It’s hard to explain to someone who didn’t live through it how transformation technology has been. When I was a child a computer was something mysterious. My Dad has managed to work his way up from the shop floor of the shipyard where he worked and into the planning office.
One evening he broad home some computer paper. I was fascinated by the the way the paper hinged on perforations and had tear off side edges that allowed it to be pulled through the printer with plastic sprockets connecting through holes in the paper.
My Dad used to compile and print off work orders using an ICL mainframe computer that was timeshared by all the shipyards that were part of British Shipbuilders.
I used the paper for years for notes and my childhood drawings. It didn’t make me a computer whiz. I never had a computer when I was at school. My school didn’t have a computer lab. I got to use Windows machines a few times in a regional computer labs. I still use what I learned in Excel spreadsheets now.
My experience with computers started with work and eventually bought my own secondhand Mac. Cut and paste completely changed the way I wrote. I got to use internal email working for Corning and internet connectivity when I went to university. One of my friends had a CompuServe account and I was there when he first met his Mexican wife on an online chatroom, years before Tinder.
Leaving college I set up a Yahoo! email address. I only needed to check my email address once a week, which was fortunate as internet access was expensive. I used to go to Liverpool’s cyber cafe with a friend every Saturday and showed him how to use the internet. I would bring any messages that I needed to send pre-written on a floppy disk that also held my CV.
That is a world away from the technology we enjoy now, where we are enveloped by smartphones and constant connectivity. In some ways the rate of change feels as if it has slowed down compared to the last few decades.
Hardkiss Music – love to see this stuff get reissued. Gavin and Scott Hardkiss brought something new to the table with their recordings. Scott Hardkiss’ use of Emerson, Lake & Palmer’s Fire on High for the track The Pheonix blows me away every time that I listen to it.
Google new operating structure – Business Insider – interesting moves which formalises where Google has been. It also means that the Google brand isn’t likely to be over extended or risked on edge ventures. Innovation is likely to be stifled
Traditional ad spending drops for first time | Kantar China – presumably because the Chinese economic growth is slowing down. Changes in media regulations is making it harder for TV stations to show the kind of content that consumers like
Social media went into overdrive on Monday evening UK time when Google announced a formal restructure of all its businesses, creating a new company called Alphabet. For the man on the street, Google means Search, YouTube, Drive (including Docs, Sheets etc.), email and Android. For the average marketer you can throw various advertising products and Google Analytics into the mix. For business IT managers, it is everything from productivity, software-as-a-service and possibly as a supplier of a search appliance for its internal servers.
Three different customer types exist and a product set that grows layer-by-layer like an onion. The bulk of Google’s revenue currently comes from advertising due to the clever technology behind it. One can see from Microsoft’s move to the cloud that there is less revenue in cloud computing than in Google’s current business, so when advertising reaches a natural ceiling for growth, services will provide an incremental benefit at best.
Android was designed as a conduit to Google services and for advertising to venture out into the mobile space. But the world’s most popular mobile operating system is not without its own issues. Despite all phones essentially looking the same, there is a massive amount of fragmentation in the Android marketplace, which makes life harder for developers. Google is also a developer, so building applications that it can build loyalty through and make money from becomes more difficult.
Secondly, an appreciable amount of Android devices (those sold in China) and many sold in Russia don’t use Google services and provide little to no opportunity for Google advertising.
This means that Google is forced to make big bets in very different sectors. Sergey Brin and Larry Page, partly because of their entrepreneurial nature to explore new opportunities, built in an ability to scale Google beyond the business lines that I have outlined above. This was apparent from their original IPO share prospectus and accompanying letter. Xerox is famous in Silicon Valley lore for fumbling the future, by inventing lots of products that would be recognisable to us today in the late 1960s and early 1970s, only to see a corporate head office miss the boat. Brin and Page would have had some awareness of this. Microsoft’s inability to leapfrog beyond its core business successfully is probably also a factor for consideration.
Alphabet formalises the framework that Page and Brin had been working to for a number of years.
So what does this mean to Google?
For the foreseeable future Alphabet will be more of the same for Google. We’ve the seen the business scale back services. By September last year Google had closed down 30 services. It has cut back the functionality of Google Adplanner as a reference tool, to just focus on sales. Google has continued to prune back services such as Google+ (a challenging task given the tentacles + has across Google’s services). The changes inside Google for staffers also reflect similar moves towards profit optimisation, move away from experimentation and being a ‘mensch’.
The biggest move was to get rid of the 20% of time engineers could devote to projects that interested them. The truth is since at least 2009, the Google myth of people working there to change the world rather than delivering profit hasn’t held sway for a great deal of their staff.
On the outside Google will still likely have playful swag and cool offices, but the reality is that it will be more of a ‘normal’ business. That means that we won’t see the next Facebook coming from within Google and that whilst the speed of evolution will continue to run along at the same pace, substantial innovation probably won’t. This kind of business requires a different kind of leader to Page, and by appointing Sundar Pichai, will create a cultural break from the past. Pichai is likely to be able to get more revenue out of the Google ‘cash cow’ to help drive innovation in these other areas.
Page and Brin are freer to bring their energy to the other businesses in Alphabet. For instance, keeping Nest out of Google allows it to work easier with Google competitors like Apple and Microsoft as part of a wider eco-system.
Lastly, it could be an effort to ring fence Google’s anti-trust woes within the existing business and prevent restrictions being imposed against its newer businesses because of the past sins of the core business.
So what does Alphabet mean for marketers?
Google is likely to pursue a steady as she goes approach. The focus will be to optimise revenue, so there will be tension with agencies on advertising practices. We’ve already seen this, with Google restricting methods of buying YouTube advertising. These changes will impact the advertising technology business around programmatic advertising.
The picture with SEO is more about slow and steady change; Google has evolved its Panda index changes to a rolling change rather than the massive shake-ups of old.
More Google related articles here. Originally written for Racepoint Global’s now defunct CommsTalk blog.
Podcasting embraces native advertising | Digiday – interesting as podcasting historically has struggled with finding a advertising model and native advertising doesn’t fit that comfortably in the performance orientation of online ads. Native advertising does make sense in podcasting as it shouldn’t affect the podcasters flow and content integrity too much – more marketing content here.
Beauty
Sephora Launching Beauty Box Subscription Service | TIME – interesting that the retail brand is stepping into BirchBox territory, it’s not only about sales but product market testing and says something about the tyranny of choice. Sephora has also rolled out vending machines in high footfall areas like airports to tap into the tyranny of choice. I can see this working in high value areas but puzzled why subscriptions has caused so much universal excitement across FMCG sectors, yet not luxury brands
Refinery29 – Time cover reinforces tech stereotypes – PCGamer calls the cover “the greatest threat to VR” because it “reinforces, rather than challenges, the perception that VR is a mask that nerds use to blot out the world.” – it also probably isn’t helped by photos from the Facebook F8 developer conference with a sea of coders wearing them whilst apparently staring into nothingness.
‘At the speed of trust’ was part of the title to an article in on SiliconAngle the other day. The language was loaded with symbolism for me. Speed of trust reminded me of the dot.com era. The internet was going to change everything – and it has been changing a lot of things with time. There was also a sense of urgency with its origin in the Netscape funding and IPO that it was important to find an audience first and a profitable business model later. People you meant talked about moving at ‘internet speed’; usually as an excuse for a poor product or lack of business plan.
Amazon still uses a variant of this principle to use its profits to enter new business areas and has managed to successfully position itself as a growth stock rather than a value stock – which most of the rest of the tech sector now is according to Wall Street.
In 2000, I used to interview clients to see whether we wanted to take them on as a business. Online advertising was fine for building awareness at the time, Google hadn’t got into search advertising yet and venture capital partners forced their investments to get a PR agency on board.
I saw a procession of start-ups and incubators who came in with an idea that they were implementing but not even a fig leaf of a business plan because they were trying to go at ‘internet speed’.
Things are different now, the average spend by a client hasn’t grown much in the intervening years and digital marketing is easily heading past 20 per cent of advertising spend. Though how much of that spend is actually effective is another matter all together
Businesses usually have identikit business plans with spread sheets and predicted revenues. But the sense of urgency is very similar to the dot.com days. Uber’s financial data reveals a plan to scale massively to achieve profitability from current losses. The revolution this time isn’t technological per se, but process. Employment is being thrown away, along with associated costs and benefits to the employee.
Practices that would have been in the black economy, are now in a mobile application.
Assets such as homes are in competition are put in competition with regulated services such as hotels.
The hard edges that these businesses will bump against aren’t slower than desired bandwidth, but legal, regulatory and social disruption. Uber is already finding out the hard way in terms of legal action around the world to curb its business. Other start-ups are fighting against their operators gaining employment status. Homejoy was apparently shut down for this very reason, though there were also rumours of a dotcomesque tale of being unable to recoup the cost of customer acquisition let alone make a profit.
Mark Twain is widely attributed to have coined the saying ‘history doesn’t repeat itself but it does rhyme’, I am a bit concerned by the kind of poetry we could end up with. More innovation related posts here.
Consolidation in Italy as Wind, 3 ink €21.8bn merger | TotalTelecom – I I hope that it won’t affect 3 UK roaming? I wouldn’t be surprised if 3 did similar deals in other mature European markets like the UK. Li Ka Shing is no one’s fool and wireless is mature and capital intensive. More wireless related posts here.
Official Google Blog: Everything in its right place – downsizing of Google+. The move to break it up is viewed by many as a defeat, it also makes sense when one thinks of app constellations, though I cannot help think of Brad Garlinghouse’s famous ‘peanut butter manifesto’ at Yahoo! nine years earlier. Though that was a blatant grab for political power, it resonates with some of what seems to be happening at Google in terms of retrenchment
