Web 3.0 Just Kicked Through the Door

In the playbook for Google's world dominance there is one play still in the developmental stage:

GoogleNet - the one missing link. No pun intended with the missing link part. Link....network... get it?

The posting below is a repost from February of 2007. I'm reposting because I think it is just as applicable today as it was then.

Couple quick thoughts before my paste:



- the amount of data on every persons habits that google will be able to manipulate and exploit is scary. the Chrome OS and Android just gave google 5 times the access they had to me before. Why? Android was built to run on devices and I can't stand windows crashing every hour so i'll gladly switch to a more stable android. not to mention its free. Android will be the OS for my mobile phones, set top boxes, home entertainment systems, appliances (refrigerators, ovens, vehicle management and entertainment systems, home automation devices (remember google's forays into the home automation and electrical smart meter markets?) and probably, in the not too distant future, they'll manage our terlits too. Thats a shit load of visibility they'll have in to the patterns and habits of connected people. Again, no pun intended :)

- will the Feds just sit back and watch as Google take it deeper than Ma Bell ever dreamed possible?






They are giving away everything else, why not connectivity too? Its all about efficiency right? Operational efficiency, risk mitigation efficiency and customer efficiency. Efficiency is the driving force behind Googlenet(gnet). What is GNet? Google's foray into the ISP business. This 'business' for Google is the means to an end. At the end of the day Google sells advertising and they'll use whatever means necessary to do that, be it building an OS and giving it away for free or by providing free connectivity so that free OS stays online 24x7. The more interaction we have with devices the more impressions google has to sell to advertisers.

The gnet hypothesis: Bandwidth costs have fallen to a level that the advertising revenue more than subsidizes the cost of the network. We are in the very early stages of a true 'gloabl village' as Marshall McCluhan called it. The cost structure for a traditional ISP like PacBell DSL..errr AT&T, comcast, etc to supply services to the residence is around $40 per month and trends down as they grow because they get cost scale.... in the network world, the more you buy the less it costs.

goog will be placing a bet, and a very calculated one, that advertising $$ will not only subsidize operational costs of providing free services(isp, voip, office, etc), but will exceed them.

Owning the customer's network routes from end to end(being the ISP) provides Google with private infrastructure platform for delivering customized content and adverting to each and every one of the people using their service. this delivery platform is always on and knows where you go, what you type, where you live, who your friends are, what files you have downloaded, what you look like, and whatever else they add on to their services. So when Johnson & Johnson or GE or Proctor & Gamble or Coca Cola or Pepsi is planning their media buys for the next year do you think they'll purchase advertisements on radio, television, print or the 4th network(Google)? based on the ability to target a specific population that has certain attributes you desire, the choice is clear...you pick google. Why? because you know that your marketing msg is going to a qualified prospect as opposed to the traditional 'shotgun' approach. plus, you can get results in realtime and tweak your msg if its not working in real time. with the other three media you are somewhat ratholed into trusting some third party for ratings that may or may not even reach the people that you want it to. by the time you figure this out a slew of things can happen...some good some bad but why chance it when you don't need to.

At the end of the day, Google is building a traditional media killer and the funny thing is..actually not really funny but kinda, that the writing is on the wall but nobody seems to believe it. I do. @Home Network had this vision but couldn't pull it off because the cable co's couldn't get their heads out of their rear to see the opportunity that was sitting right in front of them.

goog already has deals in place and likely in the works with the producers of original content which will allow their users access to that content. if i'm a content producer where would i want my content to be seen? ex. let's say you are the producer of The Office and goog offers you the ability to place your content on their network so that it can be viewed by anyone, anywhere, anytime and offers a revenue share or some other creative structure around it such that you know your worst case scenario beforehand. simple choice right? sure abc or cbs might offer an upfront fee in the form of $$ per show but the audience is limited, the timeslot is finite and in order for someone to view it, they have to purchase cable tv or satellite or whatever whereas on the google network you content would be globally accessible and the broadband access which replaces the cable or satellite tv service, is free to the masses. additionally you can develop complimentary services that engauge your viewership such that you are able to really develop a community around you content as opposed to content around a community.

What does this have to do with being an ISP? Everything, why do you think there is such a brouhaha over net neutrality? Without connectivity none of this is possible and with the right connectivity, all of it is possible and defendable from the threat of new competition emerging to pose a challenge.

The internet hasn't changed anything when it comes to the bare bones media model. The driving force of media is and always will be advertising. Without it, there would be no televsion, radio, print or internet. It doesn't matter if its old world or new world, it's still dependent upon advertising and gnet is to google what airwaves were to ABC, NBC and CBS, something to exploit in order to sell advertising.

Logic and Advertising on Facebook

Is it me or does there seem to be a growing number of naysayers bagging on Facebook as an advertising platform? It could be me but I don't think and this is why; Of the 26M unique visitors for the month of May 2007, 13M were older than 24 years of age. Of that 13M, 10M were above age 35!

If advertising on Facebook isn't showing a return then advertising on any web property should be questioned as well. This is because, at the end of the day, Facebook isn't just about college students, it's about a college educated audience that is smarter than the advertisers. To me, that poor click through % sounds like a statement from the users that the advertisers are doing a poor job on the creative front and the in your face front. Facebook users are educated people and generally speaking, educated people question things, especially when they are groomed with the notion that advertisers are like used car salesman. Slimy, untrustworthy, fickle, after the quick buck and once their done with you they are on to the next victim. Whether that is true or not, it doesn't matter, it's a perception and in this case perception may be reality.

Does this mean Facebook isn't worthy of the attention or prospective valuations floating around? Hell no, for if that was the case then NBC, ABC, CBS, Clear Channel, Fox, Viacom and all the other advertising dependent 'networks' would be less than worthless because they have exponentially greater expenses than Facebook. This means Facebook is the catalyst to the transformation of advertising as we've known it which is best described as the effort to create fear, uncertainty and doubt all wrapped around a call to action, into a relic of the past. In doing so they are resetting expectations of and possibly causing a reevaluation of prior efforts by advertisers and more specifically, their agencies. It's about time that ad click throughs and pageviews be tossed aside as the main metric for placing a value on marketing to a set of users. I can tell you with a straight face that in my 15 years of being on the internet, I have clicked on less than ten banner ads yet bought tens of thousands, if not a hundred thousand dollars worth of goods and services online. I can't tell you the last time I looked at a banner ad and thought it was intriguing. Because they aren't. They are a one way street and often an intrusive obstacle in my daily routine when they impede the performance of a website or do that overwrite or splash page crap they do on Forbes.com and sometimes on Cnet. If that isn't a reason to not click on an ad then I don't know what is.

It's about time the advertisers start giving something of value to the internet ecosystem as opposed to throwing shit on a wall and expecting revenue to flow their way. Some people may argue that they do give back via the $15B+ a year they spend on online advertising which is revenue to the companies in the business of generating revenue by selling ads. But that is not adding recognizable or measurable value to the marketees, those of us who they try to get to click on their banners, the everyday users, all of us.

What is different about the internet than the three other media networks, TV, print and radio? It's measurable. Really measurable. The way the internet works is much different and precise and specific than that of a broadcast network in that measuring a broadcasts audience is at best a guess and at worst a hope. On the internet it is possible to track how many users came to your website, where they were from, how long they stayed, what OS they were running, what browser they were using, where they came from and where they went when they left and get that info as it is happening. Those features are what makes the Internet an 11 on a scale of 1 to 10 as way to gauge effectiveness of a particular effort, in this case marketing. On the broadcast mediums you can afford to be lazy because there is no way to track how effective a particular effort is other than by sales numbers but that doesn't mean an increase or decrease in sales numbers are directly attributable to that marketing effort. There are plenty of companies that did and/or do ZERO advertising yet generate hundreds of millions of dollars a year in revenue. Its not that they don't market themselves, they definitely do, but they don't advertise. Big difference. Advertising is a form of marketing and with it come negative perceptions. Perceptions that for many, are so ingrained deep inside that they will never be unseated but can be lessened if and only if there is a sense of trust between the marketee and the marketor.

How is that ever going to happen? The most simple form is recommendations or word of mouth. When someone you trust recommends something you are more likely to believe them than you are some Madison Avenue marketing dude who created the 'coke is it' campaign. More like coke is shit because it is bad for you and how many times have you had a friend come up to you and recommend Coke? For anyone who grew up in the 70s 80s or 90s I'm referring to the brand of soft drink :) Conversely, how did you hear about Google, YouTube, Facebook or Thomas Keller's Restaurants like French Laundry, Bouchon or Perse? All leaders in their respective fields. I can tell you one thing for sure, it wasn't from advertising and that is a fact.

Does this mean we're in an economic bubble and the sky is falling? Absolutely not. Does it mean companies like advertising agencies on Madison Ave and ad networks placing banner ads on sites need to adapt to the internet? You betcha. Huh, how can an internet advertising network not be adapted to the internet by virtue of it's existence? That is very simple, they are applying 19th century methodologies and beliefs to a 21st century audience and platform. Do you take your horse and buggy to the gas station to refuel? No. Then why assume your 200+ year old demand creation theory is applicable now?

What I am getting at is that generally speaking the internet is not so much an advertising platform as it is a branding platform. That is very powerful for both sides of the market, the advertisers and those being advertised to because that means that poor advertising can be harmful to a company's place in the market as easily as subtle branding can strengthen it. Over the long haul, subtly reinforcing a brand without creating fear, uncertainty or doubt will only strengthen that brand and build trust with customers which will lead to them recommending the products and services associated to that brand to their friends and acquaintances which drive revenue growth. The same thing that advertising was supposed to do but apparently isn't. In conclusion, it's not Facebook or their users being a non marketable audience, it's that they're being targeted by 200 year old theories that were never tested or proved to be effective in the first place.