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Such a cute gorilla
November 14, 2005
Continuing its masterly replay of Microsoft's old kill-competitors-by-bundling-their-products-as-free-features-in-our-platform strategy, Google today begins giving away tools for analyzing the effectiveness of web advertising. The Google Analytics service is a repackaging of the Urchin software that Google acquired earlier this year. In addition to the competitive benefits - Google Analytics is a hammer blow to small specialist companies like Web Side Story, and it neutralizes analytics as a potential advantage for direct competitors like Yahoo and Microsoft - the free service will likely increase sales for Google's AdWords service. Analytical tools for ad performance are a complement to advertising itself. By giving the complement away, you'll tend to boost demand for the ads. (Joel Spolsky explains the economics of complements well.)
Of course, the service also means that Google will gain access to a ton of new data on ad performance that it can analyze itself. For one thing, Google Analytics can be applied to ad campaigns running outside the Google network, giving Google information on how its competitors' programs perform. For another, Google will gain greater insight into the decision making of its AdWords customers, information that could help it in optimizing its ad pricing (ie, maximizing its income at customers' expense). No need to worry, though. Google says we can all trust it to do the right thing. A Google executive told CNET: "We have very strict controls on the data. It is only used to provide reporting to customers and people using the analytics."
It's hard to complain about getting stuff for free that you used to have to pay for. This is, after all, how competition is supposed to work - the benefits fall to the customer. And that's great. Beyond the question about what happens to the data Google collects, though, there's another concern, which may or may not be purely theoretical. When Microsoft fought competitors by bundling new features into its operating system, it was frequently attacked for chilling innovation. When you give a product or service away, you take away the economic incentive for inventors and entrepreneurs to improve the product. Google right now is such a rabid innovator that it's hard to think of the company as being a force that impedes innovation. But even a cute 800-pound gorilla is still an 800-pound gorilla.
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Comments
Nick,
No doubt they are jumping for joy in the media planning departments today, but this just seems a "nice to have" tool -- not as robust as the AdCenter offering MS has in the works, which promises deeper profiling of leads.
Maybe I'm the Luddiest of Luddites, but I just can't develop a taste for the Google Kool-Aid. Despite the spate of whizzy consumer-oriented products they have released, I still see them as a one-trick pony very vulnerable to changes in the online market for search and completely dependent on a major competitor for access to 90% of their customers via Windows desktops. That can't be good.
Posted by: bpr at November 15, 2005 07:59 AM
I'm currently reading your book and I'm really enjoying it. I'm talking my discoveries over with my CTO of Synapse Group, which is a TimeWarner Company.
Here's a blurb for everyone: “Just think of the rapid shift in the way business viewed electricity a hundred years ago. Early in the 20th century, many large companies created the new management post of ‘Vice President of Electricity’, an acknowledgement of electrification’s transformative role in companies and industries. Soon, electricity’s strategic importance diminished and ‘Vice President of Electricity’ quietly disappeared from the corporate hierarchy.”
Get it on Amazon so we can all enjoy Nick's posting more fully![Amazon Link]
Posted by: Justin Pfister at November 15, 2005 12:59 PM
I'm curious to see what Google does with Urchin...I looked at it just after they bought it and found - despite superiour pricing, and a user friendly interface - the offering lacked VALUE versus its competitors. If they bring it to enterprise class, with custom metrics reporting (I have not tested it yet, but I do not see that in there) they really will decimate the industry. Till they add the value, I don't find it is worth to switching despite the FREE price tag.
Posted by: Michael McDerment at November 15, 2005 06:30 PM
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The Atlantic article:
Is Google Making Us Stupid?"
Nick's new book:
"Future Shock for the web-apps era" -Fast Company
"Ominously prescient" -Kirkus Reviews
"Riveting stuff" -New York Post
Greatest hits
Avatars consume as much electricity as Brazilians
The love song of J. Alfred Prufrock's avatar
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The end of corporate computing
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