Monday, April 25, 2005

How Google Makes A "Googol"

This is something I have been offering to the guys at Google, Yahoo and Microsoft. If there are any other companies you feel need to see this, feel free to let me know. The post is lengthy, but worth the time. When a new technology is on the cusp of adoption, it takes more than a few sentences to explain it. I see a few multi-billion dollar applications in this.

Google announced earnings last week. The amount of money Google generated in revenues by selling keywords was astounding. This is just for PC search. I know mobile search advertising will be much bigger than PC advertising, so that leads to this question.

How much will Google make when they sell keywords for mobile search and how will they do it?

Will Google start a keyword division solely for mobile search?

How much more will Google make when advertisers know that search results will be determined on location not keyword algorithms? A LOT

There are 3 reasons mobile search will generate more revenues than PC search.

1. there will be more internet traffic with the phone that the PC soon
2. click fraud won’t be an issue
3. website owners will pay MUCH MORE for keywords when they have “control” of them.

Google sells keywords to websites and the website owner hopes the search user guesses the right words in his search query to find his site. The website owner also hopes that his website comes up in the top 10 results (first page). Studies have shown that search results 11- 10,000 (from page 2 on) are never read. Nobody looks past the first page of search results. The results generated from any search query are overwhelming. You think the result number 345 guy is happy with his keyword purchase?

Do a search for anything, and you’ll see what I mean. There are thousands of websites that will never get seen and they spent money buying those keywords. It’s the equivalent of advertising on PBS at 2 am.

What Google is doing for local search, is targeting search results based on the searcher’s location by looking at the user’s IP address. They match this up w/ the search terms. This is good but it could be better. While Google is trying to determine the users location by the address of the PC, GPS automatically solves this for mobile.

So if Google will use a GPS coordinate for mobile search, and mobile search will be bigger than PC search, wouldn’t the technology that matches a GPS coordinate with a search query be invaluable?

Matching a search query with a GPS coordinate is THE solution for mobile search.

Wouldn’t this be imperative for ANY mobile search?

You won’t have to type in your zip code, street, city to find relevant searches. The less typing on your cell, the more likely it will be used.

If every PC and laptop had a GPS chip in it, local search would be complete.


The reason local search stinks is because Google cant exactly tell where you’re searching from and the data for local businesses is inadequate. Open up your Yellow Pages and ask yourself how many of these small businesses even have websites.

The roadblock for local search right now is determining your location and a database of every small business. Google is resolving these now. This inefficiency is also holding back advertising for local search. The “database” you really need is the Yellow Pages. In order for local search to work Google needs the Yellow Pages from EVERY CITY, EVERYWHERE.

Google, in creating their own universal Yellow Pages, is asking all businesses to submit their info (name , address, phone number, relevant biz, website info. VERY SMART. Google is getting data for their local search, and small businesses get placed in Googles database (free advertising). If a small business doesn’t have a website, I’m sure Google will offer them a domain, web-hosting and advertising ( 1st billion dollar opportunity).



HERE’S GOOGLE’S NEXT BILLION DOLLAR APPLICATION

Would Google be able to command more dollars if advertisers knew their site would come up based on location versus guessing the “correct” keywords? YES.

Will Google create a few billion dollar revenue streams from this? YES

Here’s how they do it.

Google unveils a Mobile Words division and mobile search takes off. All generic words are available for sale, except trademarks and brand names. That is another problem that can be resolved with Google’s Mobile Words. They sell, not auction/bid for keywords for a mobile search.

Remember mobile search is really navigation.

How can Google re-sell the same keywords again?

The search for “pizza” on a PC versus “pizza” on a cell phone is completely different. It also is done from a completely different device, and Google can determine this. Google can tell from the server info that a search query was coming from a cell phone.

So a cell phone search query accesses a completely different database, the Google Mobile Words.

Any website/company can buy keywords in the “zone” they are based on their location. Location is this case is a (zip code, GPS coordinate, phone number prefix, city). Google can determine this data with a user’s GPS coordinate. The company/website have purchased this word BUT ONLY IN THE DESIGNATED ZONE.

An example: Joe’s Pizza in the Bronx can buy the words “pizza, Italian, subs” based on the “quadrant his store is located in. (zip code, phone number prefix). Mario’s Pizza in Manhattan can buy those same words.

Domino’s buys the word “Dominos” from Google because they will want to advertise on the cell too. They will be the only one that can buy Dominos because it’s trademarked. Keying in Dominos versus pizza is navigating, keying in pizza is search. But if you’re in zip code 11034, and you key in “pizza” the websites that bought the word pizza in zip code 11034 will have their pizzerias listed. If Dominos had a store in 11304, they could buy the word pizza and be included in this search.

The owners of the keyword “pizza” in that zip code will get their pizzeria listed in mobile searches. The mobile user only has to type in “pizza”, instead of the city/zip code/pizza (think of that tiny keyboard). The user also gets pizzerias in his immediate area.

He won’t get a search result linking to a page on how to make a pizza, or the origin of pizza. He will get useful results.

Will the small business owner pay Google more for a keyword knowing he reaches mobile queries in 11034, and they will get directed to his site or address? I THINK SO

Some major things will happen.

Every small pizzeria/ small business (with or without a website) can get listed in the largest Internet Yellow Pages directory and makes the database complete . The mobile user gets a relevant search result. Click fraud is eliminated. If there’s a call center in India with a bunch of cell phones typing in “pizza”, my guess is Apu’s Pizzeria will get a ton of traffic.

In addition, the small business paid a set amount for those keywords, fraudulent clicking wont change his cost.

The search results will be determined by the MOBILE PHONE’S LOCATION.

HERE'S WHERE THE NUMBERS GET MINDBOGGLING

Imagine how many times Google can sell the same keyword in the same zip code, city, state. I’ll give you an idea. Let’s say there are 10,000 zip codes (heavily discounted) that would be good candidates for mobile search in the US.
If I was Google I think I could sell a keyword for $5000.00 per year. This $5K gets you in Google’s Yellow Pages, (how much do small businesses PAY to be in the local Yellow Pages) and it will get your business listed in any mobile queries made in your zip code for this keyword.

A guaranteed search result in a Google mobile search..

Google might be able to charge more for certain words, but this is just a round number I came up with. With 10,000 zip codes (very heavily discounted) at $5k per word, the numbers get mind-boggling. If 2 pizzerias bought the keyword “pizza” in these 10,000 zip codes at $5k per word, that’s $100m.

Now think about the demand for these words (sushi, Italian, Chinese, Thai, massage, drycleaners, salon, bank, gym, deli, golf, hospital, doctor, movie, mall). With a little thinking you can come up with dozens. You must always ask yourself, “what info would I want when I’m out away from my cell phone”. These queries are COMPLETELY different than the PC ones. These queries want navigational use.

Let’s throw in some trademarks/brand names. Let’s charge Starbucks $1k per store location to be included. McDonald’s, TCBY, Marriott, BankAmerica, PFChang, Chrysler are some others that would be of use. Would Starbucks pay $1k to have every store included in a GPS mobile search of Google’s?… I have no doubt. The revenue numbers start to get unfathomable.


Why so much per word though?

Well if Google determines what keywords are in a specific zone, and deliver relevant results based on the mobile users location, the keyword owner KNOWS that anytime a query is done for his words, in his zone, his site WILL ALWAYS come up for results.

Will these companies do this? I have no doubt they will. This is a nominal fixed cost to be included in Google Yellow Pages. Anytime a cell phone user keyed in Starbucks on their phone, they would be directed to the closest Starbucks near them. You might make nice with Google and the trademark suits in the process.

WHAT’S ANOTHER BILLION ?

Every time a mobile user keys in a search query, this is what they could get on their cell screen.
-the website/address of the search query
-map (driving directions)
-click to call feature
-GPS tracking
-coupons

Now here’s what Google gets.

-a world wide Yellow Pages that provides a great local search database.
-another revenue stream from selling mobile keywords.
-the data from every cell phone and their queries (phone number, location, keyword) a mobile marketing dream, that can be sold to advertisers. I am thinking Nielsen ratings for the phone

I would think any company doing a mobile marketing campaign would pay for this info.

The two things mobile search needs are location and relevant data. The GPS chip solves the first and a Google Mobile Words solves the other.

This is how Google makes a googol.

4 comments:

Anonymous said...

But I don't think Google can do any of that without dealing with neomedia first. These two companies need each other.

Anonymous said...

I did not know what a "GOOGOL" was,
soI did a Google on GOOGOL and found GOOGOL in essence raises the bar as in:

- 10 to the 100th power-

I wonder what that would mean in $$

Anonymous said...

Are you trying to get a job at Google ?

Scott Shaffer said...

No,

They are the company that has the clout to implement things, and I use them for examples.