Daily Archives: December 16, 2006

Google changes its monetization strategy toward a Microsoft one?

I was just talking with Dave Winer and we both noticed one thing in the custom search engine videos I posted on the ScobleShow yesterday that could signal a change in Google’s monetization strategy.

If you use the Google search component on your Web site you’ve gotta accept Google’s advertising too.

See, when I was at Microsoft I was really impressed by Google’s strategy because it really screwed with Microsoft’s strategy.

Let me explain.

At Microsoft each group, like local.live.com, is really run like a separate company underneath a venture capital firm. In fact, Microsoft’s execs look at Microsoft like a venture capital firm. They invest in ideas that get pitched to them through Bill Gates’ ThinkWeek site, then watch to see if they are coming through on their plans.

It works the exact same way on Sand Hill Road, right? If PodTech doesn’t meet its revenue projections, or if it spends too much on new servers, the VCs get nervous. If it goes on long enough they start shutting groups down. That’s why we’re all nervous about when this Web 2.0 bubble will start deflating.

So, what does that all mean? Well, if you’re a group program manager at Microsoft you’ve gotta “sell” your team’s ideas to execs and one of their questions is how you’ll bring revenue into Microsoft and keep expenses under control. If you don’t have a good idea of how revenue will come in, you probably won’t get funded. There are exceptions, but they are rare and they probably don’t get to exist in product groups.

Now, how did Google mess with all that? Well, Google was funding stuff without any clear monetization strategy. Google Maps, for instance, doesn’t have ads. Did you see the “Classified” button on Microsoft’s maps?

See the apparent difference in company strategy?

Now, why was Google’s strategy brilliant? Even better, why did it totally mess with Microsoft’s business model?

It got them a great brand name. Remember Maryam’s nephew in Wales? He said “I’ll Google that.”

Why did he say that? Because Google has — by giving away its services and not having any apparent monetization strategy — built an awesome brand name. One that’s in front of you on millions of web sites/blogs/MySpace pages, etc.

Google Maps are used on all sorts of Web sites, for instance (that list probably only has 1/100,000 of what’s really out there — I’m seeing Google Maps used on all sorts of weird little restaurant sites, and other places.

Why? Well, in part, because they work fast. In part because they were the first to use AJAX so that you could drag them around. In part, because they have an API so you can do weird stuff with them. But also, in part, because there’s no weird “monetization strategy” on them. Think about if you’re a restaurant and Google lets companies start to advertise on the maps — you could potentially be displaying ads for your competitor ON YOUR OWN SITE!

Lucovsky and Seth are the first two to show us that Google’s strategy is shifting more toward a Microsoft one. That’s something that bums me out, but opens opportunities for other companies to rebuild their brand names and get Web site developers/designers and bloggers to switch to them.

Why did that mess with Microsoft’s business model? Well, they had no way to deal with troublemakers who wanted to do Web services for free without any advertising on them who wanted to spend 10s of millions of dollars of the company money. Inside Microsoft that’s called a marketing expense and you need to convince the marketing department that such an expense would be justified.

I thought the strategy of raining down hundreds of free code gadgets that do things like Lucovsky’s video bar was brilliant. Microsoft would be hard pressed to match Google if Google continued to do just that — too many people inside Microsoft who run product teams think first about monetization. Even if those people recognize the strategy that Google was using against them (they did) it slowed them down in convincing stages to make it easy for teams inside Microsoft to come up with something new without having a good monetization strategy in place first.

Is this going to retard usage of those gadgets on Web sites? You betcha! It’s one of the reasons why Toni Schneider and Matt Mullenweg won’t let WordPress.com users put gadgets on their blog.

And, take blogs out of the picture for a minute, if I were a big company would I put a Google search engine on my Web site? I sure will think twice about doing that.

Here’s why: you’re forced to see ads. Possibly even your competitor’s ads. Imagine going to General Motors, doing a search, and seeing ads for BMW and Toyota. If a CMO allowed that to happen I bet they’d get fired the first time a board member saw those ads showing up.

Did you realize that over on Naked Conversations, our book blog about corporate blogging, we can’t put Google ads on there?

Why not? Well when we tried Google ads we got a ton of porn advertising (we’re the #10 result for “naked”). Yes, we’ve out SEO’d the porn industry, but that means we can’t take Google ads cause Google ads (unlike ads, from, say, FM Media) won’t let us choose which advertising we want on our pages. So, we removed the Google ad bar from our blog.

This is what Dave Winer and I were talking about this morning. We’re looking at a lot of Google advertising on Gmail, on blogs, on Web sites, and other places and we’re unimpressed. On the main search engine it makes a lot of sense (and is why probably 98% of Google’s revenues come from advertising on Google.com). But on blogs? On Gmail? On other components? It makes a lot lot less sense.

What does make sense is when you see a Google map object, or a videobar, that it keeps the Google brand in your face and makes you feel good about Google. That messes with Microsoft in a big way. It’s the new-age equivilent of doing advertising on the Super Bowl or the World Cup.

I want to put Google stuff on my blogs, but not if Google’s gonna be making money off of my content (or forcing me to make money off of my content).

One thing I’d like to work on with other community members is a list of gadgets/widgets/codebits that will guarantee that there’s no advertising that’ll be forced down.

Wanna help? We probably should open a wiki. Oh, heck, I just did that over on Wetpaint. Funny enough there’s Google ads on that Wiki. :-)

UPDATE: a commenter here, OR, says that the ads were actually added in response to user requests (they share revenue with site owners). My answer? That’s a good point, but that should be a choice so that on sites that I don’t want to accept advertising I can turn that off.

John Edwards to announce he’s running for President

I usually don’t cover politics, but since John Edwards showed up at Gnomedex and his wife gave Maryam a nice interview, I thought I’d link to this article on MSNBC that says that Jon Edwards is expected to announce that he’s running for President of the United States later this month.

I wish them well. They are a long shot. Why? Well, if you hate what George Bush has done for the country, you probably want to vote for someone who is completely different. How about Barack Obama? Or Hillary Clinton? Voting for a white guy who is a former trial lawyer probably won’t satisfy.

What about if you’re a conservative Christian? You’ll probably want someone really conservative that’s going to go after abortion rights, like Newt Gingrich. John McCain is going to be attractive to military families, due to his military service.

Most tech company execs will probably look toward a Republican who’s not gonna mess with their businesses. There’s a slew of them running.

From the tech industry’s perspective, who do you think we should support?

My favorite news site to watch politics on? Memeorandum.

How can we help jobless folks during holidays?

Maryam and I know several people who have been laid off in the past few weeks. Or otherwise find themselves without jobs. That really sucks, we’ve been there — Maryam posts about her experience four years ago of being laid off which threw us into debt and made life pretty tough for a while. We hid a lot of those troubles from you, back when I was starting at Microsoft.

Being laid off going into Christmas is pretty cruel cause it’s a season where things are supposed to be fun, getting or giving gifts, hanging out with families and friends, and instead you’re worrying about how to pay the rent or mortgage or how to explain to your children why they can’t have that Zune or Playstation that they want while their friends show up with lots of goodies.

One thing I do is whenever I meet Craig Newmark is to thank him. His Craig’s List site was where I found my job at NEC after I was laid off. I’ll always be loyal to Craig’s List because of that, even if a better service comes along.

But, if there’s something we can do to make your holidays a little brighter, let us know. Even if it’s to offer our home to you and give you a glass of wine so you can get away from the stress for just an hour or two.

How to respond to criticism?

I sure haven’t figured out how to respond to criticism. I’ve made my worst mistakes when I don’t listen to it, though, and understand it. This post is prompted by Ewan Mcintosh’s post about Loic Lemur and the big blowup this week at Le Web conference. Ewan writes an excellent blog about how he’s using social media in Scottish schools.

Yesterday we were presenting to a bunch of executives and employees at Intel. It was a big thrill for me to be there. Yesterday was my “blog birthday” — I started writing a blog on December 15, 2000. Unfortunately we can’t look at the first year’s worth of posts.

One exec came up to me afterward and said something like “I was impressed with you because you were listening to us.” He said he noticed I even adopted the Intel language in my answers and changed strategy based on answers we were getting.

I have to credit Amazon’s CTO, Werner Vogels, for teaching me to do that. When you’re hearing objections you’ve really got to get into their shoes and think about how things look from their perspective. It’s not something I do well on my blog. But then I don’t need to be obsequious when I’m blogging — this is my chance to say how the world looks to me.

Anyway, at one point the Intel folks started having a fascinating conversation about listening. I wish I could present it here, but can’t. Let’s just say that Intel is realizing that the real benefits of social media is that it presents an opportunity to listen to what everyone is thinking, feeling, saying about your company and your products.

How many company employees put their product names into a blog search engine and watch what people say? Or, even better, what they are saying about their competitors?

A culture change is coming to corporations. Even ones that are “anti-blog” can use social media to listen.

What would I have done if I were Loic?

I wouldn’t have called bloggers names, even if they are really jerks. I wouldn’t have stood up and said “I’d do it again” on the closing speech. Neither of those demonstrated listening behavior.

And, as Ewan points out, I wouldn’t be quiet when almost the entire blog world (which is who his conference serves, so he should care about it) is against him.

At minimum I would have linked to all of those critics, along with the few that supported him.

When you’re in the middle of a firestorm I’d link to EVERYTHING that moves. That demonstrates, at minimum, that he read and saw every post even if he doesn’t agree.

Then I’d demonstrate listening behavior. What did he learn? How is he changing? What will he do differently next time?

But, what does the silence tell us? That he’s not listening. Not learning. Not participating. Not engaging.

On the other hand, I’m sad to see Loic go through this firestorm of criticism. I’m sure it must be very tough. Last year at Le Blog 2 we had an awesome time and he was a gracious and fun host.

Maryam, who has put on many events in her life (she’s a professional event planner), both big and small, has advice of her own to Loic. It’s sound advice. We’ve been there before with angry customers who didn’t get what they wanted from the event that they spent good money to attend and that advice has helped turn many irate customers around into loyal customers.

Really, I guess the advice that I’m giving myself is when you do things for audiences (or, really, if you’re going to be successful at business) you’ve got to be adept at listening.

If I ever demonstrate I’m not listening, kick me under the table, OK? :-)

UPDATE: Loic just posted some more on his thoughts of the week.

UPDATE 2: Tom Morris has some good advice for conference organizers.

Don’t register domains when you’re drunk

We were out to dinner with Tango Diva Theresa Williamson and she was wearing something fuzzy, so we were having a bunch of fun (they are playing Xbox) and thought “is somethingfuzzy.com available?” and, what do you know, it is!”

What will we do with that? We have no idea, but the idea of registering a domain like that on GoDaddy just made us all laugh. Yes, we’ve had way too much to drink. What the heck.

Who said “don’t blog after two shots of Scotch?” Not me! :-)

Hope you’re having fun on Friday night like we are.