Sep 92008

PPC Musings Via NPR: Chrome, UAL Bankruptcy, and the Freddie/Fannie Bailout

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Driving in this morning, three random stories on NPR caught my ear as having a paid search angle.

(I couldn't see how to link to the NPR audio directly. To hear these clips, click on the H2 links below, then click on "Listen Now" link. The text isn't the transcript of the audio, just background info.)

Why Google Built Chrome

Renee Montagne asks Mario Armstrong, "How will Google make money from Chrome?" Armstrong suggests three answers:

  1. Advertising.
  2. Browser as new OS.
  3. Monitoring user behavior to better target ads.

You missed the boat, NPR.

  1. There is no advertising in Chrome. Web pages themselves carry the ads. All browsers display all the same ads (unless ad blockers installed).
  2. Unlike Windows, Chrome is open source. Google is encouraging other browser teams to utilize their technology freely. Unlike Windows, Google doesn't directly benefit from having coded Chrome -- there is no lock-in.
  3. Chrome does not send detailed browsing info back to Google.

Here's how I'd answer Renee's question:

  1. Financial. Anything that makes web browsing easier leads to more web use. More web use leads to more Google clicks, on both search and content ads. More Google clicks leads to more Google revenue, profit, and market cap.
  2. Web Evangelism. Google deeply believes in the transformative power of the internet. Anything that makes web browsing faster and safer is Inherently Good.

The Mortgage Bailout And PPC Bid Shocks

The Fed grabs control of Freddie Mac and Fannie Mae, and 30 year mortgage rates plummet 30+ basis points overnight. Wow.

What's the paid search angle? For PPC advertisers, the conversion value of traffic on terms like 30 year mortgage likely just changed significantly, and it did so extremely quickly.

Statistical bidding systems use historical trends to predict what will happen next. The underlying assumption is that world is changing slowly, so the near future will resemble the near past. When the world is changing fast, extrapolations can miss the mark.

The solution? We here at RKG have long emphasized the importance of coupling strong algorithms with smart humans.

'Bots handle the mind-numbing large-scale mechanics of tactical PPC infinitely better than humans. But smart people can react quicker to external strategic shifts than robots.

We've been auditing search financials for prospective clients now for years. Amazing, but even in 2008 we still see retailers overshooting or undershooting their key selling seasons (holiday, spring, back-to-school, whatever) by ceding too much control to the machines.

United Airlines Is Bankrupt

No, not really. Not this week, at least. But that's what a small bond research shop in Florida believed when it misread the date on a stale Chicago Trib story about UAL's bankruptcy from six years ago.

Hey, if you find it on Google, it has to be true, right?

Income Security Advisors pushed the "news" onto Bloomberg, and UAL promptly lost 99% of its value until trading was halted and the rumor corrected.



Yet another example of the terrifying speed of the web, and the implied authority conferred by top spot on a Google SERP.


6 Responses to "PPC Musings Via NPR: Chrome, UAL Bankruptcy, and the Freddie/Fannie Bailout"
Mark Ballard says:
For what it's worth, NPR also did an interview with Danny Sullivan about Google Chrome on its Science Friday program (link) last week. They seem to get it about right in this one.
Chrome's marketshare is coming primarily from Firefox, which lowers Google's TAC accordingly. IMHO that's got to be one of, if not the major reason for Chrome.
Great point, Chris. I totally overlooked the TAC angle. Some very fast sloppy web research suggest 200m FFox users (link) and rumors of $500m payment from Google to Mozilla to remain the search box default (link) ... A crude and likely-incorrect ratio suggests that, long-term, each Firefox → Chrome conversion is maybe something like $2.50 annual profit to Google via reduced traffic acquisition cost?
Jess says:
I see your point about statistical bidding systems - it is a dangerous thing to use them without humans overseeing their efforts, especially during holiday when traffic & cost volume can change frequently. However, my issue is on the other side of the coin. I work for a large retailer and have the unfortunate position of having to convince senior management that getting some kind of software to help manage our volume of keywords is a good call. Any advice on how to handle folks who believe software would 'automate me out of a job'? Any help would be appreciated - I'm doing everything manually and know that the program could be so much more efficient and effective with some software help!
Google Old News cause Big Trouble !!... A big big mistake! Google News crawled an old news “Bankruptcy of United Airlines” in year 2002 as today’s news and cause serious stock market evaporate. This old story was first hit its popularity in South Florida Sun-Sentinel newspa...
Jess, you're right, of course. Bidding correctly requires constant calculation and recalculation of traffic value for the different keywords and ads. Advanced systems handle day-parting smartly, in addition to handling changes relating to seasonal fluctuations. Humans are crucial in that they can anticipate changes that machines can't see coming, but machines are essential for the repeated calculations and execution of those human directives and goals. Have them give me a call, I'd be delighted to try to talk some sense into them. Send them links to some of our posts on bidding systems in 2008. It sounds like you're having to fight a 2008 battle with weapons from 2002 :-) George

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