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Google Businesses

Peak Google: The Company's Time At the Top May Be Nearing Its End 271

HughPickens.com writes Farhad Manjoo writes at the NYT that at first glance Google looks plenty healthy, but growth in Google's primary business, search advertising, has flattened out at about 20 percent a year for the last few years. Although Google has spent considerable resources inventing technologies for the future, it has failed to turn many of its innovations into new moneymakers. According to Manjoo, as smartphones eclipse laptop and desktop computers to become the planet's most important computing devices, the digital ad business is rapidly changing and Facebook, Google's archrival for advertising dollars, has been quick to profit from the shift. Here's why: The advertising business is split, roughly, into two. On one side are direct-response ads meant to induce an immediate purchase: Think classifieds, the Yellow Pages, catalogs or Google's own text-based ads running alongside its search results. But the bulk of the ad industry is devoted to something called brand ads, the ads you see on television and print magazines that work on your emotions in the belief that, in time, your dollars will follow. "Google doesn't create immersive experiences that you get lost in," says Ben Thompson. "Google creates transactional services. You go to Google to search, or for maps, or with something else in mind. And those are the types of ads they have. But brand advertising isn't about that kind of destination. It's about an experience." According to Thompson the future of online advertising looks increasingly like the business of television and is likely to be dominated by services like Facebook, Snapchat or Pinterest that keep people engaged for long periods of time and whose ads are proving to be massively more effective and engaging than banner advertisements.

In less than five years, Facebook has also built an enviable ad-technology infrastructure, a huge sales team that aims to persuade marketers of the benefits of Facebook ads over TV ads, and new ways for brands to measure how well their ads are doing. These efforts have paid off quickly: In 2014 Facebook sold $11.5 billion in ads, up 65 percent over 2013. Google will still make a lot of money if it doesn't dominate online ads the way it does now. But it will need to find other businesses to keep growing. This is why Google is spending on projects like a self-driving car, Google Glass, fiber-optic lines in American cities, space exploration, and other audacious innovations that have a slim chance of succeeding but might revolutionize the world if they do. But the far-out projects remind Thompson of Microsoft, which has also invested heavily in research and development, and has seen little return on its investments. "To me the Microsoft comparison can't be more clear. This is the price of being so successful — what you're seeing is that when a company becomes dominant, its dominance precludes it from dominating the next thing. It's almost like a natural law of business."
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Peak Google: The Company's Time At the Top May Be Nearing Its End

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  • so... (Score:5, Insightful)

    by buddyglass ( 925859 ) on Friday February 13, 2015 @09:11AM (#49046259)
    Maybe I'm crazy, but 20% yearly revenue growth for a company Google's size seems pretty healthy.
    • Re:so... (Score:4, Interesting)

      by Njorthbiatr ( 3776975 ) on Friday February 13, 2015 @09:15AM (#49046279)

      The attitude of TFA is what investors felt for some time, until their latest conference call, when they put everyone's fears at ease and said, "Hey there is a method to this and this is it right here."

      So no, Google isn't going anywhere.

      • Exponential growth (Score:5, Insightful)

        by duckintheface ( 710137 ) on Friday February 13, 2015 @09:51AM (#49046455)

        Yes the article says "growth in Google's primary business, search advertising, has flattened out at about 20 percent a year" But a constant growth RATE year after year is not flat. It is exponential growth. It is compounded growth where each 20% increase is an increase over and above the 20% increase of the previous year. Where else can you get a 20% compounded interest rate on your savings?

        • by Anonymous Coward

          If only Google had some kind of video advertising delivery system, with lots of users..... something like youtube.....

    • Or for a company of any other size.

    • Re:so... (Score:4, Insightful)

      by CastrTroy ( 595695 ) on Friday February 13, 2015 @09:43AM (#49046407) Homepage
      That, and their search engine is still the best around. By a long shot. Many times you don't even have to visit the pages it links to, and Google will simply give you an answer with before having to look at any of the results. When Firefox went and switch my search engine to Yahoo, I noticed by the quality of the results, not by the look of the page, because they were very careful to try to make the results page look as similar as possible.
      • Re:so... (Score:5, Interesting)

        by Dins ( 2538550 ) on Friday February 13, 2015 @10:09AM (#49046557)
        I've become increasingly impressed with Duck Duck Go. At first I rarely used them because they didn't have predictive results, image search, etc. But now they do have all that stuff and I used them as my default. The only things I still need to jump back to Google for is the latest news and most recent articles. If something's happening on the web RIGHT NOW, Google is still the better search engine for it. But for most of the searching I do, stuff happening RIGHT NOW isn't that important. However if your job depends on top efficiency internet searches, I'm sure Google is still king.
        • Re:so... (Score:5, Informative)

          by Noah Haders ( 3621429 ) on Friday February 13, 2015 @10:17AM (#49046607)

          agreed, ddg is my default as well. i also like the bangs feature, so I can type into my browser's search bar "alexander hamilton !w" and it takes me immediately to the wikipedia page for alexander hamilton without needing to deal with any annoying click throughs.

      • Re:so... (Score:5, Interesting)

        by Ranbot ( 2648297 ) on Friday February 13, 2015 @10:29AM (#49046681)

        That, and their search engine is still the best around. By a long shot. Many times you don't even have to visit the pages it links to, and Google will simply give you an answer with before having to look at any of the results. When Firefox went and switch my search engine to Yahoo, I noticed by the quality of the results, not by the look of the page, because they were very careful to try to make the results page look as similar as possible.

        Agreed Google still has the best search engine. I hate when 3rd parties try to sneak their search engines onto my PC or phone. However, I don't mind Bing terribly as a search engine, but I seem to get more relevant results with Google.

        FWIW, Bing's mapping is definitely better than Google's though. In particular the birdseye angled aerial images are awesome and allow you to see all four sides of structure, instead just a roof, with surprisingly good resolution too. I regularly inspect properties for work, and I use Bing's map tools to scope them out before I see them in person.

        • In particular the birdseye angled aerial images are awesome and allow you to see all four sides of structure, instead just a roof, with surprisingly good resolution too.

          I was surprised a few days ago to find out that Google Maps actually has this. You have to be on a PC and browser that support WebGL (i.e. no "Lite Mode" in the bottom-right corner). Zoom all the way in with satellite view turned on, then use the controls in the bottom-right to tilt the image. Then you can rotate in either direction, at which point it uses a cool 3D effect to stitch together its views of the different sides of buildings.

          (I haven't actually used the Bing maps in quite a while, so not sure ho

    • Re:so... (Score:5, Insightful)

      by GrumpySteen ( 1250194 ) on Friday February 13, 2015 @09:50AM (#49046451)

      Let me translate the article for you.

      I want to write an article about Google failing because it'll get a lot of page hits.

      Crap, they're growing by 20% every year? How the hell am I supposed make that sound bad. Hmm...

      Oh, I've got it. They're growing by 20% every year, but the growth rate isn't increasing exponentially. I can say that the growth rate is 'flat' which sounds bad!

      3. Profit.

      • Re:so... (Score:5, Insightful)

        by AmiMoJo ( 196126 ) * <mojo&world3,net> on Friday February 13, 2015 @10:36AM (#49046759) Homepage

        Yup. See how they also say that many of Google's innovations failed to become profitable, meaning that Google actually has a healthy R&D department and is willing to take big risks that pay off massively (Android? Street View?)

        • Re:so... (Score:4, Insightful)

          by Karlt1 ( 231423 ) on Friday February 13, 2015 @02:45PM (#49049277)

          Android hasn't "paid off". Google makes very little from Android and still makes most of its mobile advertising profit from iOS devices.

          Besides that, most of Android's growth is coming from countries and manufacturers that don't use Google's Android - they use AOSP without Google services.

      • What I am wondering is WHY all the articles (not just about Google) on how "businesses are ""failing"" " when all these businesses are posting 10-20% growth, yet some analyst says it's "bad" and so stocks get hit on that. Everything from Cheesecake Factory or Chipotle failing (while people are lined up to say "shut up and take my money") to a list of other businesses are getting these same "analyst reports" which are saying businesses are failing. Are these stock analysts trying to push some narrative to

    • Re:so... (Score:4, Insightful)

      by Richard_at_work ( 517087 ) <richardprice@@@gmail...com> on Friday February 13, 2015 @09:57AM (#49046491)

      Don't worry, it seems to be Googles turn for this rubbish - Microsoft has been continually dying for the past decade, despite ever growing profits and healthy revenues.

      The only companies that seemed to have actually died have been Slashdot poster children - Novell and Sun for instance.

      • Re:so... (Score:5, Interesting)

        by drinkypoo ( 153816 ) <martin.espinoza@gmail.com> on Friday February 13, 2015 @10:30AM (#49046697) Homepage Journal

        The only companies that seemed to have actually died have been Slashdot poster children - Novell and Sun for instance.

        Novell was already a has-been by the time Slashdot became a thing. Many of us predicted Sun's failure when one of their Ultrasparc refreshes had to be abandoned because they took too long to bring it out and it would have been old and slow by the time it hit the market if they had bothered to finish, and they followed this up with a long string of pointless acquisitions which they in turn followed up by laying off literally all the talent every time they bought someone.

        • Re: (Score:2, Funny)

          by Anonymous Coward

          Many of us predicted Sun's failure

          No need for alarmism, the sun is still predicted to shine brightly for Billions of years more. We have time.

      • Hate to double-reply, but I skimmed back over the thread and I was struck by how wrong you were about Novell. Novell was the target of endless derision on Slashdot back when it was an also-ran but also still a thing first for not going Linux, then for going Linux so incompetently. Before they died some of us had samba, mars-nwe, netatalk, and nfs on the same box — and with better uptimes than Novell since you could actually do software maintenance without rebooting. One server, all the clients, zero d

      • Actually, if you go to Thompson's site and actually read the source article, he says very clearly that he doesn't think Google is going anywhere. The thesis isn't that Google is DOOMED, it's that Google's time AT THE TOP is limited. Those are two vastly different things.

        Ben Thompson is a really thoughtful writer, and this game of telephone that we're seeing by Manjoo writing about Thompson's article has clearly caused confusion.

        This isn't a doomer article, honestly.

    • Re:so... (Score:5, Interesting)

      by rmdingler ( 1955220 ) on Friday February 13, 2015 @10:30AM (#49046689) Journal
      Sure seems like it, but this is, nonetheless, a really interesting submission/summary with good links.

      The parallels drawn in TFA between Peak Google and Peak Microsoft/Peak IBM are thought-provoking and relevant.

      Nothing, no creature in nature or multinational juggernaut stays at the top forever... talking to you dinosaurs, US Steel and General Motors.

      • Re:so... (Score:4, Interesting)

        by BarbaraHudson ( 3785311 ) <barbarahudsononl ... Nom minus author> on Friday February 13, 2015 @11:56AM (#49047405) Journal
        I'm not so sure that the article's basic premise is accurate in today's world.

        Instead, the findings show that people react to ads on Facebook in the same way they respond to ads on television.

        What do people do when TV commercials are on? Go to the bathroom, wash the dishes, surf other channels ...

        Eye-tracking studies have shown that people have also become ad-blind. We've seen that inserting "add-ish" content into a page (sort of like a slashvertisement) doesn't really work.

    • by dywolf ( 2673597 )

      No, see, the 20% is unchanging. Because the rate of growth when plotted has flattened, it therefore means growth itself has now paused.
      In pretty much the same way that global warming has paused, because the rate of increase flattened out.

      I mean, this is obviously how derivatives of a plot are to be used.
      We have yearly growth, increasing company size/revenue/whatever year after year.
      But when we plot the derivative of that growth, ie, the rate of the growth, it's flat.

      And that clearly means there is no actual

    • Maybe I'm crazy, but 20% yearly revenue growth for a company Google's size seems pretty healthy.

      In the deranged world of the stock market it is not enough for a company to increase revenue year on year. No, the rate of increase in the increase must also increase year on year.

      Unless you can project forward revenue of something approaching infinity, your company is simply not trying hard enough.

      • Re:so... (Score:4, Insightful)

        by schnell ( 163007 ) <me@scCURIEhnell.net minus physicist> on Friday February 13, 2015 @04:19PM (#49050101) Homepage

        In the deranged world of the stock market it is not enough for a company to increase revenue year on year. No, the rate of increase in the increase must also increase year on year.

        That's not deranged. It just depends on what you want to happen with your stock.

        Take for example Company A, which grows a predictable amount each year (or stays predictably flat, whatever). Investors take this amount of growth/profit into account, make some rudimentary financial calculations, and say "a share of Company A should be worth $X." If Company A's performance continues to be predictable, then that stock price is not going to change. Nothing inherently wrong with that, especially if the company pays a nice dividend to the owners of its shares, so they make money even if the share price is flat.

        But that's not what most investors want - they want to buy a share for $X dollars and eventually have it be worth $X+Y dollars so they can sell that share at some point and make money on it. (This is what you want when you buy a stock, right?) Companies themselves want this for reasons like incentivizing employees - if you're handing our stock options (not stock grants) to employees but the price you can cash them in at is the same price you bought them at, they are effectively worthless. Additionally, an increase in your stock price = greater market capitalization = it's easier for your company to borrow money at a low interest rate.

        But if your company doesn't grow profits above the rate that it has done so in the past (either by introducing new products, getting better returns out of old ones or driving down your costs) there is no reason for your stock price to increase. So, basically, yeah - investors big and small all want your company to show that it is increasing its profits (or in the case of a company like Amazon that loses money in the short term, marketshare) or whatever other measure continually so that there is a reason for its shares to be valued higher. If I believe that Company B has a bright future and will grow above expectations, then its valuation of $X today is too low and I should buy it because it will be worth $X+Y later.

        This all may be frustrating to people at companies that feel Wall Street is hounding them to perpetually improve results, but it's at least logically consistent, and certainly not "deranged."

  • by Harald Paulsen ( 621759 ) on Friday February 13, 2015 @09:14AM (#49046271) Homepage

    "but growth in Google's primary business, search advertising, has flattened out at about 20 percent a year for the last few years"

    So if I understand the summary, google only grows with 20% each year and that is a bad thing?

    I would start to worry if it was reduced by 20% every year.

    • by StormReaver ( 59959 ) on Friday February 13, 2015 @10:05AM (#49046541)

      So if I understand the summary, google only grows with 20% each year and that is a bad thing?

      I think everyone would be happy with a 20% yearly growth in their income.

    • by Mr D from 63 ( 3395377 ) on Friday February 13, 2015 @10:25AM (#49046663)

      Although Google has spent considerable resources inventing technologies for the future, it has failed to turn many of its innovations into new moneymakers.

      Many of Google's new technology investments are made simply for Google to maintain its foothold as the leader, not necessarily to be big money makers on their own. Keep the competition on their heels.

    • 20% yearly growth means that they will double their revenue in a little under four years.

      People's failure to understand exponential growth is astounding.

      To think Google needs an increasing rate of growth on top of an already immense, but consistent yearly rate of growth to be successful is idiotic. Ten years of 20% yearly growth would mean that Google has roughly six times the revenue as they do now in a decade. If you had a 10% increase every year in the growth rate, after a decade Google would have
  • by Threni ( 635302 ) on Friday February 13, 2015 @09:15AM (#49046273)

    Uh.. Microsoft essentially had a couple of products they thought (the monopoly on which) would last forever. Google (and the other large modern internet companies) are much more aware of the current state of what's going on (because they're responsible for it). Microsoft just panics and throws money at stuff no-one wants. Crappy phone OS, nokia, Zune, silly compromise-heavy tabtops (see what I did there?) etc. They produced an awful OS, held a straight face when everyone else said "meh, no thanks" which cost them a lot. If they've learnt anything it's at the expense of a lot of missed profit. Google have always spent a lot on R doesn't come across as panicking to stay relevant like Microsoft. Now Microsoft is giving away their new OS, open sourcing their dev tools, suffering increasingly against Google Docs (and other free office apps). If I had stock in Microsoft I'd be concerned that they don't have a plan. I don't see Google as being in the same boat as they have a more much stable history in profiting from innovation, even if not every project they attempted turned out 100% positive.

    • by Threni ( 635302 )

      > spent a lot on R

      I actually typed something like "R and D and" with the ampersand, but clearly that's asking too much.

    • by west ( 39918 ) on Friday February 13, 2015 @09:44AM (#49046415)

      I'd wager that Windows and Office *are* 'utilities' in the sense that they will be around almost forever, and generate the usual mountain of cash each quarter (although that mountain will slowly grow smaller over time). MS's success doesn't depend on popularity, it depends on businesses 'having' to have it.

      Facebook and Apple both rely on being 'cool', which is a very treacherous business to be in. How many consumer products of any sort survive changing tastes over 20 years?

      I'd bet 3:1 that in 20 years, MS will larger than Facebook or Apple - my guess, MS is 2/3rds its size, Apple and Facebook are near non-existent.

      Unfortunately, with buyouts, name purchases, etc, the odds are about 10:1 any such wager would actually be handing the money back to both bettors as 'technically unresolveable', so I'm not making any actual bets here.

      • I want to see how long Apple can keep on charging $700 for a cell phone. I really don't see how that can be maintained another decade. In an era where a $200 Moto G or similar is enough for most people, I can't see Apple being able to maintain their allure much longer. Same goes for the iPad. Why pay $500 for a tablet that is so limited when you can get a Surface Pro that does so much more for only a little bit more. Give them a couple more iterations and I'm sure they'll have something at the same price as
        • Same goes for the iPad. Why pay $500 for a tablet that is so limited when you can get a Surface Pro that does so much more for only a little bit more.

          i priced out a surface a couple months ago. with the felt keyboard thing it was $1200 out the door, more than double an ipad.

          • You can get the lowest end Surface Pro for $849 plus $130 for the keyboard. You can often find deals if you wait for a sale and get the lowest end version for $800 or less. So less than $1000. Still about double the iPad, but if you count it as a tablet and a laptop (which it basically is) you save money as a laptop with similar specs, plus buying the iPad. Even compared to buying a laptop and a cheap but good $200 Android tablet, the price is pretty reasonable. Like I said, wait a few more iterations unti
            • I think a more apt comparison is the MacBook air, which is why the surface commercials compare against the air not the ipad. it's an interesting discussion which is a greater value; they both cost about the same and serve similar purposes. the comparison to ipad isn't as apt.

        • by 0123456 ( 636235 )

          Why pay $500 for a tablet that is so limited when you can get a Surface Pro that does so much more for only a little bit more.

          What 'so much more' does a Surface Pro do that iPad owners want to do?

          Hint: nothing, which is why they use iPads. Microsoft have been pushing tablets that run desktop Windows apps since at least 2001, and hardly anyone bought them because hardly anyone wants to do that. It's a brain-dead idea, but when the only profit centres you have are Windows and Office, every piece of hardware you produce looks like it should run Windows and Office.

        • by Karlt1 ( 231423 )

          , I can't see Apple being able to maintain their allure much longer.

          Apple: Continuing losing our allure since 1999.....

    • by CastrTroy ( 595695 ) on Friday February 13, 2015 @09:54AM (#49046475) Homepage
      Personally I think that Microsoft has been doing quite well lately, but no matter what they do, people seem to find something wrong with it. I haven't heard anything particularly bad about their current iteration of their phone OS, other than the anemic app selection, but the OS itself is top notch. Everybody I know who has a Surface Pro seems to think they are amazing, the only general complaint being that they are too expensive. But I guess that you have to pay a lot of money if you want a proper digitizer built into the lightest laptop on the market. Microsoft has started to give away their OS on cheap devices because it's really the only option that works. You can't charge $50 or even $25 for a Windows license that sells to the end consumer for under $250. It just doesn't make the product competitive. This is a market that didn't exist 5 years ago, so of course they are going to have to make adjustments.
      • Personally I think that Microsoft has been doing quite well lately, but no matter what they do, people seem to find something wrong with it.

        Microsoft has gotten themselves in trouble.

        One of the big things they did wrong was kill binary compatibility for software running on XP at the same time they killed XP.

        This effectively forces a re-buy of all your hardware, because any new hardware you buy can no longer run the old software.

        Totally ignoring the fact that for all middleware-based vertical market software (which is, in effect, "all of it", mostly written in dialects of VB to glue a bunch of Microsoft and third party DLLs together) it's an add

        • One of the big things they did wrong was kill binary compatibility for software running on XP at the same time they killed XP.

          Wait, what? Microsoft hasn't done this. Most XP software works fine on later windows. It's the earlier software which doesn't work well. Some games (Civ2, egads!) won't run even in XP Mode. I presume some actual business programs are the same. Game developers may be more likely to do wacky things to the machine, but they don't have a monopoly on it — especially when it comes to the inept copy protection schemes that you often see in commercial software. But most of the software I've been using since Windows 2000 still works just fine on Windows 7, for example.

          Totally ignoring the fact that for all middleware-based vertical market software (which is, in effect, "all of it", mostly written in dialects of VB to glue a bunch of Microsoft and third party DLLs together) it's an added "rewrite everything from scratch" overhead, it ignores buying cycle.

          But I have stuff like that running on my Windows 7 amd64 system on a regular basis. WTF are you on about?

          • Some games (Civ2, egads!) won't run even in XP Mode

            That's not Microsoft's fault. Civ2 has 16-bit code which can't be run in a 64-bit virtualization environment. It is an inherent limitation of the x64 architecture. It can only be done with full emulation which imposes too much of a speed hit for MS to invest the time and effort to implement.

      • But I guess that you have to pay a lot of money if you want a proper digitizer built into the lightest laptop on the market.

        The EEE Slate series proves beyond any question that this is not true.

    • microsoft is on a slow fade

      nothing more, nothing less

      everyone should enjoy such a slow steady comfortable decline

      "OMFG! MICROSOFT IS DYING!" is just as drama queen useless as this "OMFG! GOOGLE IS DYING!" crap story we're commenting under

  • flattened growth?! (Score:5, Insightful)

    by excelsior_gr ( 969383 ) on Friday February 13, 2015 @09:15AM (#49046275)

    So, it's not that Google stopped growing, it's that it's growth stopped growing. So we're looking at the 2nd derivative now to determine the peak? Or do the MBAs merely like sensationalism just like their fellow journalists?

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      It's "it's that its" not "it's that it's"

    • by Anonymous Coward on Friday February 13, 2015 @09:33AM (#49046365)

      It's all a bizarre side effect of the premise upon which the markets now operate. Back in the old days, you bought stock in a company to share in that company's success and reap dividends. Now, you buy stock with the intent to sell it later at a profit. That shift means that to wall street guys, companies with solid business but no growth are effectively worthless. Their entire investment plan is based on growth. Add to that the shift in CEO compensation to stock options, and it becomes a race to see how long they can make the company grow before it collapses under its own weight.

      • That shift means that to wall street guys, companies with solid business but no growth are effectively worthless.

        Not only that, but if you have too little growth, you're seen as not a good investment. Your company consistently grew 5% every year? Sorry, that's not good enough. Fire 10% of your workforce and slash the quality of your products so you can eke out a 25% growth this quarter. Then I'll sell my stock at a great profit. Oh, now your company is tanking because of stockholders pressuring you to

      • by ceoyoyo ( 59147 )

        It's worked like that since people expected a percentage return on investment. Formally since the east india companies in the 1700s, probably less formally since well before that. Even regular savings account bank interest, provided it's greater than 0% implies exponential growth. The US economy, which everyone keeps complaining about, is growing exponentially.

    • by Rich0 ( 548339 )

      So, it's not that Google stopped growing, it's that it's growth stopped growing. So we're looking at the 2nd derivative now to determine the peak? Or do the MBAs merely like sensationalism just like their fellow journalists?

      2nd derivative implies an inflection point, assuming it ever switches from zero to negative. Pure exponential growth has a 2nd derivative of zero, and obviously NO company can sustain pure exponential growth forever simply because the universe is finite.

      But, of course there WILL be a peak google some day, even if it does eventually come to own every atom in the universe, again, because the universe is finite.

    • by ceoyoyo ( 59147 )

      If you want to predict a peak in the future you need to look at the second derivative.

  • domination (Score:5, Insightful)

    by StripedCow ( 776465 ) on Friday February 13, 2015 @09:20AM (#49046321)

    what you're seeing is that when a company becomes dominant, its dominance precludes it from dominating the next thing. It's almost like a natural law of business.

    You mean like how Google, after it dominated search, didn't dominate web-based e-mail, and online videos?

  • Hold On (Score:5, Insightful)

    by Godai ( 104143 ) * on Friday February 13, 2015 @09:29AM (#49046351)

    If I'm reading the article correctly, the information that says that ads in the Facebook style are far more effective than Google's comes from...a study by Facebook. Gee, that seems totally unbiased and could in no way be slanted by them to help them convince potential advertisers to sign up. All of this seems very bizarre after reading -- for years -- about how the Facebook ad model is so deeply flawed.

    • Indeed. FTFA :

      This isn’t conjecture. It’s science. It’s based on a remarkable set of in-depth studies that Facebook has conducted to show whether and how its users respond to ads on the site. The studies demonstrate that Facebook ads influence purchases

      Who would have thought it?

  • by danbert8 ( 1024253 ) on Friday February 13, 2015 @09:36AM (#49046373)

    The advertising business is split, roughly, into two. On one side are direct-response ads meant to induce an immediate purchase: Think classifieds, the Yellow Pages, catalogs or Google's own text-based ads running alongside its search results. But the bulk of the ad industry is devoted to something called brand ads, the ads you see on television and print magazines that work on your emotions in the belief that, in time, your dollars will follow.

    On one side, you get data that relates the advertising to sales directly. On the other side there is no actual evidence of return for investment. Emotional advertising is bull crap. No one buys Wonder Bread because a car in NASCAR is covered with its logos. Why that kind of advertising is still done is beyond me. Then again, the majority of the population are idiots. BRAWNDO THE THIRST MUTILATOR!

    • ... you mentioning wonderbread is literally the first time i've thought of wonderbread in like... 4 years. I'm sure if the price is similar now, and i see wonderbread in the store and i'm in the search for white bread, i'll get wonderbread now.

      i recognize the name, and hey, apparently they do nascar.

      • i once worked at a place near a wonderbread factory, and I would buy things at the wonderbread factory store.

    • I took a class in college called Psych of Personal Growth or something like that, the professor had some interesting topics I didn't see coming: one of them was how much we under-estimate marketing's effect on us. This type of emotional advertising is actually the most effective. Think of coke, they get their logo and slogans and products all over the place. In things that have nothing inherently to do with food or beverage even. This creates long-lasting associations, especially in the young. Setting them
      • It is possible that I underestimate my own attraction to brands based on advertising. However, the idea that it must be effective because companies do it doesn't work logically. They advertise because their competitors do and there is momentum in the industry of advertising. I think of it like calling a time out to "ice the kicker" in football. Evidence suggests this doesn't negatively impact the kicker and may in fact improve their chances but coaches continue to do it because everyone else does and they'd

      • I don't know - when I see the Coke Polar Bear commercial, the first thing that pops into my mind is that global warming is endangering them.

        Or this stupid cottonelle speed-dating commercial [youtube.com]. She whips out the toilet paper at the dining table, the guy is probably thinking "Awesome - she's into anal!"

        Brand advertising is getting goofier and goofier in order to stand out, but standing out for the wrong reasons is not going to work.

  • by MikeRT ( 947531 ) on Friday February 13, 2015 @09:41AM (#49046393) Homepage

    Google has a number of products they could be marketing to private cloud providers and large enterprises. Google Translate alone would probably net them conservatively $100m/year in licensing fees if they offered it on private federal networks with a license system that lets federal contractors develop for free on the open internet version and deploy on private federal networks. Yet I doubt it's even occurred to anyone at Google to have their federal consulting team even ask the Director of National Intelligence, DHS and DoJ how much it would be worth to them.

    They sell an overpriced search appliance when in reality what they should be doing is going after software licensing like Autonomy, ElasticSearch and Solr. Again, Google doesn't want to deal with this, even though they could go so far as to create separate corporations that do nothing more than make private deployable forks of Google's ad-supported products.

    They've left so much money on the table it's not even funny.

  • About how Google doesn't try to do better than break even with Gmail and Android and Google fiber, etc., because these things put more eyes into Google's advertising. Now I read about how Google has seen "little return on its investments" but is maintaining 20% growth in advertising.
  • ... then it must be true.
  • These wondrous 'immersive' Ad experiences I'm getting on Facebook. What a pile of shit. lol
  • by wisnoskij ( 1206448 ) on Friday February 13, 2015 @10:01AM (#49046521) Homepage
    20% growth is not flattening out, it is pretty much as much as you would hope for a big established player. It probably represents far more about how fast the economy is growing as a whole than actually effort by Google to grow bigger.

    Secondly, Google can play the long game. FB itself did not add any ads to its site for a long time, instead focusing on growing its user base and making them dependant. The article mentions the move to tablets like it is a knock against Google, but they have most of the table marketshare with Android. They own most of our OSes now, and an even bigger percentage of us use their browser to browse the internet. Yet they are not Microsoft, they have yet to leverage this position for trillions of dollars in licensing fees, or more ubiquitous ads that they probably could, because like FB they are more interested in gaining even more users. FB is one site on the internet, one site that 99% of the people who visit use at least Google OS or Google Browser to do so.
  • by lippydude ( 3635849 ) on Friday February 13, 2015 @10:01AM (#49046523)
    "According to Thompson the future of online advertising looks increasingly like the business of television"

    Wishfull thinking by the television advertisers. They would like to turn the Internet into television but that's not going to happen and surely facebook is the one trick pony.

    Burson-Marsteller: PR firm at centre of Facebook row [theguardian.com]
    • Really wishful thinking. While we're seeing articles about "cutting the cable" and binge show watching (without commercials). The television advertising groups are trying to convince their customers that everyone wants to be like television. I spend time and money avoiding commercials, because they waste my life-span.
  • emotional impact (Score:4, Interesting)

    by Virtex ( 2914 ) on Friday February 13, 2015 @10:24AM (#49046655) Homepage

    ... the bulk of the ad industry is devoted to something called brand ads, the ads you see on television and print magazines that work on your emotions ...

    I'll agree that Google's ads don't work on my emotions. Other advertising on the web, the kind that load up giant flash videos that cause my browser to hang for 30 seconds, play unwanted audio, obscure the content I'm trying to read, and otherwise ruin my browsing experience - those types of advertising definitely do hit me at an emotional level, but I'm not sure it's the type of emotion the advertiser wants from me. It's the kind of emotion that makes me run adblock so I don't have to deal with them anymore. I think I prefer Google's far less emotional ads.

  • by raymorris ( 2726007 ) on Friday February 13, 2015 @10:57AM (#49046919) Journal

    >. has failed to turn many of its innovations into new moneymakers.

    It doesn't matter how many don't end up bringing major revenue. It only matters that a few do. Of Google+ is a complete failure and Android has 75% of the market, Google wins big. Their newsgroup site shuts down while Gmail huge is a huge success, Google does quite well.

    They can well afford to invest $10 million each into trying ten different things if just one those goes on to make $250 million.

    If Google becomes THE autonomous car company, it doesn't matter that they also experimented with ten other things that didn't bdo great - and even the ones that don't do great sometimes make a little money.

  • "growth in Google's primary business, search advertising, has flattened out at about 20 percent a year for the last few years."

    Gee... Most businesses would be overjoyed to have an annual growth of 20% in their main business. Google is doing extraordinarily well. There is always some pundit who writes gloom and doom on the off chance they might be right and then can look back and say, "See! I said it!" totally ignoring all their own fails at prediction. Standard quackery with a broad baseline like fortune te

  • According to Thompson the future of online advertising looks increasingly like the business of television

    God help us all. As annoying as "transactional" ads are, those stupid "immersive" ads are even worse.

    and is likely to be dominated by services like Facebook, Snapchat or Pinterest

    I would be absolutely thrilled by this. If the bulk of advertising takes place there, then I won't ever have to see the bulk of advertising. That's a win/win.

    • Honestly, I don't think they are, when they're good.

      For instance, the 'Dear Kitten' videos are brilliant. I love kittens. I love the way zFrank makes videos. So he made some videos for BuzzFeed and Friskies. I watch them gladly and of my own volition. Friskies only just barely puts their mark on the video, and I'm compelled to watch it and share it because the content itself is so worth watching. That's the kind of ad Thompson is talking about.

      BuzzFeed is the king of that kind of advertising. A lot of their

  • Facebook doesn't have self-driving cars. Google will win the advertising war by subsidizing the cost of self-driving cars with advertising and product placement.

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