Google sits on a huge pile of search intent data, but doesn't use it for display ads. Here's why.
Google sits on a huge pile of search intent data, but does not use it directly to improve display ad targeting - a business the company admits is integral to its future. What gives?
The question has been raised by some people in Google's display ad operation, according to sources. These staffers have expressed frustration that they can't leverage Google users' search queries to create customized ads outside the search environment. Use of such data would result in more personalized offers, better ad performance, and ultimately more revenue for Google.
The debate is colored by the evolving global privacy debate and by complexities inherent in ad serving technology - which isn't always as cut and dried as it appears. For example, while Google has yet to openly cash in on search retargeting, it does permit a workaround that lets some advertisers reconstruct search queries.
Politics of Privacy, or Just Plain Politics?
Google is reluctant to provide a feed of its users' search data to its display ad wizards for reasons that include internal politics, the company's long-range display ad roadmap, and - topping the list - privacy.
The first - and probably least consequential - factor is haggling. According to a Google source, some in the company's core search monetization business are reluctant to allow their data to inform and enrich its display businesses (Teracent, Invite Media, Google Ad Exchange, and Google Display Network, to name a few). Essentially, the source suggested, the search product people are jealous data hoarders.
But even if there's some truth to that, Google's politics pale in comparison to the privacy issue. Numerous people familiar with the company agree that Google's reticence to offer search retargeting can be primarily chalked up to C-suite sensitivity to allegations of data misuse or abuse. CEO Larry Page is particularly allergic.
"Larry is extremely privacy sensitive," said Kevin Lee, co-founder of Didit and a ClickZ columnist. "I don't think it's the politics. Usually they'll break that down pretty easily at Google."
Page's reticence has been exacerbated by heightened regulatory interest in his company. The Federal Trade Commission is conducting an antitrust investigation of Google, exploring whether the company has used its outsized search market share (nearly 70 percent in the U.S.) to advance its own products. Separately, members of the U.S. Senate Judiciary Committee recently grilled Chairman Eric Schmidt on the same question. While anti-trust and privacy are distinct issues, Google's use of search data to boost its display ad ambitions could be construed as anti-competitive.
Additionally, Google has been upbraided in the European Union, where its search share is even higher, for alleged privacy oversteps including via its Street View mapping technology.
Dax Hamman, chief revenue officer of search retargeting firm Chango, believes Google avoids using search data because of the perception that it's become too large.
"A lot of questions Google is having to face, they only have to face because of their size and position in the marketplace," he said.
If Google dissolves the membrane separating its search data from non-search ads - and it may - the company would likely wait until the current wave of regulatory interest has passed. Even then, Google insiders say the offering would certainly incorporate consumer notification and privacy controls, in the same way it did for behavioral targeting, which it calls interest-based advertising.
So how much money is Google leaving on the table?
The burgeoning search retargeting [define] marketplace is now controlled by a handful of third-party vendors like Chango and Magnetic. Another player is Yahoo, which offers search retargeting in two forms: general interest buckets that incorporate hundreds or thousands of keywords each, and custom keyword lists that can be used to reach search users on Yahoo sites. (Bing, like Google, does not offer search retargeting.)
These firms obtain cookie-linked search activity from a combination of e-commerce sites, vertical auto sites, and other engines. While no official estimates exist on the size of the search retargeting segment, Chango's Hamman estimates U.S. investments could surpass $300 million this year.
Search Retargeting by Another Name
But defining the practice is complicated by the fact that Google provides display advertisers on the AdSense network a potential workaround for search retargeting, notes Didit's Kevin Lee.
It does this by letting advertisers target based on search data gleaned from advertiser websites and AdSense sites. Search referral data can show not only if a visitor came to a site through a search on Google or another engine, but also what keywords brought that visitor to the site. A cookie can be dropped linking the visitor to that search query, and ads can be served either immediately or later in a person's Internet travels.
"Out of one side of their mouth they'll say they are not making their search data available for the purposes of retargeting," Lee said. "However they do allow there to be intra-publisher retargeting, as well as advertiser. They get there through advertiser search data and contextual search data."
He added, "The biggest trove of search intent data is not directly used. But when that data is procured through an advertiser's site or a publisher's site they are happy to put it to use."
Correction: An earlier version said Yahoo only offers search retargeting via off-the-shelf keyword lists. In fact, it has a customized keyword offering as well.
Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects.
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