You have been googled – and it may not be in your best interest…

Just sharing, as often, an interesting article I came accross. It is an open comment in the Financial Times from the former chairman of the Competition Commission on why Google needs to be under scrutiny when it comes to consumers’ privacy. Outside from what is at stake here for Google, it is worth noting that online advertising slowly emerges as an industry of its own and not as a mere “sister channel” of the wider, global and very established advertising industry (see the last part of the article).

Google warrants an inquiry
By Denise Kingsmill – Baroness Kingsmill is former deputy chairman of the Competition Com­mission

About human nature, perception, emotions, irrational behavior and how Google tackles all that

I think I just love the guys at Saatchi & Saatchi! First they introduced the concept of Lovemarks, in which they basically explain why brands have to commit more to the consumers in order to create this emotional link that differentiate pure utility brands from the ones that add more value (hint: one category usually manages to derive substantially more margins, guess which one).

Then there is this article I came across while on the plane today. As often, it can be found in the Financial Times, you just have to admire this newspaper for its constance in quality!
It is written by Lord Saatchi himself (or at least he signed it) and does a very good job at explaining why us being mere humans makes marketing more of an art than a science. Our irrational behaviors and the role played by emotions in our everyday choices makes quantifying customers’ needs very tough, let alone addressing the right message at the right moment in time – those of you interested in marketing and framing behaviors should check this excellent blog.
It gives strong kudos to Google in that it understood before most that presenting prospective customers with the right message at the right time is priceless.

One has to admit that they/we are not quite there yet, but they certainly changed the way the industry thinks about the Internet and for that they certainly do deserve credits. 

Google data versus human nature
By Maurice Saatchi – Lord Saatchi is an executive director of M&C Saatchi 
Published: May 30 2007 03:00
Copyright The Financial Times Limited 2007

Now I am going to tell you about a scorpion. This scorpion wanted to cross a river, so he asked the frog to carry him. “No,” said the frog. “No, thank you. If I let you on my back, you may sting me and the sting of the scorpion is death.” “Now, where,” asked the scorpion, “is the logic of that?” (For scorpions always try to be logical.) “If I sting you, you will die and I will drown.” So the frog was convinced and allowed the scorpion on his back. But just in the middle of the river he felt a terrible pain and realised that, after all, the scorpion had stung him. “Logic!” cried the dying frog as he started under, bearing the scorpion down with him. “There is no logic in this!” “I know,” said the scorpion, “but I cannot help it – it is my nature.”

Orson Welles told this story to show the importance of understanding human nature. If the frog had known the scorpion’s true nature he would still be alive.

Today, the world’s great consumer goods companies are agog at the potential of the Internet to identify “human nature”, measure it and control it; at how Google’s systematic, logical computation can lead the advertiser into an earthly paradise of universal enlightenment – where all the problems of selling and marketing are solved by the same method: the method of data.

Haunted by the pronouncement of the founder of Unilever that, “Half my advertising is wasted but I don’t know which half,” marketers have long sought a set of testable rules about selling as robust as the laws of physics. So they are understandably mesmerized by the possibility that the wastage involved in the $600bn (£302bn) spent annually on advertising can be eliminated at the touch of a button.

First, under the Yellow Pages model of advertising known as “Search”, advertisers are relieved of the burden of addressing those who are not interested in buying their product. If I am selling washing machines, why waste money on costly advertisements for people who are not in the market for a washing machine at the time? How much better if I could talk only to people who are just about to buy a washing machine.

Second, the advertiser is said to have been disadvantaged by lack of data about human nature. The proponents of this theory point out that the amount of data stored on computers last year is equal to the sum of all previously recorded human knowledge; 74,000 times all the books in the US Library of Congress. So now, they say, we can go beyond mere “demographics” and “buying habits” to reach our target market. You could always reach women in Vogue, and gardeners in The Gardeners’ Chronicle, but now Internet data technology can provide “personal profiling” or “strategic targeting” – an intimate knowledge of who you are, your true nature. As the founder of Google says, it can tell you: “What to do tomorrow.”

No wonder people are so excited about all the saving of money this knowledge could bring.

Unfortunately, it will not work out quite like that.

All of us know that the sensations produced by the same object can vary with the circumstances. Lukewarm water will seem hot to a cold hand and cold to a hot hand. Colors look very different through a microscope. Even the sun in the heavens we see only as it was eight minutes before.

The commercial proof of this was best explained by Britain’s most successful newspaper publisher, the late Viscount Rothermere. When challenged on why he did not conduct more research among Daily Mail readers to find out what they wanted, he said this type of data would be unhelpful. Newspapers were emotional items, he said, because: “Getting someone else’s newspaper is like getting into someone else’s bath after they’ve just left it.”

He said it was not that easy. If it were, it would have been the researchers sitting behind the desk of Lord Northcliffe, the Mail’s founder, not him.

It is an inconvenient and stubborn fact that outside Newton’s universe, where physical laws govern reality, the world is conditioned by perception. And, as Freud’s Law of Ambivalence stated, human beings are so complicated that they can love and hate the same object at the same time.

People do not know what they want until a brilliant person shows them. Henry Ford confirmed the point. Asked if he had carried out research before he invented the Model T Ford, he replied: “If I had asked people what they wanted, I would have built a faster horse.”

Human nature is not amenable to prediction based on the trends or tendencies prevailing at the time. It is amenable to startling creativity of the kind practiced by great artists, directors, writers, musicians, actors, who know how to touch a chord in humans everywhere. They are the people that are needed to help advertisers navigate the Internet because, as Aristotle knew 2,000 years ago: “Fire burns both here and in Persia. But what is thought just changes before our eyes. The decision rests with perception.”

If anybody should know this it is the founding geniuses of Google – the living embodiment of the irrational human dream of “two men in a garage” who change the world. 

Technorati Tags: digital advertising, e-marketing, google, saatchi, web 2.0

Will Windows Vista be the last rollout of its kind?

As Xmas nears upon us, so does Windows Vista, the latest operating system from Microsoft. Wether Vista is a good OS or not is irrelevant at this point… at least it seems to be the WSJ perspective. The following article stresses the impact the Internet has had on traditional software vendors and the resulting shift in Microsoft’s business model in particular. In my opinion it raises crucial questions not only about Microsoft’s future offerings but also on an entire industry on the verge of unprecedented change.
It is indeed an interesting time to wok in this industry… maybe they were right to call it “Web 2.0″ after all. Not because of all the bells and whistles of  user-generated content but rather because of underlying tectonic shifts and their overall impact on the economy as a whole.

Life After Vista: Can Microsoft Retool for Web?
By Robert A. Guth
November, 27th 2006 – (c) 2006 – The Wall Street Journal

MICROSOFT CORP. on Thursday will begin offering large companies a long-awaited version of Windows, pitching the operating system as the start of a new generation of software. Now the question is: Will Windows Vista be the last rollout of its kind?

Windows Vista is a critically important upgrade to the software that runs hundreds of millions of PCs world-wide, intended to deliver greater protection from viruses and other Internet-borne attacks and includes features Microsoft says will make PCs easier to use. Expected to filter into businesses and homes over the next year — it will be offered to consumers in January priced from $199 to $399 — Vista is a central pillar for Microsoft’s overall growth and an engine of the $200 billion PC industry.
But the company’s developers are already facing a tricky challenge over what to do for an encore. The crux of the issue is how Microsoft’s signature Windows product should adapt to the Internet, and to rivals such as Google Inc. that are using the Net to deliver competing offerings at unprecedented speed.

Microsoft contended with that greater agility during the lengthy development of Vista, which is coming out five years after its predecessor, Windows XP. In that lag, a series of software and service innovations planned for Vista were rolled out first by Google, Apple Computer Inc. and the Mozilla Foundation, the nonprofit that makes the Firefox Web browser. Google, for instance, in 2004 pumped out a free “desktop search” tool for finding information on a PC. Mozilla’s Firefox browser included a feature called “tabbed browsing” for displaying multiple Web pages at the same time.
Microsoft couldn’t keep pace, though it believes it has now matched those technologies. Vista, for instance, includes a series of features to help users find and organize files and use a mouse to quickly flip through open windows of information. The new version of Internet Explorer has tabbed browsing.
“A five-year gap will not happen again,”vowed Steve Ballmer, Microsoft’s chief executive, in an interview last week. The company is working on new development processes so “we can add things with greater and greater agility,” he said.

The fundamental question Microsoft faces is whether the PC will continue to play a central role in tasks people now use it for, from storing music to watching videos and writing documents. In recent years, the spread of high-speed broadband Internet access and a host of new technologies have made it easier than in the past for people to use the Internet for such tasks. Consumers tap services like Flickr, an online photo site, and YouTube, the huge online video-sharing site, to store pictures and videos online — not on their PCs. Increasingly, applications such as email and word-processing are offered as Internet services that don’t require much, if any, software running on a PC. They also don’t require the companies to release whole new versions of software as Microsoft does in its Windows and its Office line of programs. Google regularly updates its search and email services with little fanfare.

Microsoft executives are tight-lipped about how Windows will change, but it’s likely a major redesign of Windows is in store. That means a delicate dance for the company as it tries to retool its software for the fast-changing Internet while trying to preserve one of the richest cash cows in business history. How that balance is handled in the next few years is of interest to thousands of Microsoft customers and the vast industry of Dell Inc., Hewlett-Packard Co., Adobe Systems Inc., Symantec Corp. and others that build their own businesses around the software. For Microsoft, Windows is still its largest business unit, contributing $13 billion in revenue and profits of $10 billion in its most recent full fiscal year.
Mr. Ballmer insisted that there has never been a greater need for software that gives rich capabilities to PCs and other devices used to get online — even though those programs may increasingly collaborate with software that resides on a server somewhere on the Internet. Windows “has a bright and healthy future,” he said.

Microsoft has been adjusting to the Internet since the mid-1990s. The rise of browser software and Web sites prompted predictions that Internet services would become the primary way to store data and handle day-to-day chores for businesses and consumers. Some companies, such as Oracle Corp. and Sun Microsystems Inc., predicted that PCs would be replaced by simpler terminals that just ran Web browsers.
As it turned out, the Internet provided another big reason to buy PCs, as consumers bought them in order to access the Web — and Microsoft benefited. But Google proved that, for companies, the combination of Web services and online advertising could be at least as lucrative as PC software.
Mr. Ballmer was quick to note that Internet offerings increasingly don’t depend on the Web alone. For instance, companies like Google are increasingly developing software to allow work to be done when a user isn’t connected online. Playing to its strength in software, Microsoft has been laying the technical foundations for its own combinations of software and Internet services, he said.

Under the brand name Windows Live, for example, Microsoft plans to offer online services that complement Windows. A separate set of services called Office Live will be aimed at small businesses. Those services are still taking shape, though Microsoft already has an online service called Windows Update that allows users to automatically receive software fixes, security enhancements and other features.
In another shift, the company is trying to make its software more flexible by breaking it into individual components, work that started while developing Vista. After two years of development, the software became so big and unwieldy that in 2004 Microsoft started the effort over, trying to rework Windows so it could be structured as individual pieces that could be changed or removed without disturbing the rest of the software.
Microsoft is likely to offer more components in the future. To try to stay in step with Google, for example, Microsoft could release search software for finding data on a PC over the Web without having to wait until the next major release of Windows. “We still have more opportunities to be even more componentized,”Mr. Ballmer says. Another area of focus, he said, will be to continue to enhance Microsoft’s Internet Explorer browser so it can handle more sophisticated graphics, video and application programs that are delivered over the Web.

Few of these details have been decided, Microsoft insiders say, but how the Windows development is carried out will be largely up to Steven Sinofsky, a senior vice president that Mr. Ballmer tapped this year to manage Windows development. Mr. Sinofsky, a former technical assistant to Microsoft Chairman Bill Gates, is noted for his work with Microsoft Office, the suite of programs that is Microsoft’s second-largest business. Mr. Sinofsky so far has largely focused on finishing Vista and preparing supplemental software for Vista expected next year.
But he has already put his stamp on the division, last summer quietly cleaning house of an old guard that managed the troubled Vista project. Mr. Ballmer has given Mr. Sinofsky wide latitude in choosing how to structure Windows in the future, say people familiar with the situation. Microsoft declined to make Mr. Sinofsky available for this article.

Meanwhile, a cadre of respected Microsoft computer scientists and programmers formed a group under Chief Software Architect Ray Ozzie to start building software that could be a critical piece of what Windows might become, say people familiar with the work. That group, says a person familiar with the matter, sees the future of Windows as much more as an Internet service than software that runs on a PC.
Mr. Ozzie has discussed ways of simultaneously exploiting PC software and the huge data centers full of server systems that Microsoft is building to deliver Internet services. For example, a feature in Office 2007 — a suite of programs arriving along with Vista — allows users to publish their calendars to a centralized service, allowing other authorized Windows Live users on the Web to view the entries.
Some people familiar with the situation see the possibility of tensions between Mr. Sinofsky’s group and efforts like the one under Mr. Ozzie. In a similar tug of war in the late 1990s, one internal faction lobbied to use Microsoft’s Internet browser software to radically retool Windows for the Internet. But that faction lost out to a more PC-centric view of the Windows mission — an outcome that some Microsoft insiders say is one reason the company fell behind in the Internet services Google and others now lead.

“I think that Microsoft is leaving the door wide open for Google to deliver a broader solution on their online platform”

Yet again, another interesting happening in the small world of online services and the race for global dominance between Google and Microsoft. There is also the question about “less is more” and the very large feature set offered by Office vs. its competitors, which keeps ringing a bell …

Google’s Free Web Services Will Vie With Microsoft Office
By Kevin J. Delaney and Robert A. Guth
October, 11th 2006
(c) 2006, The Wall Street Journal
Just as Microsoft Corp. is about to roll out the latest version of its cash-cow Office applications, Google Inc. is beefing up efforts that could win away some of the customers Microsoft is targeting.

Google’s latest move, expected to be announced today, is a plan to bundle its existing word-processing and spreadsheet offerings — online applications that people can use through their Web browsers – under the name Google Docs & Spreadsheets and more tightly weave them together. The services, which are available free, offer more-limited functions than Microsoft’s word processor and spreadsheet programs, which people use the old-fashioned way on their personal computers.
Google Chief Executive Eric Schmidt told reporters last week that Microsoft’s hold on customers who aren’t “professional users” of its core Office product “may be vulnerable.” The Web search giant is targeting average consumer users and organizations such as universities as it continues to expand email, calendar, spreadsheet and word-processing services that overlap with Microsoft offerings.

Google’s push comes as Microsoft puts the finishing touches on Office 2007, the latest version of its ubiquitous set of business programs, due by the end of the year. The programs, taken together, are Microsoft’s largest generator of revenue and profit after its Windows operating system. They are also deeply entrenched in the world’s large and small businesses around the world.
Free equivalents of Office have existed for years and failed to crack Microsoft’s market share, But over the past two years, a growing number of Internet companies, including Google, have started to make concerted efforts to pick away at the business, which accounted for $11.8 billion in revenue for Microsoft in the year ended June 30.
Working in favor of these Internet interlopers is a continuing shift by businesses and consumers to software used over the Internet. For decades most computing tasks were handled with software that was installed on computers. Microsoft defined that era with its Windows operating system and its Office suite of applications.
In recent years, though, as high-speed broadband Internet connections have spread to homes and offices, an increasing number of computer users have begun experimenting with software applications hosted over the Web. With just a Web browser, they can use software over the Internet that’s free or available by subscription.

Kyle McNabb, an analyst at Forrester Research Inc., says that Google’s moves are less about grabbing market share today than about changing behavior and getting consumers accustomed to free online software that they now buy from Microsoft. “Google is helping set the expectations that you don’t have to go buy these things,” he says. “This is going to have an impact over five to 10 years.”

Microsoft Vice President Antoine Leblond says that Microsoft doesn’t have plans to roll out an online version of Office. Instead, he says, the company is building online services designed to work with Office, a strategy that would tap the benefits of online programs without cannibalizing Office. “The future of software is going to be the combination of client applications [like Office] and [online] services,” Mr. Leblond says. “It’s not going to be one or the other – the black or white approach.”
Mr. Schmidt said last week that Google was “not in the business of building Office,” which he said was well suited for “professional users.” But the comments by Mr. Schmidt, who has long played down any competition with Microsoft, make much clearer Google’s likely core target market: users at home, in educational settings, and at small- and medium-size businesses. It could also include professional users who rely on Google for personal applications. Mr. Schmidt said Google’s calendar application is better than Microsoft’s for family members sharing their schedules, primarily because it is free and allows such sharing to take place easily online.
Google has rolled out a range of free online services. Some of them carry advertisements, and it hopes others will entice people to use its ad-supported services more. In contrast, Microsoft licenses Office to businesses and sells it to consumers for about $400.
Microsoft plays down the potential threat to Office from Google, arguing that online software can’t have the same full features that computer users demand. It can also be slow, and many businesses are loath to entrust core business functions and data to outside companies.
Microsoft’s Mr. Leblond says that Google will also find it increasingly difficult to add new features to its programs, in part because the programs rely on browser software for many of their functions. So for instance, printing is much more limited than printing from an Office program, he says. “The technology they are using has some inherent limits,” he says. “They are going to hit up against these limits.”

But Google says it isn’t trying to match all the features of traditional productivity software. “We believe that 90% of users don’t necessarily need 90% of the functions that are in there,” says Jonathan Rochelle, a product manager for Google Docs & Spreadsheets.
With the Google products, a user can save any documents on Google’s servers, accessing them from anywhere that can connect to the Internet. Other key differences with Microsoft: Besides being free, Google services make it easier for users to share files and work on them simultaneously, Google executives say. One important similarity: The Google services can generally save and open files in Microsoft-compatible formats.
“We’re building a different way of dealing with complex, powerful information that is online all the time, on every device, and fully shared,” explained Mr. Schmidt.

Google is now trying to drive a shift toward this sort of consumer usage. The Mountain View, Calif., company earlier this year bought Writely, a Web-based word-processing service, and rolled out its own spreadsheet product. In August it began offering Google Apps for Your Domain, a package that allows organizations to tap email, calendar, instant-messaging and Web-page creation services that run on Google’s computers. Google executives had said that word-processing and spreadsheets were “good candidates” to be added to that offering, which is geared toward organizations and small businesses.
Google’s Gmail email service had 9.7 million U.S. visitors in September, and its Calendar service had 896,000, according to comScore Networks Inc. The research firm didn’t have usage statistics for Google’s word-processing or spreadsheet services.
Rick Sherlund, an analyst at Goldman Sachs, thinks that Microsoft will need to respond more directly to Google’s moves. He predicts — despite Microsoft’s denials — that the company will offer a lower-end version of Office over the next year that’s aimed at consumers and small businesses.
“I think that they are leaving the door wide open for Google to deliver a broader solution on their online platform,” Mr. Sherlund says. Microsoft needs “to be serious about trying to shut that door on Google.”