The Trojan App Trap

Google's newly launched service to sell print newspaper advertising puts a new spin on its earlier failed effort to sell print magazine advertising. But it's a strategy that apparently plans to charge a lot for doing very little.

Google's prior effort to sell magazine space had all the elements we have come to expect in new Google offerings: innovation, audaciousness and hubris. Google's plan was to buy advertising pages then resell those pages in smaller units to its base of advertisers, using an auction model as icing on the cake. While we suspected Google wasn't going to find the move to the world of offline advertising easy, we did respect the idea. That's because Google was making print magazine advertising more accessible by not only simplifying it, but by carving big expensive pages into smaller, more affordable units. Google was taking risk and adding value. The software that made all this happen was important, but it wasn't the main act.

Contrast this with the new Google program for print newspaper advertising. Auctions? No. Sub-dividing pages to make them more accessible to small advertisers? No. Google taking a financial risk? No. In fact, all we can see here is Google offering a self-service online ordering utility. Pick your paper, pay for your ad, upload your artwork. That's it. While the service is currently free, Google plans to extract a sales commission from newspapers at some point in the future.

What are these newspapers thinking? In exchange for an online application that from a functional standpoint is pretty mundane and could be developed by anyone, major newspapers are poised to hand over control of some of their advertising to Google, and will be on the hook to pay Google a commission to boot.

From our perspective, Google is facilitating sales, not generating sales, a subtle but critical distinction. Do newspapers really think that Google has privileged access to some large base of advertisers who've been yearning to advertise in local newspapers but didn’t know how? We contend the New York Times and the Washington Post (both participants in this program) aren't suffering from a lack of visibility among advertisers. We further contend that neither is difficult to locate or contact. Do these newspapers really think their sales forces are so ineffectual that all it takes is a self-service ordering page to find new advertisers?

There's nothing here that makes print newspaper advertising more attractive to small advertisers. Newspapers are selling existing ad units at full rate card prices. And if this program is really designed to be used by larger advertisers, then Google will probably end up peeling existing advertisers away from the newspapers, and selling them back to the newspapers in exchange for a commission. Not a great business move for publishers, but Google could end up laughing all the way to the bank. If Google can truly generate new sales for newspapers simply by throwing up a glorified online shopping cart, then that is less a victory for newspapers than a huge indictment of their existing sales operations.

There is a lesson here for all publishers: Don't get misled into paying sales commissions for software applications, because you’ll end up paying commissions for new business you could have generated yourself, as well as business you may already have.

The Many Faces of Social Networking

Social networking, better referred to as professional networking in the B2B world, is fascinating and still in its infancy. The poster child for professional networking isLinked In which harnessed the "six degrees of separation" concept in a programming tour de force that let you quickly determine how you might get introduced to someone you don't know through someone you do know.

Linked In was quickly followed by others with variant professional networking models. Jigsaw provides an online swap meet of sorts where participants trade business cards, tossing in those of no value to them, and removing others of higher value to them. Spoke Software offers a mixed model of contributed information augmented by compiled information.

Now Hoover's, partnering with a company called Visible Path, is introducing a new service called Hoover's Connect. The new service is very much in the style of Linked In, but utilizes slick technology from Visible Path that generates and evaluates business relationships by monitoring the user's email traffic patterns.Intriguingly, despite its long head start and a base of nearly 8 million members, Linked In seems to be actively searching for applications more compelling than professional introductions. It's pushed hard over the past few years to position itself as a tool for executive recruiters. It then introduced a job board component. Most recently, it's launched an intriguing referral-driven professional yellow pages product.

This evolution of the Linked In model suggests that professional networking is a tough nut to crack. There's no doubt professional relationships are highly valuable, but that may be the exact reason people don't want to routinely share them. How disposed would you be to introduce a good professional acquaintance to a near or total stranger, knowing that stranger wants to sell your friend something? Are you going to spend your valuable time vetting this stranger and his offering so you can make a referral to your friend with confidence? Probably not. And that's exactly what I heard from a number of people who tried to use Linked In for its original networking purpose: generally the intermediary party never responded, or said "yes" and then never followed-through. Automated professional referral networks still fall short in the trust department versus true personal networks.

What does all this mean for Hoover's Connect? I'm not writing it off before it even launches, and it's got some neat elements that might produce a different result than Linked In. At the same time, I wouldn't be surprised if Hoover's ultimately finds gold by mining the information value of its professional network a number of different ways from where it's starting out. There clearly seems to be power in professional networking; the challenge is finding and packaging it so that it consistently delivers value to users.

Vertical Search for the Masses

Lunch time rolled around yesterday, and I realized I had not yet checked out the new Google Custom Search offering. So I decided to spend 30 minutes looking at the Google product, then get something to eat.

Imagine my surprise when 30 minutes later, I had not only looked at Google Custom Search, but actually created a vertical search site and installed it on our company website http://www.infocommercegroup.com/ (give it a try yourself; it's right on the home page, below the fold).

Google Custom Search really is a vertical search application that virtually anyone can use. It's free, powerful, incredibly easy use to build and install, and delivers the improved relevancy you would expect from a highly focused search. You can include any number of other websites or specific web pages from other websites. You can include your own website as well. At your option, search results can be standard Google results that move results from your specified sites and pages higher in the search results rankings, or you can go "pure vertical" and show only results from your selected sites.

Google Custom Search, which is built off the Google Co-op platform, in essence creates a filtered look at the main Google index, so you can combine the breadth of the Google search engine with your own expertise about which sites are most relevant to a specific topic. It's a powerful combination, and did I mention, oh so easy. Google even remembered monetization this time: AdSense ads surround the search results, but Google will happily pay you a percentage: just check the box on the set-up screen.

It's all very cool, and as with most things Google, potentially disruptive. What are the implications for the growing number of publishers moving into vertical search? Google Custom Search raises the bar in vertical search a bit, but that's probably a good thing, because any publisher considering a move into vertical search should be thinking a lot past what Google Customer Search can offer in terms of features and functionality. While we're seeing some stunningly powerful and innovative vertical search sites lately, there are still quite a few that look like they were thrown together during someone's lunch break. As an industry, we can and must to better. That's why we see this new offering from Google as a useful warning shot across the bow.

There's still time. I think I'll have the chicken salad.

Yes We Can

The creativity and innovation that makes data publishing such an important and exciting field was on full display at last week's InfoCommerce 2006 conference in Philadelphia. Can you predict company earnings using historical weather data? Yes you can. Can you accurately predict automobile industry sales levels, by make, model and even vehicle options using just your website log files? Yes you can. Can you build the number one most highly trafficked B2B website in one year with a small staff and no professional investors behind you? Yes you can. Can you build sites that are more powerful than the general search engines for specific types of information? Yes you can, yes you can, yes you can.

But what was also clear at InfoCommerce 2006 is that innovation and creativity alone do not guarantee business success. Success comes from basic business blocking and tackling -- sweating the details and understanding intimately the needs of our customers and our markets, making this year's theme, "Becoming One with Your Market" , the most on-target we've had in a while. We were struck by the number of speakers and attendees who mentioned that they are getting closer to their customers by sitting with them -- literally sharing offices and cubicles with them -- to study in detail the nature of their work and their work processes. It's this level of engagement, connection and understanding that is helping to define our success.

Several of this year's Models of Excellence winners provided real-world examples of products that prove that workflow integration is much more than theory; it's a very, very good business to be in. We got a taste of the huge opportunity that awaits us with vertical search, and we saw how data publishers are capitalizing on their central market positions to become powerful "switching centers" for entire industries.

And while the search engines remain huge factors in our fate, the right combination of site optimization and search marketing, coupled with a user-based interface, powerful site functionality and most importantly of all, great data, can assure us sustainable and very profitable business opportunities that will only get better as the online information business evolves.

Can we get there from here? Yes we can.

Whither Content In The Traffic Economy?

In 1999, Internet guru Esther Dyson made the remarkable prediction that "content (including software) will serve as advertising ... [and] the likely best defense for content providers is to exploit the situation to distribute intellectual property for free in order to sell services and relationships."

Of course in 1999, the venture capital-fueled notion that "information wants to be free" was accepted wisdom, except of course to those of us who created information for a living, who wondered, "So how do we get paid?"

Since then, a lot has changed, and some of us are even still in business. But there are several high-profile examples of companies doing exactly what Dyson predicted, sites like move.com, where you can find a massive free database of homes for sale, produced in cooperation with the National Association of Realtors; or Amazon.com, which acquired Internet Movie Database to become, in essence, a merchandising front-end to its video retailing business.

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The recent acquisition of Peterson's Guides by student loan marketer Nelnet now suggests a larger trend is underway. Yet this new market dynamic that rationalizes owning a site solely to generate traffic in order to move product doesn't sit quite right with me. Why buy when you can rent? I am sure for a lot less than it paid to acquire Peterson's, Nelnet probably could have been the exclusive sponsor of key Peterson sites, getting the exposure and clickthroughs with none of the hassles of owning and operating a business they don't really understand.

Since none of the four finalists bidding for Peterson's were publishers, the thinking that site traffic is so valuable that it's worth the expense and hassle of buying and running content companies in order to have full control of that traffic must be hitting the mainstream. It's an odd and perhaps sad moment when content companies can only realize their maximum value when turned into what is effectively a high tech version of the self-liquidating premium.

What will be interesting to see is if content companies start to flip this emerging paradigm and start acquiring product and service companies. With the growing resurgence of online marketplaces, the industry may slowly be moving in that direction. But is it the right turn, or a dead end?