algorithms if Google moves this down the query stream (though they can't go too deep into the longtail with it or they would start impacting relevancy in a negative way).

As an SEO, this query recycling concept (if expanded) means that you not only want to rank, but you want to deliver ***an experience*** remarkable enough that people actively search it out by name. And you want to be one of the first couple brands that people think of for your core target keyword.

Search is already heavily influenced by a rich get richer effect and the concept of cumulative advantage. And with search engines potentially feeding search query chains back into the relevancy algorithms, it gets that much harder to come from behind in saturated markets unless you change the model or target different keywords. If you are late to the game and a #10 player it might make sense to brand yourself against the second largest keyword rather than being an after-thought in a more saturated keyword market.

Search Keeps Innovating

Oct 10th

Steve Balmer on Search Innovation

In the above interview Steve Balmer states that search innovation has slowed down over the past 5 years compared to the 5 years prior. While committing to pouring billions of Dollars into the search market, Steve Balmer does not think that search has kept up its rate of innovation. But this perception is actually a fib. A lie. One that Steve must tell himself AND the media in order to try to gain press coverage for Bing and justify what will amount to a very expensive competition in the search marketplace. And it is a lie the media mush push to be able to write about / hype THE NEXT GOOGLE!!!!!!

Search Innovation is Speeding Up

The reason I know that search keeps speeding up is that I write about it. We offer subscribers a monthly newsletter, have forums that we participate in daily, and blog about the latest developments in search. This past month I have done a week of traveling and 2 conferences, but I have absolutely struggled to keep up with the all the changes recently (in spite of closing our site off to new members). Frankly I am amazed at how Danny Sullivan is able to put conferences together and still keep up with everything!

To understand the search game you must first understand that Google is first and foremost a public relations driven company which sells itself as a technology company. This is precisely why they market their browser/operating system as a browser and not an operating system...to avoid the regulations on (and comparisons with) Microsoft.

Recently Googlers have felt threatened by the media, Bing, Twitter, Facebook, and Wolfram Alpha. You can see this by looking at how Matt Cutts posted a 30 day challenge not to use any Microsoft projects, by all the daily innovations and releases Google is offering, by their promotion of a vaporware micropayment system, and by reading the recent 5 part interview of Eric Schmidt, Udi Manber, Amit Singhal, Scott Huffman, and Matt Cutts they did with BusinessWeek to remind the world how innovative Google is.

Google has went as far as advertising their advanced search tips on many search queries and even SELLING SEARCH AS A LIFESTYLE!?!?!

Now some of the changes may not be noticeable to the average searcher because Google has become more refined over the years. But it does not mean that the market lacks innovation. I thought it would make sense to put a post together to highlight some of the ways search has changed so far this year.

Under the Hood Innovation

Google stated they plan to support their rel=canonical tag across domain names and let you set URL parameters for them to ignore.

A few months back Google announced their new caffeine index, but some of the algorithmic changes are far more subtle. When Patrick Altoft tried to dissect some of the ideas behind the Vince/brand update he quoted this killer post from the always impressive Tedster

Here's my current idea. I believe that Google's staff contains more statisticians than any other specialty. The algo is, more and more, driven by statistics and probability. These statisticians watch query data as well as backlink data. That's what jumped out at me while re-reading this patent: backlinks PLUS queries.
....
This is my current brainstorming area, and it's why I recommend the idea of ATTRACTING backlinks more than "building" them. Backlinks alone cannot create a statistically correct footprint for a growing, thriving website. Even though such a "dummied-up" impression has been a working tool for improved ranking in the past, it's a tool whose future is getting more and more cloudy.

Creating a legitimate looking link profile by doing nothing but push marketing keeps getting harder as Google refines what they are looking for as a natural link building profile based on better statistics. If your link building efforts revolve around public relations, publicity, and brand then you are good to go. But if they are mechanical and aggressive you can use fairly similar link building strategies on 2 parallel sites and see one rank while the next is stuck somewhere in Google hell. From the above linked 5 Googler interviews you can see how Google is constantly working to improve localization, word relationships, indexing, and spam detection. QDF + universal search further complicate the search results.

Filtering Information

Beyond the core ranking algorithms there are also new ways to sort through information.

Google has added many options / filters / lenses to view search through, including links to...

  • vertical databases (like Videos, News, Blogs, Books, Forums, and Reviews)
  • results within specific time frames
  • ways to navigate related searches (via Related searches, Wonder wheel, Timeline)
  • additional filters (like displaying images from the page, more text, fewer or greater shopping sites)

Thinking through those type of filters with universal search in mind (and Google's new caffeine index in place) you could see how Google can further alter the search landscape on a query by query basis. Give me something fresh, give me old trusted stuff, give me at least 1 authoritative review, etc. In select markets this can be further refined by editorial partnerships like the health onebox.

Here are recent SEO results. And when authoritative SEO related sites (like SEO Book, Search Engine Land, SEOMoz, SE Roundtable, Search Engine Journal, Search Engine Watch, etc.) publish fresh posts they quickly get mixed into the top 10 to 20 search results (similarly to how Google News results get mixed in). As Google tests mixing in different types of results they can track user response on a per query basis, and bucket different related keywords together.

Inspired User Interface Innovation

A lot of the innovations come from competing search services. Consider that

  • Google's SearchWiki (and SideWiki) were heavily inspired by Wikia Search.
  • Yahoo! implemented search suggestion features widely before Google did.
  • Ask 3D pushed about a lot of the universal search sort of ideas.
  • Google tried to clone Youtube, right up until they were forced to buy it.
  • Bing launched a new visual search service.
  • Wolfram Alpha forced Google to create and evolve the Google Squared service.
  • Yahoo! SearchMonkey pushed microformats, which are now becoming more popular across competing search services.
  • One of Microsoft's best Bing innovations was putting the ads closer to the organic search results - which was quickly copied by Google.

Single Listing? Double Listing? Triple Listing? Quadruple Listing?

In the past sometimes sites would be able to get a double listing and/or sitelinks. Recently I saw a quadruple listing

Google is better surfacing forum posts in search results, has tested displaying breadcrumb navigation in the search results, and is returning internal link anchor page-links directly in the search results.

Google has made results from site: searches extensible

Search Business Model Innovation

Paid search is so easy to grasp that Google's test case is LITERALLY a pet stick!

In spite of the ease of marketing Google is not happy leaving that as is.

Google is testing using machine learning algorithms (and current Google AdWords advertiser data!!!!!!!!!) to set flat rate search ad pricing for small local businesses. And they are rumored to be launching a LendingTree clone.

Google ***is*** the competition, and they keep taking more of the web for themselves.

They are also ramping up their ad exchange. Traditionally Google has tried to credit the last click with most of the value since they are the #1 search company. But brand advertisers buy branded display ads based on mushy feely impulses...and so search can't keep taking all the credit forever if Google wants to expand the online ad pie to become a $100 billion company. As display ad clickers fall off a cliff, Google is beginning to show view conversions (conversions where an ad was viewed but not click) to further justify fuzzy brand spend. Hey if they have ads on 80% of the WWW then you are going to think those ad views created some conversions, even if they were ignored.

It doesn't matter what regulations appear, advertisers feel the need to buy those ads because that is where the distribution is. Currently Google (and Facebook) have such domination over advertisers that they can mass ban them and shut them down overnight as desired, in spite of the economic climate.

There is going to be continued innovation in the online advertising space as marketers better test / recommend / track / explore / learn how to better automate blending ads and content.

Google is testing ads tied to location pages and product ads directly in the search results.

Further marketers are studying how ads sometimes sell something other than what they were created to sell, and there is research being done on ad fatigue and relevancy.

Media Innovation

Google has been buying maps marketshare through cross promotion, a fairly flexible API, collecting user data, and clever promotional tie ins with the likes of Monopoly. China might crack down on Baidu's music piracy, and Google has distribution deals to buy marketshare as long as China allows it to happen. Increasingly Google is procuring the source of record for a greater and greater number of classifications of information types. They are already pushing their power meter, have Sony distributing their browser, and patenting some types mobile consumer reviews. Alas everything is information!

Google is learning to read more content in new formats like AJAX and is getting better at spitting content back out via a quick view of PDFs and mobile printing devices.

Google has begun trying to tie search volumes to economic activity, with their economist claiming that the economy is improving. Others, like Kayak, have followed suit by sharing their data in an easy to reference format.

All this additional content creates more competition and lowers profit margins for web publishers. And affiliate marketing will continue to grow harder. Increasingly successful media is going to need to bake self-promotion in its core, and profitable media will become more of an interactive service.

Why Write a 5 Page Blog Post With ~80 Links in It?

3 reasons...

  • to help me collect my thoughts and share them with you, our readers! :D
  • to point out that anyone talking about a lack of innovation is search is speaking from ignorance, hyping public relations messaging to the media, and/or lying
  • to help push to save Yahoo! Boss. By some measures it might be bigger than Bing AND it if it stays around it will help ensure that search keeps innovating at faster and faster rates with healthy market competition

Employing Market Leverage + Subsidies

Sep 29th

Are You Employing Leverage?

A few months back I had a chat with ShoeMoney and we talked about a lot of marketing stuff. He always speaks of the importance of being able to leverage success to build other related projects. It is typically worth far more money to be a lead player with projects that build off of each other than it is to be a #10 player in many different markets trying to build disconnected brands that can't feed off each other. Even traditional slow moving publishing organizations like newspapers are aggressively leveraging network effects in their SEO strategy.

Networks Allow You to Come From Behind

When you look at Theme Forest they came late to the market, and yet are many times as large as competing businesses that are twice as old. Envato was launched in 2006, and in spite of coming late to market they were nearly instantly successful. Owning popular blogs helped them create thriving marketplaces, and the marketplaces help them make the blogs more popular. The promotion is circular.

Most Leading Web Companies Use Networks

Larger web networks like IAC, Amazon.com, Yahoo!, Internet Brands, Quinstreet, Expedia, Classified Ventures, BankRate, Monster.com, and Demand Media employ the same tactics. At $170 million Mint was a cheap buy for Intuit just to block out competition. Any additional distribution and cost savings are a bonus. Once you have distribution you have free inventory to promote a new site into a related vertical. And this strategy works with smaller niche sites as well. Publishing this site made it easy for us to get a lot of exposure for my wife's PPC strategy flowchart.

Subsidizing New Channels

Everything that is free is subsidized. And rather than trying to squeeze the maximum returns out of any given project it is often better to look for ways to add more value. The best businesses that are sustainable create more value than they capture. Once you have multiple monetization models and multiple income streams you can be flexible with your approach to growth.

Keep Bolting On Pieces

We originally gave away free SEO tools mainly with the ideas of building links and promotion in mind. But now they also help establish a customer funnel while commoditizing the value of some similar business models. And because many of the tools are decentralized (as Firefox extensions) maintenance costs are much lower than someone who centralizes everything. Our customers on average tend to be toward the more sophisticated end of the spectrum, so giving away useful and extensible tools helps us meet that market. But a lot of our business strategy has been made up as we went along, rather than having an aggressive master plan in place.

Watching Big Companies Develop Strategy

Some companies are driven by big goals and 5 (and 10) year plans. Adobe bought Omniture and plans on offering deep analytics into user interactions with flash widget ads. Out of nowhere Adobe entered the ad market.

Renting vs Building

As Seth Godin highlighted, marketing has moved from renting an audience to building one:

This might be the most subtle yet important shift that marketers face as they deal with the reality of new media. Marketers aren't renters, now they own.

For generations, marketers were trained to buy (actually rent) eyeballs.
...
Suddenly the new media comes along and the rules are different. You're not renting an audience, you're building one.

Google is GOD of the Web

One of the best companies to study from the perspective of using market leverage to enter new markets is Google. Recently they struck a deal with Warner to bring their music back to Youtube. But even while their music was not on Youtube I was still able to listen to it - on Youtube ;)

Want to try Google's newest software in Microsoft's Internet Explorer? Continue at your own Peril!

Google is constantly trying to extend search. And their 4 step process to entering a new market usually consists of...

  • Make the service essentially free to buy marketshare, become the marketplace, and kill the business model for competing start ups in the space.
  • Promote it across search, the AdSense content network, and via a thick public relations program.
  • Use the work of thieves and the blurry parts of copyright law to diminish the value of non-partner content to try to force non-partners into a formal partnership.
  • 12 to 36 months later start charging a fair to normal market rate for the service. Claim the service makes no profits until it is an undeniable cash cow.

One of the more cynical, but perhaps accurate, in depth research reports on Google's use of market leverage is Scott Cleland's Googleopoly [PDF]. You might not be able to apply every idea in there to your projects, but it should help you understand where Google intends to intersect with your market and how you can leverage some of those touch-points to your advantage.

One last tip, from Larry Ellison, "Pick your competitors carefully for you will quickly come to resemble the companies you compete with."

Micropayments: Could Google Make It Happen?

Sep 15th
posted in

Remember how the news media wanted Google to come riding to the rescue and save them, and their failing business model?

Well, Google might have found a way.

This should be of huge interest to anyone who produces content on the web.

IF

...it comes off.

Micropayments

Google is planning to roll out a system of micropayments within the next year. Micropayments, as the name implies, are small payments - a cent or even a fraction of a cent - and the idea is that micropayments can be used to pay for accessing web content.

Google sent a paid content proposal to the Newspaper Association of America outlining their ideas. Micropayments will be an extension of Google Checkout, Google's PayPal competitor.

While currently in the early planning stages, micropayments will be a payment vehicle available to both Google and non-Google properties within the next year,” Google wrote. “The idea is to allow viable payments of a penny to several dollars by aggregating purchases across merchants and over time.”

Micropayments are not a new idea, of course. People have been suggesting micropayments will be the next big thing for quite a while now. Jakob Neilsen got it rather wrong in 1998:

I predict that most sites that are not financed through traditional product sales will move to micropayments in less than two years. Users should be willing to pay, say, one cent per Web page in return for getting quality content and an optimal user experience with less intrusive ads. Once users pay for the pages, then they get to be the site's customers, and the site will design to satisfy the users' needs and not the advertisers' needs."

Will Google be the first company to make micropayments work? It remains to be seen, but if they do, this will be the biggest game-changer on the web since PPC.

The Decline Of News

The news industry have been howling as their outdated business model falls apart. Their days of running regional oligopolies are fast coming to end, eroded by the ubiquitous web and the low cost of online publishing. The media is fueled by advertising, and as their readership fragments, the value to advertisers drops.

But what happens if 100% of a newspapers revenue came directly their readership? Micropayments may make this possible.

The big question is: who would pay for the garbage the media serves up? Why should we pay for regurgitated press releases and stories about celebrities shopping expeditions?

Micropayments could help increase the quality of news. Paid news outlets, like STRATFOR charge $349 for annual membership. How can they do this? By providing a level of analysis and research you don't get from mainstream media. Clearly some people are prepared to pay for news that isn't driven by advertisers and the lowest common denominator.

However, the subscription price is still a barrier for most. But what if micropayments, by introducing economies of scale, made it possible to get quality news, analysis and content for a few cents a week? What happens when the price is so low you barely even notice you are paying it?

The scale of the web, plus the tiny charging increments, could be a game changer. And not just for news. This opportunity applies to anyone in the web content business.

How Would This Work?

Nielsen may have got the timing wrong, but he had some good ideas about how a micro-payment system should work:

A true micropayment system would operate invisibly and simply accumulate charges on the user's monthly bill without an explicit confirmation for every click. That's exactly how electricity bills and long-distance telephone bills work. True, people wouldn't make many long-distance calls if they first had to discuss the fee with an operator (though we certainly made calls back when we had to talk to a long-distance operator and acknowledge charges for each call). In any case, telephone companies now simply add up the calls and put them all on a single bill. Intellectually, you know that it costs money to use the phone and turn on a light, but if you want to talk to somebody, you pick up the phone. And if the room is too dark, you switch on the light. You don't go out to the meter every few minutes to check on your electricity bill.

A micro-payment system should be quite different from existing payment systems. You won't be asked to fill out your details each time. Rather, it would be as simple as a click of a button, and tracking and billing would happen in the background.

Google Extends Their Reach

With Adsense, Google cleverly figured out a way to click the ticket on content it didn't own or produce.

The problem with Adsense is that it works best when placed on content heavily geared towards commerce. Micropayments opens up a business model for other types of content, content that is not easily aligned with a commercial imperative.

Imagine the potential for high quality, non-commercial content. Imagine the potential for channels like YouTube. On demand television and movies for a few cents. With micropayments, the volume of content Google could click the ticket on gets much, much bigger.

But the big question remains....

Will users pay the price?

What do you think?

Poscript by Aaron: Clay Shirky published an article in 2003 about fame vs fortune & micropayments. And, while I have generally been skeptical about micropayments, we recently had an interesting thread about this topic in the forums that changed my perspectives of the topic.

Google to Clone LendingTree?

Aug 27th

Does brand matter? That seems to be a question Google wants to challenge. Eric Schmidt offers quotes like "brands are how you sort out the cesspool". Google's search algorithms this year have put more weight on domain authority (which is often associated with brands).

But while Google is telling everyone else to build a brand, Google might be looking to compete head on with brands in many large verticals. According to the NYT:

“LendingTree recently learned that Google imminently plans to launch a loan aggregation service in late August or early September of this year that would compete with LendingTree,” the complaint says. “Lending Tree has also learned that Mortech intends to make its pricing engine services available for use with Google’s new service and will send information related to mortgage loan offers to be displayed to consumer on Google’s Web site.”

The complaint further says that LendingTree has obtained screen shots of a trial version of Google’s service that further indicate that it plans to “provide customers with conditional loan offers in addition to lenders’ contact information.”

Google made a similar test in the UK last year. This is just more reason to develop longtail content and try to build distribution channels outside of search. It seems if you are too successful with search Google may do some self-serving to compete directly against you.

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