Let's say you are a young father-to-be. It's 9pm and your wife has settled, uncomfortably, on to her favourite couch. Clearing her throat, she politely reminds you that you've been a bit distant lately, that you haven't done a hell of a lot to help her around the house. You cringe. She continues: she's eight months pregnant, for God's sake, and when are you going to get around to reading that copy of What to Expect When You're Expecting that she left none-too-subtly in your briefcase six months ago?
Now, you're in your den, avoiding dealing with the sheer terror of becoming a father by checking your e-mail for the tenth time in so many minutes, but a pang of guilt finally reaches your irresponsible heart. So you start searching the web, trying to get smart quickly. You Google "pregnancy baby" and head to the first link, Babycenter.com, where you read up on the eighth month.
You then find a link to an article that lists 10 things you can do to be a better husband. The fourth suggestion reminds you to read the books your wife has purchased, so you head to Amazon and buy another copy of What to Expect When You're Expecting, as you left the one your wife gave you next to the Gideon Bible on your last business trip. "I'll read it, I promise," you tell your wife, and then add, "I'm on Babycenter right now, in fact." Pleasantly startled, your wife springs off the sofa - well, lumbers, perhaps - and peers over your shoulder. In a flash of inspiration, you intuit that there might be something you could watch together on TV that relates to the whole parenting thing. "Let's see if there's anything on TV that might be good," you say.
You click over to your TiVo home page, which lets you manage your television service through a search-based interface. You search for "parent childbirth newborn" or something like that and find that there are five shows in the next week that focus on the course of pregnancy, three of them on the Learning Channel. You tell TiVo to record them all, noting that the first one will be available to download tonight, in half an hour, no less.
In the background of your computer, as you jump from site to site and page to page, several marketing-related actions are occurring. A cookie set by your local cable company notes that you've visited several sites that r marketing potentials - Amazon.com, TiVo.com, and Babycenter.com, all sites that indicate significant intent to purchase products or services. You've also alhat you intend to download five new programmes, and the system takes note of content tags associated with those programmes, cross-referencing them with your recent search history.
The cable cookie shares this information with a marketing application running in the background of your computer, perhaps as part of that Google Desktop Search (GDS) program you downloaded last year. Alerted by the marketing potential that your recent surfing has created, GDS instantly uploads new tags to Google's central advertising marketplace.
Up on Google's ad marketplace, millions of similar potentials are aggregated and presented to hundreds of thousands of advertisers for sale in a modified real-time auction. Most of those advertisers have preset their spending levels, demographic preferences and, most important, intent-based targeting profiles.
In the time it takes for an average Google search to finish - less than a second - several advertisements have already been sold against each of the five programmes you've selected.
Half an hour later, you and your wife turn on your television to catch the Learning Channel show. As it starts, a small box appears on the bottom of the screen, alerting you to several advertisements that have appeared in your feed. You pause the show, hit the ads button, and scan the commercials.
Only they're not just commercials; they're offers as well. The first is from Gerber for a free month's supply of formula. (Pass; you and your wife have agreed that breast-feeding is the way to go.) Next up is a Pampers ad offering a free box of diapers. (Sure, why not? You accept that one, clicking the box that allows the system to send your details to the Pampers marketing machine.)
Then comes the killer ad: "Click here for $50 off a Peg Perego Stroller. Ships in 24 hours!" Huh? you think to yourself. That's the one your wife said was the Mercedes of strollers. Maybe you can afford one after all. "Honey," you begin. "What do you think? Should we go for it?" Her eyes light up (you had said no to this exact request twice - $300 for a fucking stroller?!! were your exact words) and you click to accept the offer. Your wife snuggles into your side, pleased that, for once, her husband actually gets it.
Is such a scenario possible? While the details will inevitably vary, I honestly think it is not only plausible; it is inevitable.
For an advertiser like Peg Perego, such a scenario not only makes television advertising affordable; it turns the medium into a new sales channel. Instead of buying time on the Learning Channel on Mondays at 8pm (a content-attached purchase), Peg Perego will buy direct access to the intentions you have declared through a blend of your search history and your television watching habits. Once it is satisfied that you are a potentially high-value customer, it will then push advertising offers down the cable line to your digital video recorder.
The beauty of this scenario lies in how it changes the economic model of marketing. First of all, Peg Perego has never been a television advertiser because the medium has never lent itself to a high enough return on investment - the company relies mostly on word of mouth and distribution through a network of retail outlets for its sales. But because it can identify exactly who its customers might be, on the basis of intent, it can change its model completely, and view a marketing investment in television to be, well, not a marketing investment at all, but rather - this is worth stating again - a new sales channel. This in turn means that tens of thousands of marketers who otherwise may never have considered television a viable medium will soon see it as such.
That is the magic of intent-based marketing - it shifts marketing dollars from the unknown to the knowable. As Tim Armstrong, vice- president of advertising at Google, puts it, "search turns a cost centre into a profit centre". Think about that for a minute. The entire foundation of marketing - a $100bn industry driving, well, nearly every business on this planet - is shifting, slowly but surely, to a new model, one informed by the simple idea of people looking for things on a search engine. No wonder Jan Pedersen, chief scientist for Search & Marketplace at Yahoo, recently quipped: "We think of shopping as basically an application of search."
Marketing is not the only industry facing massive change in the search economy. There is probably no greater example of a thriving off-line search business than the yellow pages, now worth around $15bn in the US alone. Within one generation, however, the yellow pages will be viewed as a dead industry.
Now, before you tell me that flipping though a printed directory is far more convenient than turning on your computer and punching in some search terms, let me remind you that local search, as it's called in the search industry, is still in its very early stages. There will be about 1.7 billion mobile phone handsets in use by the year 2006, and most of those will have internet access.
When finding a dentist is as easy as punching "dentist" into your phone (or, with new technology already on the market, simply speaking it), the idea that anyone will pull out a 10lb paperweight to execute a search will seem as quaint as hand- cranking a car.
Imagine it's the near future and you're in your local grocery store on a mission to pick up food for a Saturday night dinner party. Because you've got oodles of disposable income to burn, it's a high-end Whole Foods store, the aisles dripping organic righteousness and whole-grain goodness. You know that dinner for eight is going to run to at least $200, not counting the wine, but that's OK compared with the tab at the local bistro. You'll be coming out ahead. But you do want to make sure you're not spending money you don't have to, especially on the wine.
Now, Whole Foods has quite a wine selection, but the store isn't known for its discount prices on anything, and when it comes to wine, you've got a sneaking suspicion that the store is really sticking it to you. But it's a convenience buy, you've always thought, and you're willing to put up with it for the most part.
As you slip your Neiman Ranch tri-tip roast beef into your basket and thank the butcher, you head to the wine aisle. What might go with that grilled tri-tip? A nice Cabernet, no doubt. Whole Foods' wine aisle, a testament to hierarchy and peer pressure, places the most expensive bottles on the top, and the cheap juice on the bottom. No self-respecting Whole Foods shopper wants to be seen bending down to check out a bottle of wine. Then again, those bottles staring out at you from eye level are exactly the kind that you suspect Whole Foods marks up with the glee of a four-star sommelier.
What to do? Not to worry; you've got Google Mobile Shop installed on your phone. You whip out your Treo 950, the one with the infrared bar code reader installed, and you wand it over that $52 bottle of 2001 Clos du Val now lovingly cradled in your arm. In less than a second, a set of options is presented on the phone's screen. It reads:
2001 Clos du Val Merlot, Lot 21 Stags Leap District, Napa Valley Average Retail Price: $38 (click here for more) Click here for a list of prices at nearby stores Click here for stores selling similar items Click here for reviews of 2001 Clos du Val Merlot Click here for more on this vendor [ecological impact, vendor labour policies]
You're pretty sure that Clos du Val isn't employing child labourers, and anyway you're really interested only in price comparisons, and the first screen has confirmed your initial suspicion: Whole Foods is ripping you off.
You click on "list of prices at nearby stores" and see that the liquor store up the street is selling the same bottle for $39. You click on that store's link, and then choose the "reserve this item for same-day pickup" option. With a satisfied smirk, you replace the bottle on its perch on the top shelf, and head over to compare prices and recipe tips for $6 boxes of imported pasta. As you leave, the fellow who runs the store's wine department eyes you warily, then picks up the phone to talk to his manager. "Herb," he says. "Did you get my message about banning cell phones in the store?"
Is this scenario possible? For it to happen, a few nontrivial things need to occur. First, the entire UPC barcode system must be made open and available as a web service - a nontrivial event, to be sure. Those bar codes and the information within them are not yet a public resource, though a small coterie of researchers and entrepreneurs is looking to change that. Second, merchants must be compelled to make their inventory open and available to web services. Third, mobile device makers must install readers in their phones, essentially turning phones into magic gateways between the physical world and the virtual world of web-based information. And fourth, providers like Google must create applications that tie it all together.
While the first few hurdles to the realisation of this scenario have yet to be jumped, it's certainly a no-brainer that Google and Yahoo would love to tie everything together should it become possible to do so. The implications of search breaking out of the PC box and making real-time information available at the point of purchase has been the failed business model of several web 1.0 companies. But with recent developments in local and mobile search, it is far closer to happening now.
What might be the effects of such a system coming to fruition? For one, markets would have to compete far more on service, convenience, ambience and other factors unrelated to price. And vendors of products that have been made in third-world sweatshops or in factories that overpollute; or vendors that support causes some consumers do not wish to support; would be called out in a far more transparent fashion. Refusal to participate in such a system would mean that vendors or merchants had something to hide, and so the system could be a major force for good in the global economy, forcing transparency and accountability into a system that has habitually hidden the process of how products are made, transported, marketed, and sold from the consumer.
Whether or not such a system actually develops, the fact remains that it could, and that alone is a powerful force on the vast ecosystem of local and global commerce. Decision by decision, possibility by possibility, click by click, search is shifting the firmament of our economic world, and what we've see so far - the billions upon billions of dollars running over the servers at Google, Yahoo, and others - is simply the first indications of that shift.
for more, click on comments!
This is an edited extract from "
The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture", by
John Battelle, to be published by Nicholas Brealey Publishing on September 20.
To buy a copy for £16.99 (+ SH) call 020 7239 0360, or click here!