Following up on my last blog on “Google Googly” (http://pgmadblog.blogspot.com/2009_11_01_archive.html), I take a deeper look at why the Google business model works and what other businesses can learn from it.
Google is into everything these days but Search and AdWords are still their “bread and butter” business. Search was their initial focus and it took a while for them to figure out how to monetize it via AdWords. As I mentioned in the last blog, their core DNA is this: Wherever the user is searching “content”, Google wants to provide the most popular results while proffering some paid-for ads.
Why has this model been so very successful? It has to do with neuroscience – how our brains work!
Once we have made a purchase decision and acted on it (made the purchase), it is pretty obvious that we will have little interest in additional ads. The “Purchase Funnel” on the left shows the various relationships. “Branding” has an important place in advertising but it is a long drawn-out awareness creation process. Plus there are no easy metrics such as CPM (one of the many so-called “click metrics”) to connect the ad to influencing the eventual consumer decision and action. Google happened to have landed, by design or luck or both, in the perfect spot in the Purchase Funnel!
When we “Search”, we are in the information collection phase (by definition). We are willing to explore and click through various informational pieces on the screen such as text ads – if they seem relevant and related to the information we are after, the more likely that we will click through. But after such explorations, consumers want to move on to the Decision and Action phases if their search was driven by a purchase need. Once we have finished the Action, we have no real patience for more ad watching – we have made our purchase and we want to enjoy it; this isn’t the time for more awareness-generating branding-type ads either. We are in a satiated state after a purchase action and our brains are not looking for more information to process.
In summary, in the information acquisition phase, we see significant consumer “traffic” and the click through of many links in an effort to gather the best information. This is Google’s realm – they provide very good search results and provide many good opportunities to click through, thus generating massive revenue via AdWords business model. But once I click through to a final destination such as a Wall Street Journal article by Mossberg, I am keen to read it rather than pay attention to any ads; I am in the satiated state – I do not care about banner ads that create awareness about random products, let alone make the effort to click through other ad links. Ads in the IDD (Interest, Desire, Decision) stages are most directly useful to the consumer and most monetizable via measureable “click” metrics.
This explains to me why Google business model works so well for them and why content business cannot monetize increased traffic (provided by Google) to their “terminal” sites. It is neuroscience!
Are there other cases where Ads in IDD (AIDD) will work? Look for opportunities when consumers are “searching” in a purchase context; at that time, provide them with “useful” ads and generate metrics to monetize.
I will reveal an AIDD business that parallels Google in the mobile world in my next blog. In the mean time, think of other cases where AIDD will work. Let us hear about it . . . after you have patented it. J