Google's costly smashed handset strategy.

Take a look at the most recent quarterly financial reports from APPL and GOOG. Apple's quarterly revenues of $75 billion were $9 billion larger than a full year of Google's revenues: $66 billion.

Apple's quarterly income of $18 billion equalled Google's entire quarterly revenues of $18 billion.

Foremski's Take: It's a little shocking to realize that in 2015, well into this new century, Silicon Valley's most profitable and successful company is nearly 40 years old and makes its money selling tech hardware rather than web services. We're still living in the old world.

Selling atoms in the form of smart phones and computers is far more lucrative than selling electrons in the form of web services and ads on a display.

Larry Page's ill-fitting turtleneck...

Google noticed that selling atoms was very profitable, if you were Apple. Four years ago, in his first year back as CEO, Larry Page tried to emulate Apple's hardware business by buying Motorola for $12.5 billion. It didn't turn out well.

By early 2014, Larry Page announced the sale of the remains of Motorola to Lenovo for $2.91 billion --sweetened with a $1.5 billion loan from Google.

See: Analysis: Larry Page's Smashed Handset Strategy - Google Ends Bid To Be Apple

Fortune names Larry Page "Business person of the year" in 2014.

It's not easy being Apple as Google found out -- selling atoms is a lot different from selling electrons.

Plus, the Motorola deal didn't make any sense. Why emulate Apple so closely, mirroring almost every business group? Google shareholders would not appreciate it.

It reminded me of the $164 billion Time Warner/AOL merger in 2000 -- later called the worst ever in US history. The mismatch in investment philosophies of the shareholders in the two companies not only scuttled the deal but also triggered a huge selloff in tech stocks.

In the late 1990s, amid the booming share prices of e-commerce companies, the investment philosophies of the shareholders of each company were polar opposites.

Time-Warner shareholders wanted to own a "bricks and mortar" business -- they didn't trust new media businesses.

AOL shareholders wanted to own a fast moving "clicks" based business -- they didn't want to invest in "bricks" -- a traditional media company.

Neither group of shareholders got what they wanted in the merger and their rush to the exits precipitated a much broader sell-off in global tech stocks that took years to recover from: the dotcom crash.

Time-Warner eventually managed to reverse the deal with the spin-off of AOL -- a nearly ten year process.

Google risked a similar revolt among its shareholders if it pursued an Apple-type business.

If Google shareholders wanted to own an Apple-like business they would have gone out and bought APPL shares. But they bought GOOG shares. There's a huge difference in investment philosophies.

Larry Page dodged a bullet on Motorola by getting out from a bad deal plus he learned that selling atoms is much harder than selling electrons.

Google's run-ins with European regulators have become a never ending marathon with no signs of an end. In the latest development, Robert Thomson, the CEO of Rupert Murdoch's News Corp., is lobbying the European Commission to hold Google accountable for abusing its dominant position in search (93% share in Europe).

The BBC reported that Thomson's "strongly worded letter" to Joaquin Almunia, Competition Commissioner, calls

...Google a "platform for piracy" whose power "increases with each passing day."

Europe is seeing a rise of nationalist groups with racist views. Thomson warns that Google's dominance will result in, "A less informed, more vexatious level of dialogue in our society."

He predicts that, "The intemperate trends we are already seeing in much of Europe will proliferate."

Mark Scott at the New York Times, reports that European media companies are concerned, too. 

“We are afraid of Google,” Mathias Döpfner, chief executive of Axel Springer, a German publishing giant, said in a letter to Google’s executive chairman, Eric Schmidt, earlier this year. “I must state this very clearly and frankly, because few of my colleagues dare do so publicly.”

Jeff Jarvis, a long-time critic of Rupert Murdoch and the author of "What would Google Do?" called the letter, "A most cynical letter from a most cynical company."

[Disclosure: I used to work with Robert Thomson when he was Editor in Chief of the US Financial Times.]

Foremski's Take: Robert Thomson is right to be concerned about Google because it is a media company: it publishes pages of content and sells advertising around it.

It prefers to be thought of as a technology company because it relies on partnering with media companies for most of its AdSense business, which represents about one-third of total revenues. Major media companies would likely balk at such partnerships if Google nailed its true colors to the mast.

Jarvis calls Thomson's letter "cynical" but what is cynical about points that are incontrovertibly true? Such as:

• - Google's linking to piracy sites.


• - That its own businesses are given a high rank in its index.


• - The sudden changes that will overnight overturn the high rank of businesses.


• - That it punishes small businesses.


• - That it places arbitrary restrictions on other companies using its Android mobile operating system.


• - That its actions commoditize third-party content.

All true. And it does nothing to allay the concerns Europe has with the fact that its digital economy is in the hands of a foreign company 5,500 miles away, that operates in secret, and that is constantly moving into competition with the businesses in its index.

But this is not a US versus European trade dispute. The concerns of European businesses are the same concerns US businesses have with Google. Their list is likely similar to Thomson's and that of the media industry in general. 

The sting in this tale...

The media industry was the first, but it won't be the last to understand that Google is a competitor with great disruptive powers. It can thrive on paltry margins per page published, reliant on the content produced by others, where media companies cannot thrive because creating original content has a high cost of business. 

One reason we see so many cryptic headlines, such as: You won’t believe what models do to prep for NYFW | New York Post - instead of: "Models Prepare For Fashion Week With Grueling Workouts" is that Google's aggregation of headlines often robs the news site of traffic because the headline says what's in the article. 

The crux of the matter is that Google's value is in its index, and in process of monetizing that index it ends up driving down the value of the content it links to. It's the nature of its business.

Google is the scorpion stinging the frog that's carrying it to the other side of the river. Without the frog it drowns and without content to index it has no business. But it can't not sting the frog. 

A scorpion cannot change its nature and the European Commission cannot change the fundamental functions of Google's business model. 

After 15 years as head of the webspam team at Google, Matt Cutts says he is taking a long break, to spend more time with his wife and family.

It's the same language that senior executives often use when suddenly departing their employer. I wouldn't blame him if he doesn't come back because he is often the target of much vitriol and anger from the SEO (Search Engine Optimization) communities every time Google changes its algorithm every few months.

Cutts has one of the toughest jobs at Google he has to explain Google's mysterious search algorithm and why some sites rank high or low. It's a highly charged arena because the livelihood of hundreds of thousands of people depend on Google ranking their business as a trusted online entity.

Yet Google's algorithm changes can sometimes plunge a site's rank for no apparent reason, which leads to a lot of hate aimed at Matt Cutts -- largely because he's the only Google representative that people know. 

It's a frustrating job because Cutts can't reveal how Google uses its 200+ signals in determining search quality and rank because spammers would take advantage of that information. He can only advise that certain behaviors, such as publishing guest posts on blogs, might be punished by Google.

I've long advised businesses to let the search engines optimize themselves and invest their money on optimizing their web sites for their visitors first, and the searchbots second.  [It always generates a lot of hate mail from the SEO sector.]

Here's Matt Cutts announcement:  

...I'd like to be there for my wife more. I know she'd like me to be around more too, and not just physically present while my mind is still on work.

My leave starts next week. Currently I'm scheduled to be gone through October. Thanks to a deep bench of smart engineers and spam fighters, the webspam team is in more-than-capable hands. Seriously, they're much better at spam fighting than I am, so don't worry on that score. One critical point is that I won't be checking my work email at all while I'm on leave. 

Matt Cutts: Gadgets, Google, and SEO --

- - -

Content Marketing: Don't Trust SEO -- Publish Content For People And Not Robots -SVW

Google’s handset strategy lies smashed. 

Google sells its handset business at a huge loss and helps Lenovo finance the deal. It ends an expensive chapter in Google’s attempts to diversify from publishing ads. 

Lenovo agrees to buy Google’s Motorola handset business for $2.91B. Larry Dignan and Zack Whittaker at ZDNet report:

Google confirmed after markets closed on Wednesday that Lenovo has acquired Motorola Mobility in a deal valued at $2.91 billion, just two years after the search giant bought it for $12.5 billion.

Lenovo will pay $1.41 billion when the deal closes in cash and shares and the remainder will be in a $1.5 billion note over three years.

In a company blog post, Motorola confirmed Google will retain the "vast majority" of the patents it acquired when it first bought the mobile company in 2011, including "current patent applications and invention disclosures." Lenovo will license the patents as part of an ongoing relationship with the search giant.

Foremski’s Take:

Google kept the patents because it needs them so it can protect Android OS app developers from legal claims by signing cross-technology license agreements, such as the recent one with Samsung. Intel, Microsoft and PC makers all engaged in cross-technology licensing agreements in the 1980s and 1990s and it helped expand the PC market.

Big U-turn…

The sale represents a U-turn for Google, and for Larry Page, CEO. Google has been trying to build an Apple-like hardware business consisting of smartphones, music players, portable computers, and TV Internet devices. It has now abandoned the smartphone handset business.

Google has been laying off thousands of people trying to make its smartphone business profitable. But very high marketing costs and an always-listening smartphone that was good, but didn’t wow the geek community or regular people, left it holding a business with mounting losses.

[Google’s Ad Partners Suffer As It Pursues An Apple-like Business, And Cuts 5400 Jobs]

Google gives away its Android operating system and it must also continue to support it with new features, which is an expensive burden. Google does not disclose the percentage of revenues it receives from mobile advertising but it is a growing revenue stream.

When will mobile revenues cover the costs of maintaining Android and also defending it from legal challenges? That’s a question I’d like Wall Street analysts to ask tomorrow, when the company reports Q4 2013.

Good decision…

The decision to sell to Lenovo was a bold one for Larry Page, CEO because it will be seen as a mark against him. He took over as CEO in April 2011, from Eric Schmidt, former CEO at Novell.

Page’s management of Google’s hardware strategy would certainly be something that Google shareholders would have a right to complain about. They can’t do much but complain because the founders and insiders hold shares that give them majority voting control.

Will Page find his voice and face Wall Street analysts at the Q4 report on Thursday? Last year he said a medical condition was affecting his speech and he would likely not participate in future calls with Wall Street.

It is better to pull out earlier than later and he has made the right decision. Shareholders will benefit because hardware is a low margin business. If you aren’t in a premium position like Apple it will drag down earnings per share and your share price. 

The more $GOOG tried to be like Apple the more it risked alienating shareholders. 

If Google’s investors wanted to own a hardware company they would have bought $APPL. 

In after-hours trading Wednesday Google was up more than 2%.

AdSense is the red line and it's been plunging for three quarters.

Googgle's [$GOOG] fourth quarter 2013 financial report is due after close of markets tomorrow (January 30) and the numbers I'll be looking at will be for its AdSense advertising network -- about one-third of total revenues -- which has been plunging for the past three quarters. 

AdSense revenues are generated by showing Google ads on third-party web sites. Large media companies such as New York Times are part of the AdSense network. There's also lots of smaller publishers that rely on the nearly $13 billion that Google paid out in 2012.  If there are problems in generating AdSense revenues, it will affect many media companies, too.

I was the only one to report on the Adsense plunge three months ago: 

Analysis: What Future For Google's Troubled $12.7bn AdSense Network?

It seems Silicon Valley reporters would rather follow a car that drives itself than follow the money. 

The mystery Google barge in San Francisco Bay that's  stacked high with containers over 4 stories high is an invitation-only "luxury showroom" reports CBS KPIX.

Google's Secret Revealed: Barge To Offer High-End Showrooms

Google's mysterious barge in San Francisco Bay will feature luxury showrooms and a party deck  to market Google Glass and other gadgets to invitation-only clients, multiple sources told KPIX 5.

 The project, which has been in the planning stages for more than a year, was created at Google[x], the secret facility that Google reportedly runs near its corporate headquarters in Mountain View. It is personally directed by Google co-founder Sergey Brin and is Google's attempt to upstage rival Apple and its chain of popular retail stores, sources said.

Really?! Apple stores are gleaming white, glass and metal architectural wonders and they are moored in the best high traffic locations -- not high tide locations. They are retail super-sites making more money per square foot than luxury jewelry store Tiffany & Co. 

Google's barges look like barges, ugly container ships. How will that image sell Google Glass?

Google always consults on its decisions with its store of Big Data. I consulted my data of common sense and it doesn't work. Waterfront locations are great for sea food restaurants and leaving on a cruise trip but not for buying glasses or smart watches.

Stacks of containers doesn't say "buy me." I would only buy Google hardware because it mattered to me and not because I drank a cocktail inside a container barge. And I would buy online.

Google's latest quarterly financial report shows problems in its AdSense network, which was responsible for 29% of last year's $43.7 billion in revenues. 

It means a lot less money for Google's network of publishing partners, such as the New York Times. 

Foremski's Take: $GOOG's Q3 report showed zero growth for AdSense compared with 22% yearly growth for its AdWords network. 

Not only has yearly growth come to a stop but AdSense revenues have shrunk every quarter this year (see chart below).

The continuing plunge in AdSense is in sharp contrast to robust 20% revenue growth in 2012, which outpaced AdWords' growth of 19%.

AdWords/AdSense mismatch…

This large gap in the performance of Google's ad networks is unprecedented. Historically, they have mirrored each other's growth (below) until about two years ago when Google introduced Panda, its first big change in its indexing algorithm.

In Google's Q3 conference call with analysts, CFO Patrick Pichette said, "advertising policy changes" were to blame for the change in AdSense performance.

With three quarters of sequential decline in revenues the future of the ad network is uncertain — especially since it shares about 80% of the revenues with its network but keeps 100% of AdWords revenues.

The AdSense network has large, legitimate publishers but it also has smaller sites filled with spam, or content stolen from other sites. Google has been criticized for aiding such content theft by allowing pirates to profit from their actions through AdSense, and then sending them traffic through search — effectively making Google an accessory.

The AdSense network has been very important to Google in the past and helped it successfully IPO in 2004 at a time when the stock market was skittish about investing in tech companies with volatile revenues.

AdSense publishers doubled Google's advertising revenues and stellar growth of 194% — compared with just 88% for AdWords — helped the IPO tremendously, showing potential investors that business was strong and very hockey-stick in direction.

AdSense boosted the IPO…

Google's IPO was one of the most successful in history and it sparked a new interest in tech stocks, which led to a boom in startups.

But is AdSense shrinking because of Google's war on spam and pirates? Or, is it reflecting deeper issues with online advertising that could become serious problems with Google's advertising business?

AdWords grew 20% but how much of that is due to "advertising policy changes" imposed early this year that require customers to buy mobile ads even if they cannot monetize that channel? It increases costs for advertisers and their cost of conversions so it could backfire for Google if some accounts that were not performing that well now get pushed into closure. 

Mobile ads killing media…

There are serious issues with online advertising affecting the entire industry. Google has reported declining value from clicks on its ads. And the shift to mobile ads is accelerating the decline, because it produces a fraction of the revenue of desktop ads. 

Matt Sanchez, CEO of San Francisco based ad network Say Media, recently warned that,  "Mobile Is Killing Media."  

Digital publishing is headed off a cliff … There's a five fold gap between mobile revenue and desktop revenue… What makes that gap even starker is how quickly it’s happening… On the industry’s current course, that’s a recipe for disaster.

Google has been pushing to diversify. It used to get 98% of its revenues from advertising but in Q3 16% came from other sources, such as enterprise IT,  and mobile phone sales. 

However, those businesses aren't as profitable as advertising. Its smartphone business lost a whopping $1.08 billion in 2012, and losses this year total $645 million. 

The failure of the search algorithm…

Google's AdSense network is more profitable than its phone business, which is why it will have to somehow resurrect it despite the spam.

The decline of AdSense says more about Google's ability to fight spam than anything else. It should not be sending traffic to spam and scraper sites in the first place but that's because its algorithm doesn't measure up to its hype.

Distracted by moonshots…

Despite all these challenges the stock market has enthusiastically welcomed Google's Q3 report by boosting shares to new highs. Maybe investors were distracted by self-driving cars and its "moon shots" to pay attention to the negative trends in Google's core business.

- - -  

A 'Grand' Moment for Google: Mobile Push Spurs Milestone - WSJ.com

Fortune Senior Editor Dan Primack recently returned from a visit to Silicon Valley and he reports new details on the Calico Google venture that is funding research into extending human life spans.

He reports that Calico, co-founded by Bill Maris, managing partner at Google Ventures, had commitments of investment from  wealthy tech execs and VCs, but that Google co-founders Sergey Brin and Larry Page decided to fund the venture entirely from Google's balance sheet: New details on Google's anti-aging startup

Maris began raising money, largely from wealthy tech executives and venture capitalists… One of those Maris called on was Google co-founder and director of special projects Sergey Brin, who expressed interest in investing.But as conversations progressed between Brin, Maris and Google CEO Larry Page, a consensus began to form that the best course of action would be to fund the entire project off of Google's balance sheet (the board would later agree).

I have heard various numbers as to the exact Google commitment, but for now can only really say that we're talking about a minimum of hundreds of millions (tranched out, of course). The company itself still isn't commenting, although it's possible that there will be some specifics in its next quarterly earnings report (due next week).

How is this venture part of Google's [$GOOG] mission to index the world's information? Some might argue that DNA is information, too. However,  creating drugs and life-extension technologies isn't an index and it's not what Google's shareholders chose to invest in.

Developing drugs and medical equipment is incredibly capital intensive and risky. It will bite into Google's profitability.

It already has to absorb large losses from CEO Larry Page's $12.5 billion acquisition of Motorola Mobility two years ago, which last quarter resulted in half it's workforce being cut with the loss of 5400 jobs.

However, the founders control the voting shares and the board of directors — there's not much that common shareholders can do about it other than take their money out.

The Calico venture could have been funded by Silicon Valley's wealthy elite. Dan Primack reports that Mr. Maris had succeeded in persuading many wealthy tech execs and VCs to invest, and both Google founders were considering using their own wealth to invest. However, they decided it'd be better to use Google's money rather than their own.

I think the reason might be that Google has plans to use the life extension technologies as an employment retention scheme to stop valuable software engineers from leaving the company.

Earlier this year at a Commonwealth Club Inforum event, Todd Carlisle, Director of Staffing at Google, said: " what if where you worked resulted in you being able to live a lot longer? "You might never leave the company," he said.

A talented software engineer is immensely valuable to Google's competitors because they can scale their work across an immensely large web services platform.

Google's interests are strongly focused on keeping the best talent at Google — even if they aren't working on essentail projects — because that denies them to competitors.

- - -

Google's Life-Extension Venture Is About Employee Retention -SVW

However, Google sees infographics in a much different way. To Google, it is duplicated content; it is a paid form of promotion that appears to boost the popularity of a website through means that are not "natural" and therefore it is a form of SEO (Search Engine Optimization) to gain a higher rank in its search index than is deserved through normal means.

The risk from infographics is that Google might penalize the website being promoted through the infographic. Google says that all embed code for infographics must include a "nofollow" tag on the links.

Aaron Wall at SEOBook.com, writes: How to Nofollow Friends and Influence Rankings with Infographics

Google is getting a bit absurd with suggesting that any form of content creation that drives links should include rel=nofollow…

If you run smaller & lesser known websites, quite often Google will rank a larger site that syndicates the infographic above the original source. They do that even when the links are followed. Mix in nofollow on the links and it is virtually guaranteed that you will get outranked by someone syndicating your infographic.

Foremski's Take: Infographics make sense if you are committed to quality content and easing the path to sharing that content. It makes good marketing sense because you are optimizing your site for your visitors, and associating your brand with quality content.

Unfortunately, the online marketing world is run by a powerful algorithm and you need to satisfy its changing whims.  Rather than focus on pleasing humans, businesses try to please the Googlebot otherwise they risk being penalized — which means their online presence will  be bumped from prime spots in Google's index. If they can't be found easily online they effectively cease to exist.

Google's recent new rules on links in press releases and in infographics, show how trying to please Google's algorithm, runs counter to pleasing readers. Which one should you choose? Most business don't have a choice.

- - -

Please see: Google Is Forcing A Change In The PR Industry -SVW

Here is an infographic from SEOBook illustrating the problem with infographics:

[Please see full Q2 earnings report: Google's Q2 falls below expectations with EPS of $9.56 | ZDNet]

2013 is shaping up to be a tough year for Google's advertising partners. They represented 27% of Google's revenues in 2012 but just 24% in the second quarter. Growth of 12% in the first quarter, fell further to 7% in the second quarter, considerably lagging the 18% growth for Google's sites.

Management offered no explanation for the large difference in performance of its two largest revenue streams. The difference is especially noticeable since its partners outperformed Google's sites in 2012.  

Google says it shares about 80% of AdSense network revenues. It keeps all the money from its AdWords sales. Together they generate 92% of total revenues.

A lot of media companies are members of the AdSense network and the slowdown represents lost income.

Google's management has been focused on growing its smartphone business, which reported accelerating losses despite slashing 5383 jobs in the second quarter, representing 54% of its Motorola Mobility workforce. The savings in labor costs will help finance a reported $500 million in marketing for new smartphone models.

Google's pursuit of an Apple-like business carries considerable challenges because hardware is less profitable than its core business, which means earnings per share will suffer — as they have in the second quarter. 

The more Google tries to be like Apple, the more it risks alienating its shareholders. If its investors wanted to own a hardware company stock they would have bought one.  

$GOOG shares fell 4% in after hours trading.

The above comment is from Aaron Wall's excellent SEOBook.com -- my go-to source for understanding search engine optimization and the algorithmic games that Google [$GOOG] plays with hundreds of thousands of businesses the world over.

Few journalists understand Google's business because if they did they would be writing some amazing stories, stories that would attract scrutiny of the kind that Google wouldn't want. 

This is why Google likes to point over there, and say, "Look at that car,  it's driving itself!"  

Or, "Look at our chairman he's in North Korea and now he's in Myanmar telling them to open up the Internet." All red herrings designed to focus attention away from how Google makes money. [Matt Cutts, Google's official web spam explainer, is the other red herring – cutoff and five steps behind reality.]

Journalists run their Google beat as if it were based in Detroit, not Silicon Valley, because they don't understand the dynamics of its business but they can understand a driverless car. They don't see that Google is engaged in a massive war against small business, which is fundamentally a war against jobs.

Google's dirty little secret is that its commercial algorithm is broken and it can't distinguish between quality  content and spam. Which is why it is backing big brands in a big way because that's the easiest way to sort things out.

That's too bad for small mom and pop businesses and the backbone of the economy.

Please see Aaron Wall's latest article: Is Google Encouraging User Generated Spam on Social Media Sites?

Microsoft has never made a profit from its search business, which loses about $2 billion a year. If it abandoned search, Mr Cleland says that the action could harm Google in several ways:

- It would show that no one in search can make money because of Google's massive presence globally.

- It would take away Google's claim that Microsoft competition is just one click away.

- It would allow Microsoft to file a private antitrust lawsuit that could bring triple penalties if it won.

Unlike the FTC, the experts at the DOJ and EU have long understood the stark reality of the search advertising business because they approved the highly-unusual combination of #2 Yahoo and #3 Microsoft search advertising competitors in a three competitor market in a last ditch effort to salvage a competitive search market.

...

Ironically, Google blames Microsoft for all its antitrust woes. However, without Microsoft as a competitor, Google’s antitrust liabilities would skyrocket.


Read more: http://dailycaller.com/2013/01/14/what-if-microsoft-exited-the-search-business/

From SEOBook: "A case study in being PRE negatively seo'ed."

Enter www.buymycar.com, an idea I had wanted to do for some time, where people list a car and it gets sent to a network of dealers who bid on it from a secure area. A simple idea but FAR from simple to implement.

...

Satisfied I had ticked all the boxes from hours of Matt Cutts video's and Google guidelines documents, I went to work... I was enjoying building what I had hoped would be a useful site and kicked myself for not having done so sooner. I also thanked Google mentally for being smart enough now to reward better sites.

But after four months of work, testing, and signing up car dealers, and still before the full launch, the web site owner Robert Prime, checked to see what links there were to the site. To his horror he found 13,208 sites had used a link to his site using the anchor text "Buy My Car Scam."

...this was absolutely devastating to see.

A worried competitor had obviously decided I was a threat and to nip my site in the bud with Google and attack it before it had even fully started. The live launch date was scheduled for January 7th, 2013!

... I was faced with death by Google rankings ... before it had any rankings... my site being cited as a scam across the Internet before it launched!

Foremski's Take: Negative search engine optimization was rare until Google changed its algorithm over the past two years and started paying attention to the quality of the sites linking to any web site.

It has led to a huge erasure of hyperlinks as web sites try to clean up large networks of their back-links.

But it has also added masses of new hyperlinks designed to tarnish the online reputation of a competitor and to flag it within Google as a potential scam or spam site.

When competitors gain by using this tactic what is the response of an ethical business? Does it have to do the same because that's what the mechanics of Google's algorithm dictates?

How can businesses behave ethically if Google only responds to unethical behavior by others, such as labeling a competitor a scam?

The Google algorithm is more than a collection of numerical values -- it also has ethical and moral values built in that can't be easily seen. The rise in negative SEO shows how the design of the algorithm can encourage unethical business practices.

Can Google design an algorithm that rewards ethical businesses? Companies competing to be more ethical than each other would be a very good thing to see.

If Google can do one then it can do the other, imho.

PRWeb distributed the press release and said it slipped through its internal tests for "integrity."

Danny Sullivan explains how PRWeb has become a popular distribution network for a lot of content, some of it shady, and how it ends up on well respected newspaper sites.

How PRWeb Helps Distribute Crap Into Google & News Sites

In the past, you'd get a press release out and hope newspapers might pick up the story, often using the release as a basis for writing their own stories -- ones that might be fact-checked, or sourced with others, or get turned into something other than a promotional item.

Instead, with PRWeb and other services, you can get whatever you want published and distributed verbatim into a wide range of news sources.

Foremski's Take:

Many newspapers have sections where they republish press releases, hoping to make a little money on the pageviews that this might draw. They don't check the facts in the release because they never have, even when writing news stories based on that information.

Newsrooms everywhere assume that the facts within a news release are trustworthy because the company issuing the release has passed it through many internal checks by its communications and legal teams.

Journalists also assume that the distribution service, PRWeb, Businesswire, etc, has verified the source of the press release, though not the facts in the release.

The "scoop" culture in rewriting press releases

This system works nearly 100% of the time. However, once a fake release has made it into this trusted network it can then gain wide distribution very quickly on highly ranked news sites, primarily because of a key vulnerability in many of today's newsrooms.

Lots of online news sites, such as TheNextWeb, Techcrunch, etc, demand as many as 6 news stories per day from each staff writer. They are under intense pressure to publish news stories within minutes of an announcement, which means they are rewriting press releases with no time to make calls.

Gone are the days of newspaper deadlines, when reporters had several hours to work on a news story before each edition hit the streets.

In this new newsroom culture, the first site to publish the rewrite of the press release is considered having a "scoop" even though the lead might be measured in seconds

[A scoop used to mean being the exclusive source of an important news story. It represented a lot of hard work by reporters cultivating networks of important contacts. Rewriting press releases all day long does little to help young news writers become effective reporters, who are skilled in interviewing senior executives, in nurturing contacts, and skilled in the many ways of uncovering great stories and real scoops.]

The perils of broad distribution...

This incident highlights another valuable aspect of issuing a press release: it can help to maintain a high Google rank by increasing the number of links back to a company.

As Danny Sullivan explains:

Buying a press release through PRWeb is an easy and legit way to effectively buy links, a way that Google doesn't penalize you for.

That won't stay true for long if PRWeb continues to distribute fake releases, or spammy, low quality content. And if that content is republished by large numbers of what Google considers to be low ranked sites, that will be a very large problem too.

There are a lot of web sites republishing press releases because the content is free and easy to find.

There's a very clear danger here: Google's algorithm updates are increasingly focused on rooting out sites trying to scam Google into awarding a higher rank. Lots of links can harm websites because it is a red flag for Google. It could decide to penalize a site for trying to SEO it's way into a higher rank by buying lots of links on lots of low quality websites.

Take a look at: The Fast Unravelling Web: Here's Why Google Is Killing The Hyperlink - SVW

This is why many companies are trying to get web sites to delete links back to them because they are concerned that it is hurting their Google rank.

This "negative SEO" trend, where fewer links from top sites are better than lots of links from many sites, is resulting in a mass erasure of hyperlinks and threatens to unravel much of the commercial Internet. I

PRWeb is popular because it can offer wide distribution for its clients' content which can lead to lots of backlinks from many sites. But if Google decides it doesn't trust those sites, or the distribution platform, it could boomerang onto PRWeb customers with a wallop, because of all the backlinks from low-ranked sites. 

And if Google decides that some content is low quality, then every website republishing that content, is risking its visibility within its search rank.

PRWeb is just an example of the challenges faced by all other press release and content distribution services. 

So what's the best way for companies to distribute their press releases? It has to be through trusted distribution networks that keep low-quality, spammy content out. Because Google will judge your business and your content on the company it keeps.

There's a perception that I'm advising web sites not to improve the quality of their content. I'm not advising anything, I'm reporting that a little known Google patent appears to be playing a major role in how a post-Panda Google now ranks web sites and web pages. It also explains some of the bizarre, random changes in rankings that have bedeviled SEO efforts by webmasters.

If Google detects that a web page has been changed between visits from its spider, it will check to see if the changes are designed to improve the rank of that page in its search index. This will flag the site as a potential spammer and trigger a reassessment of the site's rank in Google's index. In between the reassessment the site's rankings will fluctuate randomly.

This creates the situation where if a site owner tries to improve the quality of a page, by rewriting passages to make them clearer, adding additional information, links, video, etc, this could result in a spammer flag from Google, and a period of randomly fluctuating index ranking. Thus, trying to improve the quality of your site could sink your rank.

Yet Google is constantly telling web sites to improve the quality of their content to gain a better ranking.

That's a seriously messed up situation.

Any SEO -- White Hat Or Black -- Could Flag You As A Spammer - SVW

Is Search Broken? Does Google Trick SEOs With Random SERP Ranking Changes?

Over on SEOBook, there's a great article pointing out how Google is now measuring any attempt at raising the rank of a web page as the work of a spammer -- no matter the quality of the content -- and it will penalize the site.

Any attempt to modify the rank of a web page, after it's been ranked, could spell disaster for the site owner.

A little known Google patent called Ranking Documents details what Google is looking at. Here is the explanation:

Google may shift the rankings of your site, in what appears to be a random manner, before Google settles on a target rank.

Let's say that you're building links to a site, and the site moves up in the rankings. You would assume that the link building has had a positive effect...

Google then toys with you for a while before sending your site plummeting to the target rank. This makes it harder to determine cause and effect.

...

If you're a webmaster doing anything at all that might be considered an effort to improve rank, then you're a "spammer".

This is a messed up situation because even if you change what you were doing to follow the line of Google's acceptable SEO practices, it is still viewed as an attempt to modify Google's index and thus it is the work of a spammer.

Pandamonium...

The massive Panda algorithm change last year caused havoc among hundreds of thousands of web sites whose rankings changed overnight. If they did anything to try and regain their lost ranks, (and lost business) that immediately flags Google as the work of spammers!

This explains why the scrapers of legitimate sites rank higher than the original because they haven't tried to change their initial rank.

If you try to improve the quality of your site, that can work against you. For example, HubPages tried to restore its original rankings in the wake of Panda by improving the quality of the content by deleting pages, and by trying to improve grammar and even spelling. Nothing worked until it republished with subdomains, thus starting with a clean sheet.

At the time, HubPages CEO Paul Edmondson told me that there seemed was a random element at work in Google's rankings so they couldn't determine which type of SEO was working. This is a direct match with the language in Google's Ranking Documents patent description:

During the transition from the old rank to the target rank, the transition rank might cause:

- a time-based delay response,

- a negative response
- a random response, and/or

- an unexpected response

Be careful if you try to improve the quality of any of your pages by adding links, adding information, or anything at all!

Once engraved into the fabric of the Internet the content must be unchanged or Google will flag you as a spammer and penalize your ranking. The permalink has become a permafrost for content.

Take a look at the full article on SEOBook: Is Search Broken? Does Google Trick SEOs With Random SERP Ranking Changes?

Also, my article from 2007: Is search broken? | ZDNet

He begins by re-stating his original premise: "I believe the internet has been one of the greatest forces for good in the world over the past quarter century."

He then goes on to say:

Today, the primary threat by far to internet freedom is government filtering of political dissent. This has been far more effective than I ever imagined possible across a number of nations.

Foremski's Take: The problem with the Internet is that the same methods that a company such as Google uses to monitor its users for clues about what they might purchase next, so it can show relevant ads, can just as easily be used by governments to monitor its citizens for political and oppressive purposes.

"Big Brother" is already here, it's just masquerading as "Big Sales Assistant."

The dilemma Google faces is that every bit of progress the company makes in improving the efficiency of the commercial Internet, and thereby improving its profits, unavoidably improves the potential efficiency of governments to exploit those advances for potentially harmful purposes. The technologies and methodologies are both identical as a process.

Governments can simply buy data "off-the-shelf" from Google, and other companies, and instead of using it for commercial reasons such as selling diapers, use it to uncover and track networks of political dissent.

Even easier, governments can force Google to give it data by court order, or passage of laws.

But there are solutions that would greatly hamper any government's ability to force Google, or other Internet companies, to provide them with data. The data could be "laundered" and anonymized to a far greater degree than is currently done.

Anonymized data still has commercial value, companies don't need to know "Joe Smith" -- the name means nothing, it's user behavior that counts, and they could still sell Mr Smith a new TV without knowing his name. Governments need names in order to persecute and prosecute dissidents.

While it is theoretically possible to de-anonymize a dataset by cross-mapping against other datasets -- it's not a trivial problem and it would certainly limit what an oppressive government could do.

Yet, despite his concern about people's freedom and the government monitoring of Internet users, which Mr Brin describes as "dangerous," Google has made itself into a one-stop data warehouse housing the single largest collection of identifiable data about nearly every Internet user that ever lived. Why subpoena 50 companies when one will do?

Google has become the single largest potential storehouse of data about political dissent yet it has done little to make sure that data can't be used for harmful purposes.

It's paradoxical that the US government has fined Google several times for collecting private data when it's precisely that type of data that would be useful to an oppressive government.

There are other inconsistencies in what it says and does. Google found a way around South Korea's law that mandates Internet companies collect the real names of users posting comments. Google did this because of concerns about the safety of it's S. Korean users.

Yet Google insists people use real names for its G+ service, and it has aggregated previously fragmented user data into one, by implementing a unified privacy policy.

How does Mr Brin explain the huge contradiction in his public warnings and Google's actions in pursuit of its business objectives?

One possible explanation is that there is a deep split on such issues within Google, as there was over its China business. Mr Brin was firmly against Google's move into China, on which he eventually prevailed, resulting in a retreat from the search market in that country

Maybe Mr Brin doesn't speak for Google but for himself? In which case his public hand wringing is worth little compared with what he could do within the company. He could harness Google's army of braniacs to develop new online technologies that could thwart government abuses while at the same time improve commercial applications.

There's lots Google could do that would protect all Internet users from being harmed by dangerous elements within any government, or any other organized group.

"Do no evil" is a wonderful motto but it's meaningless if Google allows others to use it for evil.

Many observers have questioned those numbers but I know for certain that they could be larger by at least 1 -- if my account worked.

I've had constant troubles with G+ for several months. I keep adding the same people to the same circles time and again. And it often won't let me share anything.

Other Google products are failing too. My Gmail is virtually unusable because it delivers my mail more than an hour late, it won't autocomplete addresses which means I have to search for the right address and copy and paste it in. My Google Contacts are blank and won't let me add anyone.

I've tried repeatedly since last summer to get help from Google to fix this -- nothing.

I've seen other frustrated users with similar problems, also not able to find anyone at Google to help them.

Google wants desperately to have a successful social network but it clearly doesn't get it, because it doesn't use social networks in providing customer support. If you aren't doing it, you won't get it -- this is core to any company's culture of success.

For example, Apple is a company that is notoriously bad at being active in social networks and social media and I would say that this is a primary reason why it has been so bad at creating a social network (Ping). You have to be in it to get it.

Google will fail at G+ and other social network ventures if it doesn't fully engage in those networks, and others, with its customers and users. You have to be in it to get it. That's how things work and there's no short cuts.

Google, fix my G+ and Gmail! This has been going on for months! Please! Cherry-on-top please!?

Will Google notice my pleas here? But not my constant requests on Google support forums? Or ignore all of them?

If I'm having serious problems with Google products I'm pretty sure there must be many others because my use is dirt simple, it is not extraordinary or exotic in any way. And Google isn't interested in fixing my problem, and I'm assuming, that of others' in the same boat.

That's a warning sign, imho, of a potentially larger issue within Google.

Last week Google introduced search results heavily influenced by relevant signals from people's social circles and promoting G+ content in its search results.

The move is an attempt to boost its nascent G+ social network, which has had a rocky start.

I predicted that this strategy would attract legions of marketers hoping to boost traffic to their client sites through new forms of Search Engine Optimization (SEO) techniques. A torrent of spam on G+ could risk alienating early users of the social network.

It also risks harming the quality of its search results, warns Rand Fishkin, a leading SEO expert and founder of SEO software comapany SEOmoz. He studied how "Google Plus Your World" (GPYW) works and discovered that it goes beyond personalized search and is being used to affect the search rankings of "normal" Google results.

Why Every Marketer Now Needs a Google+ Strategy | SEOmoz

It's my opinion that if SPYW continues to roll out to all logged-in Google users and Google stays as aggressive as it's been in the last 10 days with pushing Google+ for even logged-out users, the service will become a necessity for search and social marketers.

Mr Fishkin says that Google's use of G+ to boost rank in its search results means that every company must develop a G+ strategy.

You're losing out if you're not because the biasing is so heavy right now.

There's risks for Google, in further degrading the quality of its results--an issue that has dogged the search giant for the past couple of years.

Google is essentially saying, "You know what? We are willing to forego a little bit of quality and relevance in favor of showing Google+ and social stuff in our results more heavily."

...

I think there are certainly some risks for Google, [around] quality and relevancy...

Search engine marketers are constantly on the look out for clues about what type of data Google is using in its secret algorithm, which are the most important signals? Now they know. And that means the game is on to game G+.

Look out, Google search quality could be headed for a major dive.

(Click image for original story.)

Google assumes people sharing links etc will unlikely be spammers but the SEO benefits from the integration of G+ into search will undoubtably attract legions of spammers.

Automated scripts could create massive amounts of G+ posts and +1s in a bid to fool Google into ranking spammer's content higher in search results. How can Google control against this type of spam flood? It won't be easy.

But the resulting rise in traffic and activity on G+ by the spammers will make a nice graph to show the world how popular G+ has become.

- Visit Silicon Valley Watch - hand-curated tech and local news -

SEOBook has produced an interesting infographic explaining Google's affiliate strategy.

It's ironic that Google's actions have largely devalued the search rank benefits of a link from another website. Yet this "PageRank,"named after CEO Larry Page, was the heart and soul of the Google algorithm. It was his eureka insight into the structure of the web that made Google into Google -- PageRank generated stellar search results.

Spammers soon figured out that creating a lot of backlinks was an easy way to fool Google's algorithm into generating vastly improved search page positions for their sites. So it's not surprising that Google had to find ways to deal with backlink inflation, and find other indicators of trust and authority. But in moving away from PageRank Google risks throwing out the baby with the bath water.

The company says it now monitors more than 200 signals, in addition to PageRank, to determine the importance of websites. But without PageRank it's a hard job and it's showing in the complaints about search quality.

I have a suggestion for Google: Bring back the use of PageRank and let the spammers create massed fields of backlinks to their sites -- they'll easily identify themselves by their overuse of SEO. Jump on that--it's an easy filter. After all, hardly anyone links to anyone anymore, unless they're spammers.

It also allows Google to essentially become the affiliate marketer for large brands because that's where they get most of their traffic. This is at the expense of smaller companies trying to make money online and who don't own major brands.

New services, such as Google Instant, make it easier to focus user searches on brands rather than the massive long tail of keywords that small marketers use to attract traffic. Google Instant can direct searchers to keyword terms they weren't going to type in but that Google knows it can make money from.

Aaron Wall, at SEOBook has produced an infographic that explains how Google has managed to chop the long tail off and concentrate on the thick, juicy, short tail of keywords, which is far more lucrative than what it can make from long tail keywords. (Embed code.)

This strategy has managed to generate billions of dollars in extra revenue for Google this year. It is a war against small businesses, a major source of jobs in the US. And it's largely a secret war with very few people following, or able to understand what is happening. Google doesn't want attention on this strategy because in today's tough economy and high unemployment, Google is destroying jobs at countless small companies -- a PR nightmare.

Aaron Wall, over at SEOBook, has written about Google's shift in strategy and how it now favors large brands over small businesses. In a recent post he pointed out that large brands are able to sell that favored Google status to other companies.

Let me explain: Google favors large brands by sending them lots of traffic rather than to small businesses who make affiliate fees. Those brands can then sell access to that traffic to other companies by essentially forming small advertising networks of their own.

These brands can not only leverage internal resources to further build off the boost Google offers them, but they can then take that attention and sell it back off to the highest bidder. ... the biggest retailers are now becoming ad networks.

Here is Aaron Wall's infographic on this topic of Google favoring large brands (anyone is welcome to use it - here is the embed code.)

Google's search pages are being flooded with paid search listings from its AdWords advertising network in the final weeks of the Q3 financial quarter, possibly to boost revenues to meet, or exceed Wall Street analyst estimates.

Aaron Wall, in a post on the web site SEOBook: "Endless AdWords Profits" notes that a search for "7 for all mankind" shows a massive AdWords box with ten links (his image below).

10 links in a single AdWords ad unit!

Then more ads below it. Then a single organic listing with huge sublinks too. And unless you have a huge monitor at that point you are "below the fold."

...

While it is generally against Google's TOS for advertisers to double dip in AdWords (outside of the official prescribed oversize ad units highlighted above), Google is doing exactly that with their multitude of brands.

Google places a faint background color to distinguish ads from organic search but on some browsers and computers the background color is difficult to see, which means searchers can't tell what is a paid listing and what's not.

Moves such as these have helped Google greatly increase its revenues this year at the expense of its AdSense advertising network. AdSense revenues are split with other publishers but Google gets to keep 100% of its AdWords revenues.

On Wednesday Eric Schmidt, executive chairman of Google, will appear before a Senate committee that's looking into abuses of its dominant position in Internet commerce.

The Guardian reports:

[Schmidt] is expected to argue the company offers a level playing field for rival products — and is increasingly facing competition from social networking sites such as Facebook and Twitter.

...The Senate committee will also hear evidence from Google rivals, including Jeremy Stoppelman, chief executive of the reviews site Yelp, and Jeff Katz, chief executive of the price comparison site Nextag.

Larry Page, who returned to the CEO job in April, has managed to greatly boost Google's revenues this year partly by swamping search results with paid listings from AdWords.

GOOG Analysis: The Massive Mystery In Google's Finances And Why This Is Bad For Publishers - SVW

It also made a massive change in its algorithm to shift traffic away from content sites that it doesn't own. The shift is supposed to reward "quality content" but third party publishers such as HubPages report that they have done everything they can to fulfill Google's drive for higher quality content yet the Panda algorithm continues to penalize the site.

HubPages CEO On Google's Panda: SEO Doesn't Work - SVW

Google's aggressive push for revenues is a risky strategy because of the anti-trust scrutiny in the US and Europe. In addition to the Senate, Google is being investigated by the Federal Trade Commission and the European Union.

In the above search example, with only one organic, unpaid link showing "above the fold" amidst a sea of paid Google links, it will be difficult for Google to argue that it is not promoting its own business over that of others.

If the members of the Senate committee choose to question Mr Schmidt about the rise in Google AdWords links and the correspondingly scarce organic links, he'll have to come up with a better answer than pointing to Facebook and Twitter as worthy competitors.

Nielsen's "State of the Media" report for the third quarter of 2011 tries to capture a snapshot of the social media landscape in the US.

Among the key findings is the fact that social networks and blogs account for nearly a quarter of the time that Americans spend online.

Given that social media now reaches more than 80 percent of adult internet users, such stats have massive implications for the world of online retail. The report found, for instance that some 60 percent of people who used "three or more digital means of research for product purchases learned about a specific brand or retailer from a social networking site".

Of these consumers, 48 percent responded to a retailer's offer posted on Facebook and Twitter. Perhaps even more revealing is the fact that 70 percent of active online adult social networkers shop online, 12 percent more likely than the average adult internet user.

The report also found that users over the age of 55 are driving mobile growth of social networks and that, while men are still the predominant users of the internet, women have taken the lead in social networking.

In fact, the majority of the visitors to nine of the top ten social networks in the US are women. The notable exceptions to this are LinkedIn and Wikia, which are the only sites where the percentage of men exceeds the percentage of total active male users (47 percent).

Another exception not mentioned in the report is Google+ where nearly all of the early adopters were men.

Also of interest is the fact that there is a correlation between a user's level of education and the kind of social network they visit. A quarter of visitors to popular blogging platform WordPress, for instance have a bachelors degree, while LinkedIn is three times more likely to be visited by users with a post-graduate degree than average.

Personal computers still remain the most prevalent means of gaining access to social networks and are used by 97 percent of consumers.

Mobile still lags somewhat behind but is fast gaining traction. 37 percent of users access social networks through their mobile phones, with a select few using tablets, e-book readers and handheld music players.

Such figures are borne out by the fact that social networking apps went up 30 percent from the same quarter last year to become the third most used type of smartphone app.

The report also found that active social media users are influential offline. This is, in part, due to the influence they have in recommending and reviewing products. Active social network users are also more likely than the average internet user to be "found at political rallies, professional sporting events and working out at the gym".

Before the launch of Panda Google spent months bad-mouthing "content farms" and how the new algorithm would weed out the bad content. The first version was called "Farmer" as a reference to "content farms" -- sites that scrape or produce low quality content just to game search rankings.

Who could argue with such a noble goal?

Yet when the Panda "Farmer" algorithm hit the Internet, it failed to highlight "quality" content. Quality sites, such as my friends at Ubergizmo, lost rank and their scrapers ranked higher than them. That's an #epicfail.

[Please see: More On Panda Pandaemonium.... - SVW}

There have been lots of sites that have suffered tremendous losses. Some of the stories are heartbreaking. Here are some quotes from a Google blogpost asking for examples of good quality web sites that have been hurt by Panda: 5,835 replies.

...we are interested in hearing feedback from site owners and the community as we continue to refine our algorithms. If you know of a high quality site that has been negatively affected by this change, please bring it to our attention in this thread. Note that as this is an algorithmic change we are unable to make manual exceptions, but in cases of high quality content we can pass the examples along to the engineers who will look at them as they work on future iterations and improvements to the algorithm.

Here's some of the replies illustrating the enormous hurt that Panda has caused many legitimate, high quality content sites:

I am so devastated. My main site and my life's work, cure-back-pain.org was drastically affected. I am not a learned webmaster, I am a back pain patient and someone who writes to help others recover. My site is 5 years old and has often led in the rankings for my topic, back pain and back pain treatment.

I was let go from my "dayjob" in the economic decline of 2008 and found a savior in the fact that I could make a living helping those who needed it most, so I turned to my site full time and found it very rewarding. I write all my own content and work my site 80 hours a week+. I do everything myself.

... with the terrible downturn in rankings, I am most likely going to lose my house. This is not an exaggeration. My wife and I are in free fall now, as we are both casualties of this economy. This is a very sad to me, but I am not here to cry about money. Just as important is the fact that I spent 5 years building a safe haven for back pain sufferers to find honest info and help without feeling like they have to spend all their money doing it.

There's lots more stories in a similar vein here.

Lots of losers due to "bad quality" of content. But one massive winner: Google.

Since Google launched Panda it has beaten Wall Street estimates twice. It's revenues have surged tremendously, yet for much of the past year and more, Google's revenues to its own sites (AdWords) barely could keep pace with revenue to its partner sites (AdSense).

Here's an example for 2010 revenues:

- In Q1 Google sites grew 20% and partner sites grew 24%.
- In Q2 Google sites grew 23% and partner sites grew 23%.
- In Q3 Google sites grew 22% and partner sites grew 22%.
- In Q4 Google sites grew 22% and partner sites grew 24%.

At no point did Google manage to exceed growth in revenues from its partner sites.

Yet suddenly in 2011, under new CEO Larry Page, everything changed:

In Q1 Google sites grew 32% and partner sites grew 19%.

In Q2 Google sites grew 39% and partner sites grew 20%.

Yet for the past year and more, Google couldn't keep up with partner sites and all of a sudden it is surging ahead.

What caused this sudden reversal in fortunes? It looks like it's due to Panda.

Google is taking away traffic from its partner sites and that means it doesn't have to split the revenues, about 68%, with partners -- it keeps all the money.

Some have been waiting for Google to flip a switch and grab AdSense traffic and revenues. It is something which Google has the means and the motive... Larry Page, the new CEO, now looks fabulous.

With all the high quality web sites being hit with tremendous traffic losses, 50% and more, and with Google sites surging in traffic and revenues, it is evident that Google's push for quality content was a red herring, a ruse to divert revenues from its AdSense partners to its own coffers.

This kind of behavior will most definitely attract government regulatory scrutiny. What Google does or doesn't do affects millions of businesses globally, it affects hundreds of millions of people's salaries -- it affects entire economies.

GOOG's CEO Larry Page is likely betting that Google can move faster than regulatory bodies can crack down. And he's right. But is it right?

History shows that MSFT tried a similar strategy, but it didn't work. Does Mr Page believe he can do better? Of course.

---

HubPages CEO On Google's Panda: SEO Doesn't Work - SVW

Scary Google: Larry Page Wants To Change The World - SVW

Users are invited to collaborate with whomever they want to include and those who are excluded are oblivious to it, that's quite a nifty way to manage the message socially. This form of 'targeted sharing' is in keeping with their core money-spinner, AdWords, too. More on that later.

What we can confirm via Joseph Smarr is that Google+'s backend is built mostly using BigTable and Colossus/GFS and that they use a lot of other common Google technologies such as MapReduce which many other Google applications do, too.

Here's where some imaginative integration speculation can spice things up:

Google+ and Docs = collaborative publishing on the fly.
As more groups of people begin to collaborate on cloud-based documents it's going to be important to publish information to certain groups (read Circles) as well.

Eventually, different departments within a business could start publishing information within their Circles and could increase their productivity through this efficient means of data dissemination.

Google+ and Youtube = exponential video sharing.
The chances of a video going viral increase exponentially when you've got influencers sharing with their Circles. With over 20-million potential influencers Google+ is now a very nice home-away-from-home for Youtube. Hangouts also mean increased brand engagement: imagine talking to the Isaiah Mustafah (The Old Spice guy) in real time.

Waiting around on Twitter for your brand to reply to you is going to be so old-school when you've got real time brand immersion.

Google+ and Latitude = Foursquare killer.
It's easy to see how having a location-based application like Latitude could fit into a conglomerated social media environment. You can check in, your friends know where you are and, once Google+ allows in brands and businesses, it's going to be easier than ever for them to do loyalty targeting.

As an aside: If we cast our minds back to November 2010 when rumors of Google acquiring group buying company Groupon were rife we can see the potential in having a group buying application linked to a location based service -- this could be a compelling marketing tool for small and medium businesses.

Google+ and Translate = a true social media Babel fish.
Ever get sick of having foreign friends who are probably posting the most interesting things, but you can't understand Swahili? By integrating Google Translate into Google+, we may no longer have to wonder what our foreign friends are saying or commenting about us -- it's automagically translated.

Google+ and Sites = Facebook Fan page killer.
There's only so much you can do to your Facebook page in order for it to stand out from the rest. Not so, if Google+ integrates Sites. The potential for celebrities, businesses and eccentric geeks to differentiate their pages from each other is going to be huge, coupled with the fact that this allows different forms of transactions to occur, from leading generation to crowd sourcing, your 'site' on Google+ could cover it all.

And, the real kicker:
Google+ and AdWords = a viable, trackable and ROI effective monetization model for social media.
Gone are the days of trying to justify the value of a 'Like' on Facebook or a retweet by an influencer on Twitter, with AdWords contextual targeting advertisers will be able to target Google+ the same way they do with Gmail.

Added to this is the kind of demographic data (age, sex, interests, +1′s) that Facebook has previously only been privy to -- which makes targeting your ads in a social media environment so much more effective. As an addition, if it's reporting you're after: consider that linking AdWords to Analytics is done fairly easily as it is.

In the bigger scheme of things, Google+ is a one-stop shop for all of Google's amazing (yet currently disparate) peripheral applications. Given a bit more time, these speculations could be the death knell for some of the more favored social media entities.

Graeme Lipschitz is a Business Development manager at Clicks2Customers.com. He has previously worked for Google UK and Google South Africa as a lead account strategist, growing accounts in the Travel, Finance and Retail sectors.

Mr Levy says Google is now in the hands of "a true corporate radical."

In an article for Wired, "Larry Page Wants to Return Google to Its Startup Roots" he reports that Mr Page has said many times, that he has always "wanted to change the world."

He sees the historic technology boom as a chance to realize such ambitions and sees those who fail to do so as shamelessly squandering the opportunity. To Page, the only true failure is not attempting the audacious.

Interesting stuff.

So what will be Mr Page's audacious ideas? That's not clear yet. Whatever it is, he'll be taking about 25,000 staff, tens of thousands of shareholders, and hundreds of millions of users on the ride with him.

Will this distract Google? Will it take its eye off the ball?

Google occupies a tremendously important position within the global economy, it's ability to continue doing what it does best, affects huge volumes of global commerce and many millions of businesses.

My concern about the "corporate radical" Mr Page is that improving search and contextual advertising is not very glamorous, it certainly doesn't change the world but it's hugely important to all Internet users.

Will it be important enough for Mr Page's ambitions? It doesn't look like it, he's shown interest in everything from space flight to nuclear reactors.

I'm sure that he has an imaginary Wikipedia page from the future in his mind, and it doesn't include something like this:

"Larry Page resumed the CEO position on April 1, 2011, where he spent the rest of his years honing his Page Rank algorithm, incrementally improving the search experience for Internet users ... searching for skateboarding cats and cheap coupons."

My concern is that the road to hell is paved with good intentions and I'd rather not be in the same vehicle as Mr Page. But because of Google's dominance -- we are all sitting in the passenger seat.

But shouldn't Mr Page "change the world" somewhere else? After all, Bill Gates does it through his foundation, not through Microsoft.

I'd advise Mr Page to head up Google Foundation and leave the mundane work of improving search to those that are comfortable with more modest ambitions.

Otherwise, expect more self-driving cars, neighborhood nuclear power stations, and whatever else Mr Page thinks is a world changer.

Or, maybe there's not too much to worry about?

Mr Levy writes that Google staff have figured out ways of dealing with Mr Pages' "nuttier instincts."

... Googlers have learned that the best way to counter some of his more problematic idiosyncrasies is not by having a frank discussion but through misdirection. For instance, Wesley Chan, a top product manager ... has learned that instead of arguing his case with Page, a better strategy is "giving him shiny objects to play with."

If you want Google to remain Google, please send your shiny objects to: Larry Page, Googleplex, Santa Clara, CA 94043.

The partner sites are part of Google's AdSense network and include large media companies such as The New York Times.

Google's own sites, such as search, gmail, etc showed 39% growth in the most recent quarter compared with the year ago quarter, to $6.23 billion.

Google partner sites grew at nearly half the rate: just 20% compared with a year ago, to $2.48 billion.

This huge disparity between the growth rates of Google sites and partner sites is without precedent for most of its history. For example, in 2010, Google sites never exceeded the growth rate of partner sites:

- In Q1 Google sites grew 20% and partner sites grew 24%
- In Q2 Google sites grew 23% and partner sites grew 23%
- In Q3 Google sites grew 22% and partner sites grew 22%
- In Q4 Google sites grew 22% and partner sites grew 24%

Yet in Q1 2011 Google sites' growth jumped suddenly and without any explanation: Google sites grew 32% and partner sites grew 19%.

For some strange reason no one has picked up on this or noticed this huge change in its business model. There is no explanation from Google or Wall Street analysts that I could find.

The analyst call seemed focused on Google+, which is not a business. It serves as distraction from what appears to be a fundamental change in Google's business model.

The payments to Google partner sites are not audited by any independent third parties. Google says it pays out about 80% of AdSense revenues it receives to its partners but not evenly. Some receive a higher percentage while others get much less than 80% because of special deals with large publishers.

This loss of growth parity with Google sites could cost Google partner sites more than $1 billion in lost revenues in 2011.

If Wall Street models expected near parity in growth levels then it's no wonder that Google has managed to handily beat analyst earnings estimates. It certainly makes new CEO Larry Page look good.

Why are Google sites suddenly growing at nearly double the rate of partner sites when they have historically maintained near parity? What changed that could have produced such a massive boost?

By Nur Bremmen, MemeBurn

It's not easy to run an online content business in an age where everyone is a publisher. Everyone is doing it and there's never been competition in the content business like this before.

If we cut through the hyperbole and the evangelism, we're left with the simple fact that online advertising, while promising, is not making the same bucks as its traditional media counterparts.

The model is still evolving and can be confusing at times. So what is the future of content and online advertising?

Memeburn got the answers from Google's content Tzar, Peter Barron. He spoke about paywalls, Google News, filtering news by social recommendations, and the future of online advertising.

Barron has been Google's Director of External Relations for Europe, the Middle East and Africa since January 2011. He joined Google in 2008 and was previously Director of Communications and Public Affairs for north and Central Europe.

Before joining Google, he was editor of BBC2′s Newsnight program from 2004-2008 and worked in TV News and Current Affairs for nearly twenty years. He has also been deputy editor at Channel 4 News and Tonight with Trevor McDonald and devised and edited the BBC Current Affairs drama-documentary series.

What is the future of online advertising in a publishing context -- where are we headed?

Online solutions for publishers won't be limited to one format. We're working with publishers on a variety of business models online, including advertising, subscription and others. Through experimentation and the creation of a wide range of products, we believe journalism will be able to continue to thrive in the online era.

Do you see a time where publishers are no longer selling advertising themselves and just focusing on content creation, i.e. advertising happens all through a third party ad network like AdSense?

Again, we believe that the important thing is to have a variety of models available. Ad networks carry certain advantages for publishers, but some publishers may prefer to build their own technology for ad serving.

Why does there appear to be such an adversarial relationship between online media and Google? - O'Reilly once referred to Google aggregation of publisher content as the "Napsterization" of content?

I think our relationship with the news industry is improving all the time. We have been speaking and collaborating with publishers in recent years to try to find online solutions, and I think most in the news industry recognize that.

Our users want to find high-quality material online, and so we are working with publishers around the world to help increase traffic, readers' engagement and to find more effective ways to monetize content, whether that is through ads or charging for content. We believe that working together is a win-win scenario.

Why do you think Google was accused of "Napsterizing content"?

Google News doesn't violate copyright laws. We show just enough for users to identify the stories they're interested in--a headline, short snippet and a link to the publisher's site--and we direct users to those news sites to read the stories. This is fully consistent with copyright law.

Google Search and Google News are a great source of promotion, and send about four-billion clicks a month to the websites of news publishers, but if a publisher doesn't want to appear in our index all they have to do is implement simple technical standards such as robots.txt in order to remove their content.

How can Google help cash-strapped online publishers?

Google wants to help create a virtuous circle for publishers: more, better engaged users; generating more revenue; enabling greater investment in higher quality content. Google drives a lot of valuable traffic to news organizations' websites for free -- it helps people discover the content these publishers make available on the web.

Each click is a business opportunity, offering newspapers and other publishers the chance to show ads, register users and win loyal readers.
Google tools for publishers include:

-AdSense for relevant text and display ads

-DoubleClick ad-serving tools for showing display ads

- AdExchange for maximizing the value of ad space on an impression-by-impression basis

-YouTube channels, video embeds and YouTube Direct

- Fast Flip for magazines, newspapers and web publishers

-Living Stories to experiment with displaying news, now open sourced

- News Archives for newspapers and magazines

- One Pass for payments and authentication across platforms

In many ways, Google has leveled the playing field, allowing new and niche online publishers and individual blogs access to vast audiences -- can you comment further?

The internet lowers barriers and enables publishers large and small to find new audiences and create revenue. We think this is fantastic as it enlarges the potential market for content creators and publishers, and increases the amount of choice available for consumers.

At what point will there be too much choice and too much information?

People always have their mechanisms for winnowing down choice. For instance search engines, social networks, friends' recommendations and other sources provide consumers with ways of managing the otherwise overwhelming amount of data out there.

The Internet gives us the unprecedented potential to bring the world's cultural material to the fingertips of anyone with an Internet connection; we will use technology to make all that information manageable.

Where do you stand on the paywall debate? Should publishers charge for their content?

It's really up to news organizations to decide if they want to charge for their content online. And it's up to consumers to decide if that content is worth paying for.

How can Google help here?

Google helps connect those publishers and consumers. It's important to remember that through programs like Google One Pass and First Click Free, news publishers can charge for their content while at the same time ensuring that it's discoverable through Google--these two are not mutually exclusive.

We send billions of clicks to news publishers' websites every month and have lots of advertising tools to help publishers make money online. We're also talking with publishers to figure out if Google technology can help with some of the technical challenges of charging for content online, like authentication and billing.

Paywalls -- we're getting an acute sense of déjà vu. Apart from the WSJ and FT, they largely failed in the early 2000s, why would they work now when they failed before and there is now even more free content choices online?

Some people already are paying for content, and we think more will as long as the content is unique and adds value to consumers. But it's up to individual publishers to decide whether they want to charge for content, just like it's up to consumers to decide if they want to pay for it.

Our goal is to help connect those publishers and consumers. It's important to remember that news publishers can charge for their content while at the same time ensuring that it's discoverable through Google -- these two are not mutually exclusive.

Do you think the pronouncements on the death of print are greatly exaggerated? And the traditional TV broadcast?

Print journalism is clearly facing difficulties at the moment. Our focus is on helping to provide technological solutions to help make the transition online a successful one. We believe that online holds great opportunity, and that what is needed is a variety of new products and business models to enable a thriving online journalism ecosystem.

Would Google News ever carry advertising?

For Google News, the primary goal is not to generate revenue but to help users find high-quality information produced by journalists.

Currently, advertising only appears on Google News in the US. We have no plans to place advertising on Google News elsewhere.

Also, we should note that news results are not big earners of revenue, as advertisers are far more likely to want to advertise against searches for "Sony TV" than "Forest fires in Germany".

Photo credit: BBC

For example: The 20% time myth.

The myth might have been that you basically get a day off a week to do whatever. It is still work. And you’re still held responsible for what you do. So yeah, you can do whatever you want to, but you have to actually want it and it is still for Google...

Also, it isn’t always the next big product. Hundreds of engineers at Google spend their 20% time on mundane things like promoting test driven coding, cleaning up old code, mentoring new engineers or just helping out on another project that needs helping.

It's his description of the culture at Google that's particularly fascinating, such as the insistence by co-founders Larry Page and Sergey Brin to always "Think big."

Thinking big sounds great, but most big ideas start small and go from there. Google itself started from the notion that it would be interesting to look at back links for pages. Twitter started out as hardly more than a group SMS product that also works online. Facebook explicitly restricted themselves at first to one university.

There is a very strong culture of keeping secrets with the outside world but being totally open inside the company.

There are very few internal secrets and that works because the rule is that you don't talk about anything to outsiders. Living as an engineer in this peculiar world with its own technology stack and ideas about technology is very exciting especially in the beginning. There is so much to learn, so many ideas to explore.

Google has done its bit to keep the web open and to fight anybody trying to turn it into a so called walled garden. But being inside is a bit like being in a walled garden. You can't discuss interesting developments inside with people on the outside of course, but it is even hard to partake in discussions outside...

Over time this starts to outweigh the advantages of being on the inside.

I found this blog post via Dave Winer on Scripting News, where he writes that Mr Osinga helped him understand "the process that led to failures like Buzz and Wave."

However, as an outsider, I think the failure of the many Google services that were launched and then mostly abandoned is due to a chronic failure to understand PR and marketing.

Mr Winer comments that Google's idea of a product launch is:

just invite Scoble in for a demo (figuratively) and the rest is taken care of by the press and bloggers.

That works pretty well, Robert Scoble is great at videoing a product demo and posting it quickly, and there are lots of press and bloggers that help bring lots of attention to every new Google announcement.

But what about the day after the launch? What about the following weeks and months?

Robert Scoble and the rest of the mediasphere have moved onto the next thing, the next company, the next launch.

Build it and they will come...

Google doesn't seem to recognize the need for marketing around its products, it doesn't appear to have a marketing strategy beyond launch day.

I get tons of pitches from small and large companies about their new product launches. And then I get lots of follow on pitches for months afterwards about those products as those companies try to maintain the momentum of users and media coverage.

I never get follow on pitches from Google.

Engineers hate "marketing"

I attribute this to Google's engineering culture which looks down on marketing. Among software engineers "marketing" is widely disdained. For example, a software engineer friend of mine often criticizes Apple and its products, saying that it's "just marketing."

It's as if "marketing" can just be taken off a shelf and simply added to something, and that it doesn't provide anything of intrinsic value. It's "just marketing."

Google has good reasons for its attitude towards marketing because its search engine succeeded without the need for any promotional activities of any kind.

When I was at the Financial Times, before Google IPO'd, I'd meet with the founders and other execs and they often loved to mention the fact that they won millions of users with no marketing budget. They didn't spend a penny.

That mind set clearly continues today and is deeply embedded in the culture. I see it as the chief reason that the majority of Google's services have failed to succeed: There's no marketing strategy.

The products are good. And the launches are high profile. But if there is no marketing follow through they will die among the noisy marketing clamor of a gazillion other companies trying to gain the attention of media and potential users.

It's a noisy world

And the noise level is much higher today than when Google launched its search engine. It's a much different world, and it's one where marketing has become extremely important. It's not "just marketing." It's probably the single most important component of any product. But not at Google.

I don't see things changing. Larry Page recently took over as CEO and his reorganization of the company is strengthening the engineering culture, and lessening the influence of non-engineer executives.

This is great news for other companies. It means they have a better chance to compete against some of Google's products and carve out a profitable business.

And Google doesn't need all of its products to succeed because it makes 98% of its money from just one product: advertising. Yet it fails to understand the value of marketing. It's a delightful irony.

- - -

Douwe Osinga's Blog: Leaving Google - part 2

Scripting News: Understanding Google

I've been helping Murray Newlands with his San Francisco Blog Club meetups, which are great for helping to educate a mostly newbie group about blogging.

Last night the featured speaker was Chang Kim, product manager at Google's Blogger.com. Trouble is he was a no show. He didn't call to say he was running late. Nothing.

Murray had to scramble and he put on a presentation about ways you can monetize your blog. He did a really good job especially given that he had no time to prepare.

At the end of Murray's presentation Mr Kim turned up but everyone had dispersed to network and chat. He still wanted to put on his presentation but I was out the door. Before I left I asked him what happened.

I got stuck in traffic, he said. Oh, well, why didn't you call? (or leave earlier for that matter -- check Google maps for traffic density).

I DM'd, he said, looking at me as if I was crazy about picking up the phone to make a call instead of a DM.

He really thinks Twitter is the best way to communicate when you are running late? Wow. I guess at Google everyone is sitting on their Twit streams all day long, so that's the best way to communicate if you can't make a meeting.

I wanted to ask him about Blogger and how it seems to have become a haven for scam sites that scrape content and serve it up as original. Google then promotes it over the original content sites in its search rankings and gets revenues from the AdSense ads it runs on the site.

And the recent Panda algorithm update seems to have had the effect of boosting this lucrative scam.

Blogger has had a scammy reputation for a long time. It is relatively easy to buy scripts that automatically create blog sites on Blogger, build up backlinks, and hook it up to Google AdSense and watch the money come in.

Sites that have been scraped in this manner can apply to have Google take down the sites through takedown notices but it's a tedious and expensive process and when you've got thousands of pages of content being illegally copied it's nearly impossible. Plus, the scammers just move location and do it again, and again.

Bt when Google announced its Panda update of its algorithm, there was a lot of hope by web masters that Panda would do what it promised: reward original quality content and punish the scrapper sites. But it didn't. In many cases, It did the reverse.

Here is a great example. Hubert Nguyen and Eliane Fiolet run Ubergizmo, one of the top gadget web sites with more than 4 million monthly pageviews. The Panda update vaulted the scrapper sites over their's in the Google rankings!

They wrote about it here:

When Google's Panda Rewards Content Theft | Ubergizmo

It seems that Google's algorithm cannot recognize Ubergizmo.com as the original source of our articles, and is treating our site as an automated spam site -- yes, that sucks.

We get it: for an algorithm, it's really hard to figure out who is the real author of the content, but it was working fine before, so we can only conclude that the "Panda" update has a hand in this.

Additionally we're in Google News, so that could be one more signal that our site does not steal/copy content. Heck, even Matt Cutts, the head of Google's Web Spam team has linked to Ubergizmo from his blog a few months ago ... Surely, that's a sign that we're not a spam site. Right?

But here we are, our content treated worse than spam and ranking below those hundreds of automated content-stealing sites. As technologists, we measure the difficulty of the task, but Google got it right before. And as far as we can tell, Google is giving our whole site a "black eye" (like a Panda?), so even new articles immediately rank lower than spam.

What the hell is going on at Google?

Google had to run an update to Panda a few weeks after releasing it because it wasn't affecting the ranking of Demand Media and other content mills. How hard can that be? They know the IP addresses!

Then Google harms the original content producers, like Ubergizmo. Google knows that Ubergizmo has been around for years yet it promotes the new scam sites over the old.

And there are many examples of this happening, you can see it on all the webmaster boards.

Yet Google stands by its Panda update.

What the hell is going on?

Is Google deliberately doing this because it boosts traffic and revenues to its sites such as Blogger?

Google missed its estimates in the most recent quarter so it certainly looks like it has an incentive to boost the scrappers over the legitimate sites.

If you look at Google's recent quarter, revenues by Google sites suddenly jumped an astonishing 32%. Yet for all of 2010 growth was in the low 20% range.

What happened in the quarter that could explain this miraculous jump?!

Google has not offered an explanation and Wall Street analysts did not ask about it on the earnings call.

Something fishy definitely seems to be happening. And it's another black eye for Google.

It's rapidly losing credibility and wearing away at the store of goodwill it used to enjoy.

It's like watching Google crumple and buckle in a slow-motion car crash -- except that as website publishers and users -- we are also in the passenger seat.

---
Please see: When Google's Panda Rewards Content Theft | Ubergizmo

Google's Search For Quality... And The Art Of Motorcycle Maintenance - SVW

It's a quick way of finding the most egregious gamers of the system.

And Google's recent release of its "Panda" algorithm update was designed to find quality sites and raise them in the search rankings.

But Panda is causing a lot of pandaemonium for all types of businesses, those that played by Google's "white hat" SEO rules, and those that didn't.

The Panda update was supposed to punish sites with low quality content, such as content farms churning out millions of articles or videos of mostly mediocre quality. And to some degree, Panda did what it promised and demoted some of the more visible content farms like Demand Media.

Sistrix, which sells software that monitors keywords and traffic, published a chart showing Demand Media's ehow.com as the biggest loser.

Yesterday, Demand Media acknowledged there was a negative effect from Panda but that the drop in traffic was "overstated" and that its financial forecast remained unchanged. However, some investors were discouraged, which led to a drop of around 13 percent in its stock price.

For large companies such as Demand Media, it is easier for them to deal with algorithmic changes because once they figure out the new rules of the game, they can scale that across a massive amount of content.

However, smaller businesses, especially those that thought they were playing by the official rules that Google sets and still got punished in the rankings -- are less well equipped to deal with the loss of a good ranking. It's another example of how the Internet favors scale in online business.

Andreas Ramos, author of Search Engine Marketing, and an executive at search engine marketing firm Acxiom, told SVW: "We haven't really noticed anything one way or the other for our clients. Most of these updates are like that. They don't really affect the large corporate sites, which have top presence anyway, since Google is biased towards large brands. It's the small sites that get knocked around. Google has been down ranking the legitimate small shops because they feel that consumers prefer big brands (well, actually, consumers do prefer the big brands). They end up on page 2 and nobody goes to p. 2, so their revenues collapse."

Rich Skrenta, CEO of Blekko, a human curated search service told SVW: "It seems like ehow.com has fallen a bit but is still on page one. For the most part, the Panda updates have shuffled the sites in 1-10, but the same players are all there. The net effect for users is minimal. One content farm has been replaced with another. It's a game of whack-a-mole."

While industry observers are skeptical about the changes, Google is making a bid deal about how "quality" is important to web site ranking. Amit Singhal, Google Fellow, recently wrote about the change in a blog post:

Based on our testing, we've found the algorithm is very accurate at detecting site quality. If you believe your site is high-quality and has been impacted by this change, we encourage you to evaluate the different aspects of your site extensively.

So the answer is simple: raise the quality of your content and claim your top listing in Google's search rankings.

But what is quality content?

Take a look at some of these comments from the Sistrix blog in response to the Panda upgrade:

Rose:

The unfortunate thing is that it did not only affect the big guys, but more so the little ones. I have spent nearly two years writing REAL, unique content articles. I used Ezine Articles and Hub Pages to post them. They got hit and now my site went from PR3 to PR 0....NEARLY TWO YEARS, AND HOURS AND HOURS OF WORK DOWN THE DRAIN!

JimF:

My website has lost tons of traffic in this algorithm change. Yet it is nonprofit, I am considered an expert in my niche, all the content is entirely original and written by me, and it gets 100K unique visitors a month. I'm at a loss to explain how my SERPs (and traffic) have dropped in this algo change.

Rod:

Content farms down, and quality sites up, MY FOOT! I see more of the exact opposite, where original, quality content took a big hit, while more spammy sites remained, or floated to the top.

Markus Bauer:

Google is definitely not able to "understand the value of professionally-researched and well-written content" in an algorithmical way, but they are able to read the signs (respectively interpret the signals) indicating the opposite.

Mr Bauer makes a good point: can Google's algorithm be made to understand the difference in "quality" between one piece of content and another?

Google often states that its goal is to find the most "relevant" link -- that's not the same as finding the best "quality" link.

After all, its search results are based on evaluating relevant data such as location, age, gender, surfing habits, and more recently, social networks.

"Relevant" is clearly different from "quality". Yet in the Panda update "quality" assumes a greater weight in Google's calculations.

But how can "quality" be algorithmically defined?

It's difficult enough to define using language, which has room for lots of ambiguity. So how can it be defined numerically?

In the popular book of the 1970s: "Zen and the Art of Motorcycle Maintenance" by Robert Pirsig, the protagonist's search to define the meaning of "quality" is a fascinating metaphysical journey...but one that ultimately leads to insanity.

We can't afford an insane Google, it's too important to global commerce.

And we can't afford to have millions of businesses trying to figure out what "quality" means to Google -- it's an insane waste of time trying to guess what Google's secret algorithm is measuring.

I'm very much of the opinion that businesses should optimize for their customers and not for the searchbots -- let the search engines optimize themselves.

If you optimize for your customers they will come back again and again. They know where you live.

If you rely on SEO for your traffic that's like smoking crack -- you have to keep doing it.

There is nothing about SEO that improves the user experience of your site. But if you invest money into improving the user experience, it will build loyalty and traffic that is independent of what Google does, or doesn't do.

Surely, the best strategy for any business has to be Google independence.

Google [$GOOG] typically relies on partner sites for about 30% of total revenues but over the past year it has managed to reduce that to 28%.

Many Google partner sites have been criticized for being spam sites and content mills. But there are also many respectable news sites, such as The New York Times, in the partner program.

In the most recent quarter Google paid its partner sites $1.7 billion, up 19% from a year ago.

However, revenues to Google's sites jumped 32% from a year ago. This represents an unusually large change in relative growth rates.

During 2010 Google sites revenue growth was equal to, or smaller than, growth by its partner sites:

- In Q1 2010 Google sites grew 20% and partner sites grew 24%
- In Q2 2010 Google sites grew 23% and partner sites grew 23%
- In Q3 2010 Google sites grew 22% and partner sites grew 22%
- In Q4 2010 Google sites grew 22% and partner sites grew 24%

- In Q1 2011 Google sites grew 32% and partner sites grew 19%

Google has not offered an explanation for the large difference in growth rates following a long period of parity.

If partner sites had maintained their near lockstep relationship with Google sites, they would have boosted their revenues by as much as $214 million in the most recent quarter.

If this continues in 2011 they could miss out on nearly $1 billion in revenues.

Why would Google sites grow so much faster than partner sites in Q1?

What happened in Q1 that Google partner sites lost their growth momentum?

It's a massive 68% difference in revenue growth rates when for all of 2010 Google sites never grew faster than partner sites.

With the move, Google would get about 6,000 patents covering wired, wireless and digital communications technologies.

Google's top lawyer, Kent Walker wrote:

Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories.

Foremski's Take: The PC industry had a problem when it was starting out in that PC technologies represented a basket of technologies that had lots of IP belonging to many companies.

If would have been a nightmare to figure out all the IP ownership and that would have had a chilling effect on the development of the entire industry.

But there was a solution: the key players in the PC market would cross-license their patent portfolios to each other. This provided each with protection from legal challenges because they had automatic licenses to similar IP. And it also provided an umbrella of protection for PC industry innovators, which continued to lower PC prices and expand the market without having to worry about a legal minefield.

Will Google do the same? Could Google do the same and use its expanded patent portfolio to shield other innovators from dubious lawsuits so that innovation in Internet services can continue without interference from patent trolls?

After all, Google does benefit from continued innovation by third-parties, in acquisitions; and in others using its services, such as its maps and payments services. Startups don't have patent portfolios large enough to protect their work.

Google could use its clout to protect the work of startups from legal challenges. Or it could use its IP to attack startups that might challenge its revenues.

It's a double edged sword and it'll be interesting to see how it is used.

But will Google win its $900m bid?

It's strategy is puzzling. It's taking a big risk in publicizing its interest in the Nortel portfolio. Its bid is a "stalking horse" in that it acts as a reserve price for an auction that takes place in June.

Google could have waited until the auction and then made its move. By advertising its interest in the patents it reveals areas in its IP where it is weak.

For example, hedge funds might get together to outbid Google because they could then sell licenses or pursue successful legal challenges and recoup more than their outlay.

Google has done something similar in the past with multi-billion dollar bids in auctions for wireless spectrum. It wasn't interested in winning the auction but it was interested in influencing the market in its favor.

Is Google doing something similar by publicizing the Nortel bid so far ahead of the June auction? Or is it a strategic mistake?

Vivek Wadhwa, a visiting scholar at UC Berkeley (photo) kicked things off by saying that Google's results were polluted and that Google itself was financing the "pollution" through its AdSense advertising network.

Rich Skrenta, CEO of Blekko supported Mr Wadhwa's claim that Google results were polluted and he said that Google was hiding behind its algorithm and saying it couldn't do much about the number of spam sites. He also claimed that Google employed thousands of people to rank web sites.

I asked him for the source of his claim about Google's human ranking of web sites. He said it was well known in the industry and that it could be found on SEO blog sites. I protested that this was not a reliable source.

Quentin Hardy, Forbes columnist, pointed out that if Google was as bad as everyone was saying then how come people still use it? After all, people used to switch search engines regularly before Google came into being. I remember Excite, AltaVista, HotBot...

Chris Tolles, CEO of Topix said that it was important to reduce the amount of traffic coming from Google. He said Topix used to get as much as 80% of its traffic from Google but that this was now down to 40% because people come directly to the site which is higher quality traffic.

There was some discussion about how bad Google was compared with asking your social network. But it is becoming clear that Internet users will use a variety of search methods to find what they need, one search engine for everything seems like a dated concept.

Jeff Atwood from Stack Exchange said that Google was unable to determine the origin of content and that some scrapers were ranking higher than his sites in search rankings. His users have been complaining about this issue.

I pointed out that Google now has a special tag that webmasters can use to show original and syndicated content but that few people use it. However, it seems to me that we should let the search engines optimize themselves rather than have to use no-follow tags, and search optimization techniques. Content should be optimized for your readers and not for the search bots.

Mr Skrenta said that there is a flood of mediocre content coming. If you go to Mechanical Turk you can find lots of people paying tiny mounts of money to commission huge numbers of articles.

It was a fun discussion although I'm not sure we made much progress on defining the future of search. I heard a lot from Blekko about how bad Google is at search but nothing about Blekko itself.

- Flights from Seattle to Salt Lake City are down about 7% from last year, as are flights from Dallas to Jacksonville. Deals can also be found to Cancun, Mexico's spring break hotspot, with fares from Philadelphia down 8% and fares from Atlanta down 16%.

- Lowest average fares: San Francisco to Tampa, $300

- Lower airfares this year: San Francisco to Paris (-9%)

- Highest price increase this year: New York to Vancouver, Canada, $596 (+64%); Philadelphia to San Juan, Puerto Rico, $939 (+54%).

Travel tips:

You can save $25 to $125 per ticket by travelling from a Monday to Monday or Tuesday to Tuesday instead of from Saturday to Saturday. It's best to get a head start on travel and schedule your trip for the first week of March rather than waiting until mid-April to escape the grind. Traveling during the first or last week of March as opposed to mid-March can save travelers $25 per ticket. Traveling in early April as opposed to the middle of April will save travelers an average of $30 to $50 per ticket. Use the Bing Travel Flexible Travel graph to help determine the best days to travel.

Google posted:

Official Google Blog: An update to Google Social Search

...if you're thinking about climbing Mt. Kilimanjaro and your colleague Matt has written a blog post about his own experience, then we'll bump up that post with a note and a picture.

But there will be no changes because there is essentially no change in the management of Google.

People forget that Mr Schmidt held the title of CEO in name only. The decision making was shared between the founders: Larry Page and Sergey Brin; and Mr Schmidt in what they termed a "triumvirate."

Here it is explained in extracts from Larry Page's 2004 Founders' IPO Letter:

Eric has the legal responsibilities of the CEO...

...

We run Google as a triumvirate. Sergey and I have worked closely together for the last eight years, five at Google. Eric, our CEO, joined Google three years ago. The three of us run the company collaboratively with Sergey and me as Presidents.

...

We hired Eric as a more experienced complement to Sergey and me to help us run the business.

Mr Schmidt always held the minority vote against Messrs Page and Brin. And there is nothing to suggest that they have dissolved their management structure beyond removing Mr Schmidt.

Mr Page gets to hold the CEO title for legal reasons but the power sharing with Mr Brin is still there. Both founders will continue to make the key decisions.

Why would we expect anything to change at Google if there is no new management?

The only thing that's changed is that the founders have regained some of their lost dignity. Mr Schmidt was brought in as CEO to provide the founders with "adult supervision" as he termed it. Google's chief investors believed that the coming IPO would do better if a veteran Silicon Valley executive was seen to be at the helm.

Continuing to have "adult supervision" ten years later when you are nearly 38 years old must be embarrassing for the founders. Especially since wonder kid Mark Zuckerberg has been doing great without having any official adult supervision. He's tripled the value of Facebook in less than a year and he's just 26.

This is the real reason Mr Schmidt was shifted, imho. And it's all plain to see in Mr Schmidt's tweeted announcement:

"Day-to-day adult supervision no longer needed!"

Mr Page will become CEO and Mr Schmidt becomes Executive Chairman.

Mr Schmidt Tweeted:

Day-to-day adult supervision no longer needed! http://goo.gl/zC89p.

Mr Schmidt was brought in as CEO in August of 2001 because of pressure from Kleiner Perkins, one of Google's chief investors. His goal was to provide "adult supervision" to the young founders as Google was preparing for an IPO.

The VCs believed the IPO would be more successful if investors saw that Google was headed by a veteran Silicon Valley executive. The company created a "triumvirate" where the founders and Mr Schmidt shared responsibility for executive decisions.

Many years later, Google still maintained its "adult supervision" which must have rankled the founders, now nearing 38 years old. The situation must have become especially galling in recent months since Mark Zuckerberg, the 26 year old founder of Facebook is also CEO. He has managed to more than triple the value of Facebook in less than a year--without the need for any adult supervision.

One year ago I asked: Nine years later does Google still need 'adult supervision?' | ZDNet

The Google triumvirate has worked reasonably smoothly but there have been large differences of opinion between the founders and Mr Schmidt, especially over China. Mr Brin was in opposition to Google's entry into China and he advocated an end to its China operations, against Mr Schmidt's position that Google should overlook China's human rights record.

Mr Schmidt has served as a useful "lightning rod" at Google and he has consistently distracted the media from paying much attention to the founders. Sometimes Mr Schmidt's less carefully considered remarks have gotten him into trouble.

His unusual leadership style has attracted a number of critics. For example, Elizabeth Corcoran, senior editor at Forbes, once asked "Who's Really Running Google? - Forbes.com

...as charming as he is, Schmidt runs Google about as much as much as the Dalai Lama runs the world's spiritual life.

...he has defined his job not so much as leading Google but as running interference for it--placating the investment community, soothing nervous regulators and policymakers and doing whatever it takes to create a magical force field protecting Googleteers...

He hasn't had much success at "running interference" with Wall Street and policy makers.

- Google is facing increasing scrutiny from the US administration over possible anti-trust business practices. That’s despite Mr Schmidt’s very public support for President Obama.

- Google has run into big problems internationally with its books scanning project and with European anti-trust authorities.

- Its relationship with Microsoft is very bad, because Google actively opposed Microsoft's acquisition of Yahoo and other deals.

- Mr Schmidt has managed to upset newspaper companies both in the US and internationally. He has failed portray Google as an ally rather than as an adversary.

- Google’s relationship with Apple soured badly, especially after Google introduced its Nexus phone, and then dropped it. Mr Schmidt was forced to resign from Apple’s board.

- Mr Schmidt admitted that he persuaded the Google board to pay $1 billion more than YouTube was worth. Critics said that was to reward VCs who were investors in both Google and YouTube at the cost of GOOG's shareholders. Google is still trying to figure out how make YouTube profitable.

- Google has failed to diversify its business away from search and online advertising despite many acquisitions.

Mr Page will now have to step out of the shadows and assume a much more vocal and public role. That will be a challenge for a shy software engineer who is much happier working on engineering problems than schmoozing Wall Street analysts and building media partnerships with other companies.

Mr Schmidt was brought in as CEO in August of 2001 because of pressure from Kleiner Perkins, one of Google's chief investors. His goal was to provide "adult supervision" to the young founders as Google was preparing for an IPO.

The VCs believed the IPO would be more successful if investors saw that Google was headed by a veteran Silicon Valley executive. The company created a "triumvirate" where the founders and Mr Schmidt shared responsibility for executive decisions.

Many years later, Google still maintained its "adult supervision" which must have rankled the founders, now nearing 38 years old. The situation must have become especially galling in recent months since Mark Zuckerberg, the 26 year old founder of Facebook is also CEO. He has managed to more than triple the value of Facebook in less than a year--without the need for any adult supervision.

One year ago I asked: Nine years later does Google still need 'adult supervision?' | ZDNet

The Google triumvirate has worked reasonably smoothly but there have been large differences of opinion between the founders and Mr Schmidt, especially over China. Mr Brin was in opposition to Google's entry into China and he advocated an end to its China operations, against Mr Schmidt's position that Google should overlook China's human rights record.

Mr Schmidt has served as a useful "lightning rod" at Google. Sometimes Mr Schmidt's less carefully considered remarks have gotten him into trouble but he has consistently distracted the media from paying much attention to the founders.

Mr Page will now have to step out of the shadows and assume a much more vocal and public role. That will be a challenge for a software engineer who is much happier working on engineering problems than schmoozing Wall Street analysts and building media partnerships with other companies.

If search is becoming less useful then how will we navigate the web?

The answer is by curation, by using the recommendations of others acting as curators.

Paul Kedrosky writing on Infectious Greed:

... the re-rise of curation is partly about crowd curation -- not one people, but lots of people, whether consciously (lists, etc.) or unconsciously (tweets, etc) -- and partly about hand curation (JetSetter, etc.). We are going to increasingly see nichey services that sell curation as a primary feature, with the primary advantage of being mostly unsullied by content farms, SEO spam, and nonsensical Q&A sites intended to create low-rent versions of Borges' Library of Babylon. The result will be a subset of curated sites that will re-seed a new generation of algorithmic search sites, and the cycle will continue, over and over.

But we need good curation tools. The most comprehensive one I've found is Pearltrees (Pearltrees is a consulting client) and here are my reasons:

- Pearltrees allows you to curate anything that is found online. That's not true for most other curation services.

- Pearltrees has a team feature that allows groups of people to curate a subject.

- Pearltrees curation can be added to other Pearltrees, it is shareable and searchable; it is durable; it is automatically part of a community in ways that a "curated" list of sites on a web page isn't.

- Curation by itself is not an ideal substitute for search. You do need algorithms to help in navigation. And this is another area where Pearltrees has something unique: a powerful search algorithm that surfaces the content of similar Pearltrees -- which is a great way of discovering new, spam-free content.

But there is one area where curation cannot help search -- in real-time content. This is an area that will always be vulnerable to spammy SEO tactics because you need machines to index real-time content and that means being vulnerable to the many gaming techniques used by spammers.

The big question for Google is if it has lost the war with spammers or merely a battle?

Google can lose the war but it can never win it -- it's a war that cannot ever be won. Which means curation will become ever more important in our relationship to the Internet.

What would you curate? What's your expertise?

- - -

Here is a Pearltree on "curation" by author and teacher Howard Rheingold:

Curation
---

Please see:

Curation - The Third Web Frontier

Curation And The Human Web...

Aggregation Is Not Curation - There Is A Big Difference

... according to an unnamed insider who spoke with VatorNews. Neither Google nor Groupon could be reached for comment to confirm the report, but Vator's source is reliable and the report falls in line with the recent string of Groupon acquisition rumors.

Tuesday Kara Swisher at All Things D reported that her sources said that Google will pay $5.3 billion plus a $700 million earnout if Groupon meets sales targets.

... it is a killer move for Google-despite the high price-given it has long tried to enter the local advertising space, with decidedly mixed results.

The New York Times reported that its sources said Google will pay $6 billion for Groupon.

Google made an initial bid of $3 billion to $4 billion, these people said. But in the face of Groupon's resistance, Google raised its offer to $5 billion to $6 billion. The company is unlikely to offer more than that, according to one of the people with knowledge of the situation.

Foremski's Take:

The deal doesn't make sense for Google. Groupon relies on a large number of people to make the sales for Groupon to work.

Google is a business that relies on machines and algorithms -- not on managing large numbers of sales people.

Caroline McCarthy at CNet News makes a similar point:

Groupon's "secret sauce" is not its technology ... but its massive sales force and how that sales force is organized. It's not Google's usual cup of tea, but it's one of Google's own weak spots.

But she writes that Google needs to move beyond engineers and beef up its direct sales force. She quotes David Ambrose, co-founder of Scoop St, a Groupon clone, that Google might pay more than $2.5 billion because "Google has never really been able to do direct sales well at all."

I don't believe that Google can buy a direct sales force capability. If it does, that effort will fail. Google's culture is engineering based and the sales force will never have the clout of engineering.

Just because it makes sense to have a strong direct sales force doesn't mean that it makes sense for a company to acquire one. Company culture always trumps logic and reason. And company culture is the least agile part of any organization.

And Google's engineering culture is deeply wired. For example, Google has been encouraged by vocal observers to buy a newspaper, such as the New York Times. But again, something like that would never happen because Google doesn't want to manage editors, journalists, foreign news bureaus, etc. It knows how to manage servers and software.

At the bottom of every Google news page you see the following:

"The selection and placement of stories on this page were determined automatically by a computer program."

Placement was not determined by a person but by an algorithm.

Algorithms and machines are a far more scalable and profitable business than a people based business such as a newspaper, or Groupon.

In addition, the higher costs of doing business with a large sales force will lower Google's profitability and that will affect its stock price. In mid-morning trading Tuesday Google [GOOG] was down 4% or $23.45 to $558.66 in reaction to the news.

Microsoft's Bing outpaced Google in October, adding 0.3 percentage points to 11.5% market share.

Google increased its lead by 0.2 percentage points to 66.3%.

Second placed Yahoo! slipped by 0.2% percentage points to 16.5%.

Ask was in 4th place with 3.6% share, losing 0.1 percentage points.

AOL was in fifth place losing 0.2 percentage points to 2.1%.

Microsoft increased its number of searches in October by 7% compared with a 4% increase by Google.

More details are here.

Ask recently pulled out of the search market; it will be interesting to see which company will pick up its 3.6% market share. Are Ask users deliberately not using Google? That would mean a big boost to Microsoft in the November numbers.

The introduction of Google Instant has forced comScore to change the way it analyzes its results. This is explained here: comScore September 2010 Search Reporting Enhancements (comScore Voices)

Being a brand that is called up by Google Instant on the very first letter is now the height of search engine optimization (SEO). I took a look at what came up for each letter. Results will vary somewhat by your location.

A is for ... Amazon, AOL, Apple, ATT.

B is for ... BART, Bank of America, Best Buy, Bing.

C is for ... Craigslist, Costco, CNN, Chase.

D is for ... DMV, Dictionary, Droid X, Disneyland.

E is for ... Ebay, ESPN, Expedia, Evite.

F is for ... Facebook, Facebook login, Fandango, FIFA.

G is for ... Gmail, Google maps, Google, Great America.

H is for ... Hotmail, Hulu, Home Depot, HP.

I is for ... Iphone, Ikea, Inception, IMDB.

J is for ... Jet Blue, Jeremy Lin, Jamba Juice, Java.

K is for ... Kaiser, KTUV, Kayak, Kohls.

L is for ... Lowes, Lost, LinkedIn, Limewire.

M is for ... Mapquest, Myspace, MSN, Maps.

N is for ... Netflix, Nordstrom, NBA, News.

O is for ...Outsidelands, Orbitz, OSH, Office Depot.

P is for ... Pandora, PG&E, Paypal, Petco.

Q is for ... Quotes, QVC, Quicktime, Quinoa.

R is for ... REI, Ross, Redfin, Rosh Hashanah.

S is for ... Skype, SFGate, Sears, Southwest.

T is for ... Target, Twitter, Thesaurus, Travelocity.

U is for ... USPS, UPS, United Airlines, Utube.

V is for ... Verizon, Virgin America, VLC, Verizon Wireless.

W is for ... Weather, Walmart, Wells Fargo, Wikipedia.

X is for ... Xbox, XKCD, XM Radio, Xfinity.

Y is for ... Yahoo, Youtube, Yahoo Mail, Yelp.

Z is for ... Zillow, Zappos, Zipcodes, Zynga.

If you can get your brand into the one-letter list you are golden. This is now the holy grail of SEO.

The company said it performed extensive studies of users and how they interact with Google Instant plus extensive eye-tracking studies. They all showed a much improved user experience and a lot less time spent searching for the right page.

Google says it now has 1 billion users per week and that the time saved by users worldwide from using Google Instant is 11 hours per second. That's the equivalent of 350 million hours of user time per year, said Marissa Mayer, VP of Search Products and User Experience.

During the question and answer part of the launch, the Google team could offer no data on how the change would impact its advertising business beyond saying that what's best for the user is usually best for the advertiser.

This is shocking. Google makes a major change to the search service and the user experience -- yet has no measurement on how that impacts click rates on its adverts!

Let me say this again: Google makes a major change to the search service and the user experience -- yet has no measurement on how that impacts click rates on its adverts!

Those text ads on the side of its results page represent about two-thirds of its revenues. Any change to the structure of the search page has to impact the click through rate of its advertising for better or worse. Yet Google did not measure this impact. Wow.

It seems that the company is divided between those working on improving the search experience and the rest of the company that is trying to sell advertising. And there appears to be no communication between the two sides.

If I were a GOOG shareholder I'd be very concerned that the effectiveness of Google's advertising has been compromised. At the very least, as a shareholder, I would want to know that Google's advertising business has not been compromised by this major change in serving search results.

There must be an effect on advertising.

Think of it this way: If Google could guide me to my intended destination in the shortest time possible then the amount of time I spend staring at Google ads decreases. In this case, it decreases by 11 hours per second.

How is it possible that this will not affect advertising revenues? If I spend less time looking at a page with ads on it then surely that means less time spent clicking on ads?

And if Google has indeed studied the effect on advertising from using "instant" then why did it not offer supporting data instead of just saying that what's good for the user is usually good for the advertiser.

Google may have shot itself in the foot.

- - -

Please see: Will "Google Instant" Distract From Google Ads? That's What Eye-Tracker Data Shows...

But will this interactive search function distract users from Google ads?

During the 90 minute launch Google executives showed off the result of an eye-tracking study of users interacting with Google Instant. The dynamic nature of the search page forces users to look at the suggestions offered as they type, and user's eyes are drawn the area just below the search box towards the best choice in the results.

The eye tracker did not show any activity on the right side of the page where Google text ads are placed. These Google Adwords text links provide about two-thirds of Google's revenue and the majority of its profits. Google Adsense ads, which appear on third party web sites provide the rest of Google's revenues and far less profit.

The dynamic nature of the page, constantly changing as users type, forces users to concentrate on the search results as they are being presented.

This is far different from typing in a search term and then receiving a static page of results where the eyes are not drawn to any movement, and they can take in a much larger section of the page, including the text ads on the right.

Google executives said they expected SEO and advertising to continue as before and that a focus on improving the search experience usually helps its advertising.

However, if Google improves search to the point where people can get to the site they want with just typing in a few letters, there is less opportunity for Google to serve up ads on its search pages and receive clicks. Google does not make money from impressions but from clicks on its ads.

Google estimates that users worldwide are saving 11 hours per second by using the "Instant" version of its search service.

That means there is 11 hours every second that is not being spent looking at search ads.

It shouldn't take long for Google to see if the change to the new search format impacts its advertising. The Google Instant service is being rolled out throughout the day on four major browser platforms and the company will be able to collect a large amount of usage data fairly quickly.

It would not surprise me if the user data on this new service shows a big change in how users interact with its advertising.

Also: The "I'm feeling lucky" button, which has been on the Google search page since the first days of Google is on the way out. That's what Udi Manber, Vice President of Core Search told me. "There's a long answer but the short answer is yes, the button will be gone. The entire page is all about 'I'm feeling lucky.'"