TMW #043 | Paying for search, subscription regulation, and the role of data sharers.

Jun 6, 2021

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Would you pay to use Google Search? What would happen if subscription services become regulated? Would the role of a “data sharer” make analytics more influential in organizations?

All unpacked this week in TMW #043 along with the 15+ links of everything that mattered this week. Including Trump’s failed social media platform.

✍ Commentary

🔍 Would you pay for search? There’s no other technology that’s changed how companies market themselves online than Google search. Since 1997, Google search permanently altered the flow of information on the internet and has continued to control more than 90% of online search engine queries up to this day. Through every single evolution of the web, Google search has been there, crawling websites, indexing pages, collecting search data and building customer profiles to sell to advertisers. But what if Google search was available as a paid app, without advertising, and with extended features? Would people buy it and does it even make sense to offer something like this?

Neeva, a subscription-based search product offers something of interest to these questions in an interview with Sridhar Ramaswamy this week. Founded by two ex-Google engineers, the company’s view is that a market for a privacy-first and personalized search experience is something that’s worth paying for. Like most advertising businesses, Google search slowly minimizes value to the end-user while increasing the value created for the advertiser, and after time something like Google search becomes increasingly opposed to the interests of the people using the product. But search is different because every query is somewhat controlled by websites manipulating SEO to their advantage. Google just supplies the indexing technology and methodology to rank pages, which arguably has been the greatest achievement in information availability in history.

But who decides the best result for a query? It’s user-defined and experience-defined. But the problem is that this optimizes towards business incentives instead of the user. One interesting example is when you search for a disease, what you tend to get on page one are the medical blogs that are the best at SEO, not the ones with the most factual and relevant information. Yes, of course, content popularity is mostly user-defined, but Google also looks at things like backlinks, user experience on the platform (is it mobile friendly?), and other factors in how websites are ranked. It’s infinitely complex and necessarily opaque. And Google now has the skills, expertise, and technology to make the internet work for most people on its platform, and to make the prospects of a company like Neeva troubling.

But here’s the thing, a subscription product - while it could deliver something privacy-focused for users - makes little sense from a commercial standpoint. Here’s some napkin math. An estimated 1.6 Billion people search Google 3 - 4 times a day (arguably the best DAU metric in the world), and if a $5 monthly subscription existed, 1% of users signing up worldwide would result in about ~$700 million ARR. Compared to Google’s 2020 advertising revenues for search, I doubt there’s enough there to even maintain the platform itself.

There are also other challenges, Google search is the closest thing we have when it comes to a privately owned product becoming a public good. Life or death situations involve Google search, and literally, billions of people rely on it every day. So creating a paid search product would enable some people to escape tracking, but the majority of those who can’t afford something like this must surrender their data to Google to continue using the product. And while some assert that search is a form of a public good, like roads or internet infrastructure, the reality is that Google search is fundamentally an advertising business owned by a private company.

The other impact of Google search is the cottage industries it creates around it, like the SEO industry which is now worth north of $80 billion, creating whole new jobs for people in whole new categories to solve business problems that didn’t exist until relatively recently. In the early days, SEO was a strategy to coordinate each of the various search engines to help companies rank in each of them. Now, it’s mostly just optimizing what you can do on Google. And that’s a problem. As new companies like Neeva figure out how to monetize and reach a semblance of global scale, there will be new jobs to optimize each of these search engines. And if history can tell us anything, products like Google search which is continually optimizing for the advertiser over the user will only expedite a more diverse search landscape for marketers. Links: Paying for search. Neeva. SEO: $88B industry. History of SEO. Hubspot Google search metrics. Google’s $150B advertising business. Google 2020 10-K fiscal year report.

👩‍⚖️ Regulating paid subscriptions. This week Twitter announced Twitter Blue, a $5 a month subscription service to augment some features in the app. It’s mostly improvements on how the core app is used, which should probably just be free features. There are things like creating bookmarks, custom profiles, the ability to undo (but not edit)  a tweet, and a few other marginal enhancements. As a paid subscriber you'll still get served ads, and it doesn’t change how you interact with people on Twitter.

Another interesting thing that happened this week, the FTC in the United States has handed down a number of reviews into subscription practices as the methodology for billing customers has reached mass adoption by brands. Some of this is caused by constraints placed on advertising-driven news media, and consumer changes to online shopping caused by the pandemic, which has led to Americans holding more than 10 subscriptions to various services. But for companies like Twitter, there’s a realization that the ad-supported model is just not really getting them anywhere.

The subscription industry is set to grow to $1.5 trillion by 2025, according to a UBS forecast and more retailers than ever are moving towards this kind of model to promote customer loyalty, lower shipping costs, better service, and exclusive deals. The business value is clear, the subscription model literally allows you to connect your business to someone else's credit card making it easier to continue to charge customers, without having to let them know or even having your customers noticing in the first place. This is both a great experience (nobody likes having to pull out their credit card) but also an easy avenue for abuse. New regulations focused on the subscription economy will force more companies to create experiences that improve healthy spending habits and give more visibility to users. Links: Twitter Blue. FTC regulation. Subscription popularity throughout the pandemic.

📈Chart Of The Week  

The role of the data sharer. A recent report from Talend talks about a fairly novel role within the data analytics department that’s focused on bridging the gap between the data that’s analyzed and the message that data conveys. The data sharer is that role, someone who delivers data analysis to teams and works in systems to analyze data for themselves. According to this survey data, sharers take up 52% of the total analytics team, and on average they make better data-backed decisions and are more effective when working with data. Link

📰 Latest Developments

Facebook F8. The annual developer conference took a different approach this year. It’s a “refresh” going back to its roots. There’s a disconnect, however, as most of the announcements like the business API for messaging, the business suite app store, and switch to Pytorch, while interesting, don’t really talk to the company’s most pressing problems like managing on-platform misinformation, abuse, and privacy. Link

Confluent’s IPO. The cloud platform has been around for almost a decade as a way to manage data flows and streaming in Kafka. The company is effectively a wrapper and GUI for the open-source data management platform, making it easier to manage the technology. Confluent’s valuation is about $4.5 billion. They were early in the data streaming world, but the IPO reflects a sales-led business model that is becoming increasingly expensive. Link

Etsy buys Depop. Who would have thought that second-hand clothing is such a lucrative business? The sale went down for $1.6 billion. Depop is an eCommerce platform for used clothing, based in the UK. This is a very good overlap of product affinity, Etsy has its own used clothing sector, has tapped into the maker economy in a way that no one else has, and now will try to scale this part of the business through Depop’s straightforward eCommerce platform. Link

📚 Reading

IKEA’s digital transformation. The company set out to transition the business model onto digital channels about three years ago by hiring Martin Coppola (ex-Google, Samsung). The problems are pretty clear - eCommerce is 24/7 and stores are 9-5. Logistics was built around store fulfillment, not online. Coppola suggests that it’s not really a digital transformation, but rather a reframing on how IKEA does business holistically. Link

Airbnb’s experimentation mindset. This company takes a very different outlook to product experimentation. They acknowledge a few things: It’s about establishing causality, external factors will have the largest impact on product metrics, and isolating a single metric to evaluate success creates clarity. This feels like science at scale. Link

Google and fingerprinting. The identity solution for apps has always been a contentious type of technology. Fingerprinting allows for attribution between a click-through from a web link to an app download or in-app purchase. Apple has effectively shut down fingerprinting, but Google has been very opaque about its stance. Confusion reigns. Link

🔢 Data & Insights

LinkedIn state of sales. Interesting survey research from LinkedIn looks at how people are selling throughout the pandemic. About 77% of salespeople say that their company will be investing in business intelligence and sales-related technology in the next year. Surprisingly, about 50% of buyers said that doing deals remotely has made the process easier. Link

Apple and app store fraud. In 2020 the App store stopped $1.5 Billion dollars worth of fraudulent transactions through apps. Of this, about 3 million stolen credit cards were prevented from purchase and half a million developer accounts were suspended. The 30% app tax pays for this kind of safeguarding in the app store. Link

Measuring CX. An interesting report from Rackspace looks at how investing in digital experiences in apps leads to business outcomes. Their report states that investing in CX leads on average to a 1.6x increase in brand awareness, doubles customer retention, and LTV. And surprisingly it also increases employee satisfaction. Good reasons here to optimize towards experience over revenue or conversion metrics. Link

💡 Ideas

The Agile marketing manifesto. The original agile manifesto was created specifically for software development. Over the years marketing teams have been working towards gaining the benefits of the agile ways of working. The problem is that the principles of agile represent the inherent problems in software, not marketing. This is an attempt to right this wrong. Link

Retailtainment. Online shopping used to be its own category on the web. Now it’s ubiquitous. Shopping is being embedded into social platforms, messaging, and search. Here’s a deep dive into how eCommerce is encroaching into every corner of the internet. Link

The Martech canvas. In its fourth year running, the Martech canvas is a simple tool to arrange technology investments around business functions like commerce, media, content, experience, social media, management, and data. What’s interesting is how the overlaps work, one example shows how your system of record stretches across various business functions. Link (note, you’ll need to reach out to the creator to get a copy).

✨ Weird and Wonderful

QR Codes are 26 years old. The technology is about as old as Google, but it took a pandemic for it to take off. China has the most widespread adoption of QR codes globally, which validates the idea of QR, but in the west, it just didn’t make sense until contactless became a thing. Good idea or good timing? Link

The $100 Million Deli. As an accurate reflection of how insane the stock market has become, a deli store in New Jersey has exceeded a valuation of $100 million in the stock exchange this year. Many companies are riding a wave of meme stocks which reflects the disconnect between the valuation of a business and its actual value. Link

Trump’s failed social media platform. A WordPress blog that housed Trump’s Twitter-like rants shut down last week due to lack of web traffic. This also coincided with Facebook’s decision to ban Trump for another two years. If the former POTUS can’t build his own audience outside of the major platforms what hope do the rest of us have? Link FB banning.

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Juan Mendoza

Juan Mendoza is an expert in researching global media, marketing, data, and technology trends. He is the CEO of The Martech Weekly, a media and research brand with subscribers in over 65 countries.

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