In terms of sheer user adoption, Google+ may be the most successful online service launch. Some estimates – such as one by Paul Allen – peg it at 10 million users. Some analysts – such as Bill Gross – say it’s rapidly on its way to 100 million. Any other company would have struggled mightily with capacity issues by now. That heat wave rolling through North Carolina: anything to do with the launch of another covert Google data center?
The service seems well received, even though (similar to Gmail) it only lightly innovates on top of an existing category. Why is it a game-changer? Because of its scale and not because of any revolution in user behavior.
How Google+ Will Advance Display Advertising
Google+ solves a real problem. It helps to advance online display ad targeting, which has had limited the company, and most advertisers, to date. Essentially, Google will now have full, opt-in access to your demographics, tastes, and behavior. Prior to this, Google, as well as other firms and advertisers, were almost there. Now, the more people that embrace Google+, the more fully this loop will be closed.
The analogy of the last-mile problem comes to mind. The last mile referred to the inadequate Internet connection from a person’s home to the larger, more sophisticated global network. As demand increased for faster home connections, innovation and investment followed despite a lack of elegant, efficient solutions. This is analogous to Google building an incredibly expensive social network just so it can close the attribution loop and create more fertile audiences for its existing advertising base. It’s a huge bet, but with a quantifiable payoff.
Why Google+ Is Not Another Facebook
Analysts and practitioners are already trying to guess at how Google will target advertising in this platform. Most are looking at Google+ as a copy of Facebook, but that’s not a good comparison. It’s not primarily about the ads that will show up inside Google+, though they will. It isn’t primarily about being able to take social targeting and target searchers, or searches, to target within social.
Google’s biggest advance is the creation and maintenance of richer, more granular, and more predictable audiences for advertisers, allowing for better targeting of display advertising all over the digital universe. In many cases, of course, Google will split the proceeds with publishers, networks, and exchanges. But increasingly, advertisers will enjoy the benefit of doing more through a single platform – or at least fewer platforms.
How can Google accomplish all of this with a social network? With a single checkbox. The screen shot, below, says it all: when signing up for Google+, you give Google permission to use your personal information “to personalise content and ads on non-Google websites.” It started out as a consequence of signing up for and using the +1 button. Now, signing up for Google+ accomplishes the same thing.
Is providing richer personal data through Google+ similar to Facebook’s “interest categories”? Potentially, it’s a lot more than that. You could deny Google this right by simply unchecking the box on sign-up. I’d love to see what percentage of Google+’s 10,000,000 users to date did so.
Also, targeting opportunities will vary by country, depending on their privacy rules. But that’s a long-term battle for a company like Google, anyway. Lobbying in such jurisdictions is part of its arsenal, but not always at the top of its priority list.
If Google can obtain this rich data about its users, it might continue to grow its top-line revenue and profit margin from display advertising; so display advertising wouldn’t look anemic compared to the cash cow, search.
Google+: Right Time, Right Place?
Some suggest that pent-up demand for a Facebook alternative is driving Google+’s growth. Some prominent “socialites” have essentially left their Facebook presences dormant since the company’s high-profile privacy gaffes. Google is far from immune to criticism on the privacy front, but there is a collective feeling out there that veteran Googlers have taken their lumps, whereas Mark Zuckerberg is an untamed animal still on the loose with weaker adult supervision.
Privacy gaffes by Facebook as well as by Google (Buzz) seemed to change public expectations about privacy – or lack thereof. Interestingly, Google created something called a Hangout inside of Google+. No one is under the impression that he is going to “hang out” in these platforms in a genuine, unfettered way. Either your guard must be up permanently, or you must accept that people will know more about you as part of this new, more open way of life.
As if to make this point directly, on Google+, we see Googlers subtly training us to be “transparent.” A photo of Larry Page waterskiing received hundreds of comments.
A Formidable Facebook Foe
Google eventually can benefit from operating the most functional, sophisticated advertising platform in the world. As a result, Facebook will face its first serious competition. Its advertiser platform is one-dimensional and behind schedule compared to Google’s multi-dimensional, highly evolved system.
Facebook’s likely initial public offering – and all of the distractions that accompany IPOs, including departures by vested employees – poses another challenge to Facebook. (Google went through this already.)
Google’s other advantages over Facebook?
– Google’s slightly better reputation on privacy issues.
– Its superior engineering talent that is helping to marry search with social with local with photos and videos with messaging and email.
– Google’s expansion is funded through cash flow. Facebook has burned significant sums of cash to get to where it is now.
– Its ability to innovate on issues involving speed and cost, and its massive scalability.
Google operates search, YouTube, Gmail, and now, Google+ with aplomb. By contrast, Facebook (a behemoth, to be sure) handles far less data; it will have difficulty scaling efficiently into new realms. Google’s expansion is funded through cash flow. Facebook has burned significant sums of cash to get to where it is now.
Facebook suddenly looks beatable. Facebook’s biggest asset? The Googlers who now work there. But that could change. What hot start-up will bored ex-Facebookers be jumping to in a couple years?
From a cultural standpoint, Google+ still faces an uphill battle. A useful product isn’t the same as a place you feel proud to hang out in, or go to appear cool. Google will need to maintain a fun image. Strange to pose this as a challenge for a company with Doodles on its home page and exercise balls as furniture. But photos of Larry waterskiing don’t exactly scream “Facebook killer.” To be fair, we’re only about a week in, and I’ve seen friends from all over the world posting pictures of their travels and pub nights, much as they do on Facebook. And is it just me, or is it easier to post more photos, more quickly?
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