June 29th, 2006
With the launch of Google Checkout, Google is clearly aiming to be the world’s online shopping engine. The strategy has all the hallmarks of AdWords — Google doesn’t care what you’re looking for, what you find, or where you buy it — so long as Google can make money off of every step of the process.
Here’s the problem with this strategy — from the consumer perspective, Google is not an efficient way to shop online. Google’s blog mentions Starbucks are one of the merchants that signed up for Google Checkout, so let’s try searching for “gourmet coffee.”
There’s nothing wrong with the ads in the search results — each of these gourmet coffee merchants is potentially relevant. The problem is that I have no way to compare them — all I can do is click and browse, click and browse.
Google revolutionized search by leveraging the network effect of hyperlinks to determine relevancy — but the 2.0 efficiencies of page rank are completely missing from AdWords. Sure, advertisers compete on keyword relevance, but I as a consumer am unable to benefit from the network effects of the larger online shopping community. Which of these merchants has the best value proposition for people like me? Where do people like me most often shop? Which has the most relevant products? Which has the best prices?
Navigating Google ads feels like Yahoo circa 1997 — a lot of clicking and browsing in hopes of finding the right fit. The organic search results may be super-relevant, but the “sponsored” results are of limited value because the cost-per-click bids are too big a factor in ranking and there is no information available from my peers. The advertisers are in complete control. The ads are relevant to a degree, and certainly more relevant than the random interruption of old media models, but as a consumer, I’m still at the mercy of the system. And the return on my attention is marginal at best.
To put it simply, shopping through Google is a very 1.0 experience.
Media is deeply personal, social, cultural, human, creative – and so it’s economics aren’t those of simple technological scale, because, more often than not, technological scale kills those things (think Clear Channel roboDJs). The real opportunity is in leveraging the new forms at the edges of the firms – markets, networks, communities – to explode just how personal, social, cultural, human and creative media can be.
It should be painfully clear that, in the Googleverse, media is none of those things – it’s just a commodity filtered, sorted, and “processed” by machines. Which is deeply reminiscent of the 20th century’s scale and scope driven Great Rationalization of consumer industries, where goods ultimately became “commodities” which were “processed” by machine, assembly line, and bureaucracy (think meat-packing, clothes, and cosmetics).
I don’t want an algorithm and a bunch of ad copywriters determining what’s “relevant” for me. I want my peers — people like me — to determine what’s relevant.
If Google increases its dominance of search advertising by dominating checkout, it will drive up the costs of search advertising, which, even in a new cost-per-action model, will ultimately be passed on to me as a consumer.
So Google gets more profitable. And we hand over more data to Google for not a whole lot of return. As Marshall Kirkpatrick observes:
The biggest question then appears to be whether consumers trust the Google brand enough to look to the company for more than just access to the rest of the worldÃ¢â‚¬â„¢s data, but as a repository for our own data kept private from a world of online shopping vendors.
This of course, brings me back to Jellyfish’s vision — they want to create a system that rewards peer reviewers who help people make smarter buying decisions by putting money in the reviewer’s pocket — a value per RELEVANT transaction — this creates a virtuous cycle, increasing the network effect of information and in turn helping me find what I really want at the best price.
The obvious implication here is that Google is becoming the new Microsoft — far more focused on its own dominance than on innovating and creating life-changing value for it users.