Google – Page 6 – Naofumi Kagami

Effectiveness of Online Ads

Jordan Weissmann an article that is very much in alignment with my views and experiences with online advertising.

“We Have No Idea If Online Ads Work: The Internet has given us an ocean of data. Turns out, most of it is pretty useless.”

Some excerpts;

Last year, a group of economists working with eBay’s internal research lab issued a massive experimental study with a simple, startling conclusion: For a large, well-known brand, search ads are probably worthless.

For instance, companies like to run large ad campaigns during major shopping seasons, like Christmas. But if sales double come December, it’s hard to say whether the ad or the holiday was responsible. Companies also understandably like to target audiences they think will like what they’re selling. But that always leads to the nagging question of whether the customer would have gone and purchased the product regardless. Economists call this issue “endogeneity.” Derek Thompson at the Atlantic dubs it the “I-was-gonna-buy-it-anyway problem.”

In the end, it all comes down to the evergreen challenge of distinguishing correlation (e.g., a Facebook user saw an ad and then bought some shoes) from causation (e.g., a Facebook user bought some shoes because he saw an ad).

This is exactly the reason why we stopped using AdWords for our antibody search service. Visitor numbers dropped, but our profits didn’t.

Maybe brands that are just starting out need to use AdWords. Maybe if they never gain brand recognition or loyalty, these brands might have to use AdWords forever. However, if your brand has managed to get some recognition, or if your product offerings are unique and listed high in organic search, it is very likely that AdWords is reducing your profit rather than increasing it.

Google and other internet advertising companies are telling advertisers how much data they have and how effectively they can target customers. However, as a recipient of these advertisements, I’m seldom amused when they blatantly show ads from websites that just I visited the day before. If this is all that big data can do, then Internet advertising companies have a big problem.

Design And The Lack Of Intent

I read a great post today by John Moran about Intent within Apple’s designs.

Overarching intent is easy. The hard part is driving that conscious decision-making throughout every little choice in the creative process. Good designers have a clear sense of the overall purpose of their creation; great designers can say, “This is why we made that decision” about a thousand details.

When Jony Ive, Apple’s newly titled SVP of Design, criticizes a material selection or feature decision, “he’s known to use ‘arbitrary’ as a term of abuse.”

John goes to outline the “Three Design Evasions”; what most companies do instead of employing Intent.

Preserving the past.
Copy first without making the Intent your own.
Delegating design decisions to your customers.

The question is, what is holding good design back? Do we lack good designers or are corporations ruining them?

I don’t know the answer. I’m quite sure that a lot of designers are aware of Intent and consciously try hard. The problem is, I tend to find most of the celebrated designers lacking it the most. Instead, I often find good Intent and good design in kitchen utensils and other everyday tools that are not “appearance” driven.

For example, architecture. Widely acclaimed architecture is more often praised based on its appearance. Of course critics will note Intent and usability benefits. However, as an actual user of these buildings, I have never found myself appreciating the designers’ decisions. In fact, we more often tend to loath the strangely designed rooftops that invariable leak rain, and the unconventional hallway orientations that make you feel lost.

On the other hand, I marvel at the curves of my kitchen cutting knife or scissors which are truly designed to fit your hand. I wonder at the small details on the metal knife embedded in the box of my food wrap which allow me to efficiently cut the film with the minimum of strength and without it tearing in unwanted places.

Even Jony Ive’s designs used to have annoying flaws. I hated the trackpad buttons on the Powerbook G3s which looked nice, but had a very badly designed clicking mechanism. The flimsy hinge on the Titanium Powerbook easily fractured and came off. And it’s really hard to justify the design of the “toilet-seat” iBooks. There was very little Intent in those designs.

In my opinion, it was only after the aluminum Powerbooks which had very minimal ornamentation that Jony’s designs started to blend form and function.

Designing with Intent is probably really really hard. Even for Apple and Jony Ive.

Non-Google Play Evolution Outside of China

An interesting trend in Android is how they are removing features from the core operating system (which is open-sourced) and adding them to Google Play Services which is closed source and requires a restrictive license from Google to install.

This is a way to solve the fragmentation problem that Android faces. More insidiously however, it is also a way for Google to pressure OEMs and exert strict control of Android.

The problem is, Google is incapable of imposing this restriction in the largest smartphone market in the world. In China, more than 70% of smartphones do not have Google Play services, which means that applications that require Google Play will fail to work for Chinese users.

This is a huge issue of itself. However, the future implications are even larger.

Because Google has removed core applications from open-source Android (AOSP), this creates an ecological niche for third-party developers. Chinese developers are free to create app stores, maps, calendars, chats systems, digital content distribution stores, payment systems, video apps, search apps, location services and a lot more without competition from Google. This is certainly what is happening right now in China. There is a thriving ecosystem with lots of competition in these areas, whereas in other parts of the world, Google tends to crush other players creating a much less vibrant market.

Within the vibrant ecosystem, competition will encourage players to innovate and improve their services faster than a single company, even if that single company is Google. These Chinese services will eventually rise to a level that is of higher quality than Google.

The next issue is whether these services will transfer to countries outside of Google. The Google Play Service licensing restrictions explicitly prevent OEMs from removing the Google search widget from a prominent location. This makes it difficult for Chinese services to replace Google Play on licensed phones. For the Chinese services to be emphasized higher than Google Play, OEMs will have to forgo Google Play altogether.

Is this possible? What would be the economic incentives to do so.

Although this scenario is at least a year into the future and anything may happen till that time, it is important to note that a free OS strategy (Android) is not substantially different from a cost for license strategy (Microsoft Windows). The fact that Android is free does not make it easier or harder for the Chinese alternatives to go to market.

For example, in the Windows PC world, PCs came bundled with all kinds of unnecessary and unwanted “crap ware”, because “crap ware” companies paid the OEMs to load it onto their products. In the future, some Chinese companies could pay Android OEMs to remove Google Play from their devices and instead preload their own offerings. In fact, that is probably what is happening in the Chinese market right now. I would be very surprised if the Chinese service providers did not try this as they launch in other countries.

In conclusion, the following in how I feel about Google’s strategy.

It is understandable for Google to move desirable features out of Android open-source, and to move them into closed source so that they can exert more control.
However in the long-term, it allows alternative services to thrive in certain niches. In the case of China, this niche is happens to be huge and vibrant.
In a few years, these alternative services could mature to the point that they can challenge Google in markets outside their current niche.
Instead of mostly ignoring China, which this Google Play strategy is doing, Google should think of ways to undermine the companies that are enjoying the Google-free void. The threat of these companies challenging Google could actually be larger than US companies like Microsoft or Yahoo.

Will Google Use Humans to Fix Google Now?

I have never used Google Now, but I was always skeptical. The use cases that were being reported on the web always were extremely limited, and it seemed that they were simply telling us about the things that worked but not about the things that didn’t.

A couple of days ago, Janko Roettgers wrote on GigaOM about how Google Now actually fails, even in the limited tasks it’s supposed to be good at.

We often assume that because Google is collecting huge amounts of information about their users, they are able to understand a lot about who we are and what we want to do. Yes, Google does know where you live and it knows exactly what keywords you used on your searches yesterday. It knows exactly where you are right now. This is all very creepy, especially if you are an Android user. The problem is, there is no guarantee that this information will let Google know your current intentions with any accuracy.

Google has been described as a “decade-old machine learning project”. There are two products from Google which have shown how this can actually be turned into something useful. They are Google AdSense and Google Maps.

Google search basically selects the ads (AdWords) to be displayed based on the keywords that were entered in the search field. Although the information that Google holds about the user is also used to tweak the results, this is not the main driver of the AdWord ads to be displayed. With AdWords, the user has directly expressed their intent through the search keywords and Google does not try to second-guess it. This intent is what drives the ads and this is why I don’t include it in the current discussion.

AdSense is more “intelligent” than AdWords because it tries to guess user intent. It analyses the content of the page the user currently is browsing. It uses knowledge of what pages the user has visited recently. It uses location data. It combines all of these to determine which ad the user is most likely to click on. In reality, AdSense fails most of the time. It does not correctly estimate the user’s current intent. But that’s OK. The click-through rate (CTR) of AdSense is at most a few percent and the vast majority of people aren’t interested in what is shown in an online ad. It’s completely acceptable for AdSense to get it wrong most of the time. Therefore, the “intelligent” guesses of AdSense are successful even if they are completely wrong most of the time. AdSense will still be immensely successful when the majority of users are pissed-off by the ads. It only takes a small percentage of correct answers to succeed.

Google Maps is a totally different kind of “intelligence”. Google Maps has to be accurate for the vast majority of the time. It has to be something like 99.999% accurate or more. Otherwise, we would constantly get reports that some poor drivers drove themselves into a desert. How can Google Maps be so accurate when AsSense is so sloppy? The secret lies in humans. To quote an article by Alexis Madrigal on The Atlantic.

I came away convinced that the geographic data Google has assembled is not likely to be matched by any other company. The secret to this success isn’t, as you might expect, Google’s facility with data, but rather its willingness to commit humans to combining and cleaning data about the physical world. Google’s map offerings build in the human intelligence on the front end, and that’s what allows its computers to tell you the best route from San Francisco to Boston.

Even though Google gets vast amounts of information from satellites and street-view cars, it has to combine these with an army of human beings to gain accuracy. Without these human beings, they cannot get the error rate to an acceptable level. The kind of “intelligence” in Google Maps can only be attained with a huge number of people who manually curate the information.

Now let’s get back to Google Now. Which kind of “intelligence” do we need? Do we want a personal assistant that thinks it is acceptable to guess correctly only a few percent of the time? Or do we want a personal assistant that truly knows what we want to do next?

If we want the latter, we may have to be content with an army of human beings plowing through your most personal information, helping Google’s not-so-accurate machine learning algorithms to make sense of your daily routines.

What Are “Services”

There is a lot of discussion on the Internet about how “services” are essential to tech companies.

Ben Bajarin recently raised the point that even though Google is using their services as a weapon to fend off the proliferation of AOSP (Android Open Source Project) devices, Google’s services are actually only relevant in markets like the US and UK, but much less so in other regions.

What you see with regard to the Google Play services availability is the biggest issue facing Google. It is one that is forcing, in a good way, local companies in those regions to create and bring to market services of their own to support their region. China is the best example of this do date. Granted China’s Android ecosystem is a bit messy with over 100 different app stores but the region is quickly fixing these issues and consolidating.

The fact that Android is being used as an open source platform is not necessarily a bad thing for Google. What is challenging is that they are not making the impact with their services the way they need to be in many of these regions. Their competition in this case is not from the likes of Apple or Microsoft necessarily but from savvy startups looking to solve a problem in their region and doing it better than Google can thus keeping Google out of regions they may wish to compete.

I totally agree with Ben’s argument, but I would also suggest that what we are simply calling “services” should be broken down into certain sub-categories. For example, looking at the Wikipedia table on Google Play availability, we see that “paid apps and games” are available in the majority of countries, whereas books, movies and music are not. Compared to the same chart for Apple’s iTunes store,, Google Play is extremely lacking in books, movies and music but not very different in apps. This suggests that digital distribution of apps is a very different business compared to that of books, movies and music.

The reason why there is a large difference is rather obvious. In the case of apps, Apple and Google are the gatekeepers. They do not have to negotiate with the content owners over whether they can distribute the content in a certain country and at what prices. They make the decisions or the developers make the decision when they submit the app.

For books, movies and music, the rights to distribute content are much more complicated. The content owners have much stronger bargaining power and they often have different agreements in each country. Each country may have their own distributor network which may have exclusive rights for distributing content in that country. Furthermore these distributors might have plans for their own digital distribution which would compete with what Google and Apple are planning to offer.

Hence the difference between Apple and Google Play is most likely the difference in negotiating power, skill and previous relationships with the content owners. Essentially, it boils down to the ability to make deals.

With this in mind, I propose that we break down “services” into the following;

self-owned services: These are the services where the provider has ownership of the content. Examples are search, social network services and web-based services (Google Apps, etc.).
self-controlled services: These are the services where the provider can distribute without negotiating with a strong content owner. The prime example is apps. App vendors are generally quite small and have little bargaining power relative to the service provider.
third-party owned services: These are the services where you are selling content that is owned by a third-party, and that third-party has strong negotiating power over distribution (unlike in the case of apps). Examples are music, books, movies, etc. Distribution of this content was historically done physically through retail networks and this resulted in complex networks and agreements, which are often different in each country. Also this content tends to be much more expensive to create than “self-owned service” content, thus requiring large companies to fund production. These large companies obviously have strong negotiating power.

When we map companies like Google, Apple, Amazon, Twitter, Facebook, Spotify, and Pandora to these categories, we find that no company is strong in all three. Twitter and Facebook are exclusively in the “self-owned services”. Amazon, Spotify and Pandora are exclusively in the “third-party owned services”. Google is mostly in the “self-owned services” and to some extent in the “self-controlled services”. They are however very weak in “third-party owned services”. Apple is strong in “third-partly owned services” and strong in “self-controlled services”. They are however weak in “self-owned services”.

From an international perspective, “self-owned services” and “self-controlled services” are relatively easy for the service provider to provide in many different countries. However, “third-party owned services” are very difficult. Amazon for example has very limited international reach. The fact that Apple has in fact been able to provide their services in a large number of countries is very much the exception.

These three categories will probably have very different dynamics and I sense that it will be very difficult for any single company to excel in all of them. At least that seems to be the case so far.

Google Plus is an SEO Tool

There was a good article on the New York Times about Google’s spooky social network, Google Plus.

Some quotes from the article;

Thanks to Plus, Google knows about people’s friendships on Gmail, the places they go on maps and how they spend their time on the more than two million websites in Google’s ad network. And it is gathering this information even though relatively few people use Plus as their social network. Plus has 29 million unique monthly users on its website and 41 million on smartphones, with some users overlapping, compared with Facebook’s 128 million users on its website and 108 million on phones, according to Nielsen.

…

Starbucks, for instance, has three million followers on Plus, meager compared with its 36 million “likes” on Facebook. Yet it updates its Google Plus page for the sake of good search placement, and takes advice from Google representatives on how to optimize Plus content for the search engine.

“When we think about posting on Google Plus, we think about how does it relate to our search efforts,” said Alex Wheeler, vice president of global digital marketing at Starbucks.

1 in 3 Android Devices are forked Android

Interesting statistic from ABI research.

1 in 3 Android devices are actually forked Android (ASOP, non-certified Android) which do not run Google services. Furthermore, the majority of growth is now coming from this segment.

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Google-Motorola Confusion

I’ve been trying unsuccessfully to find any indication of how the Moto G, the low-cost smartphone from Motorola is selling. I’m interested in how well their strategy, that is selling mid-spec smartphones at low-end prices by foregoing profits, is working. I strongly suspect that it is not, but I need data to verify that.

In the meantime, I found this funny article by Rolfe Winker for the Wall Street Journal. It describes very well the almost comical confusion and utter lack of coherent strategy at Google-Motorola. I’ve quoted some parts of it below.

The price cut on the Moto X extends a strategy laid out by Motorola Chief Executive Dennis Woodside to undercut rivals. Motorola’s lower-end Moto G phone, released in November, starts at $179 without a contract in the U.S., compared with $250 for a comparable Samsung device at Verizon. VZ -0.48%

OK. So the strategy is to undercut rivals on price.

Analysts say that low off-contract pricing is likely to have a bigger impact outside the U.S., where a larger share of smartphone users buy their phones directly, rather than by signing wireless contracts.

Now such a strategy will work best outside of the U.S. It won’t make much difference in the U.S.

The Moto X is sold only in North and South America, and the new lower price is only available in the U.S. for now.

Uh oh. But the lower price is only going to be available for the U.S.

Nice.

P.S.
In the last part of this article, there is a quote from an analyst;

Brand, distribution and product breadth are critical to sales volumes, and here Moto falls desperately behind [Samsung] still.

If this is true and I suspect that it is, we can also expect the sales of the Moto G to also be rather insignificant, adding to the long list of Google branded products that saw major hype, but failed to sell well.

Chromebookは何台売れているのか？

Chromebookが何台売れているのかについて、Googleは一切公開していません。

そんな中で、結構売れているのではないかという憶測があります。例えばGoogleの副社長のCaesar Senguptaは米国の教育地区の22%がChromebookを使っていると語っていますし、Amazonのランキングで上位に入っている)という話もあります。

一方でChromebookの販売台数に関する情報はごくわずかなのですが、芳しくありません。

例えばNPDの調査 (2013年6月30日 – 9月7日)によると

Chromebooks, which didn’t exist in 2012, added almost 175,000 units to the market this year and provided all the growth in the challenged notebook market; entry-level Windows notebooks (under $300) increased 14 percent, and Windows touch notebooks accounted for 25 percent of Windows notebook sales.

NPDはさらに表を使って、Chromebookのインパクトを示しています。

スクリーンショット 2013 12 18 5 57 17

また以下の数字と比較することもできます。

Appleは2012年1年間で18,158,000台のMacを売り上げました。(Macworldより)
2012年の第4四半期で、世界のPCの出荷台数は 90,300,000台。米国だけで 17,505,607台。(Gartnerより)

このことから言えるのは

Chromebookは一定の数は売れているようですが、Windowsを脅かすレベルではありません。
Amazonのランキングから想像するとChromebookはもっと売れているように思ってしまいますが、そうではなさそうです。全く売れていないというわけではないのですが、それほどは売れていません。

もう一つ面白い統計は、Chromebook 11がリコールされたことで明るみに出た数字です。HPとGoogleはChromebook 11を2013年の10月から販売し、11月には製品不良のために出荷停止しました。そしてリコール対象の台数は145,000台だそうです。単純に比較はできませんが、NPDのデータの同程度の台数であり、それを裏付けるものと考えても良いと思います。