Google weighs using data for profit

Marketplace Staff Aug 10, 2010

Google weighs using data for profit

Marketplace Staff Aug 10, 2010


Kai Ryssdal: Google’s having kind of a tough week, PR-wise. Yesterday, the company that made the phrase “don’t be evil” popular, said maybe it is OK after all to charge different prices for different kinds of content online. And then today, a story in the Wall Street Journal has some details about how Google is deciding to capitalize on the enormous pile of user data it has to turn a profit.

Jessica Vascellaro wrote the piece about Google’s data vision statement in the Journal this morning. Jessica, good to have you with us.

Jessica Vascellaro: Thanks for having me.

Ryssdal: Obviously, there’s a bunch of stuff in this Google Vision statement that they wrote without intending for anybody to see it. But what are they thinking about in terms of doing stuff with our data?

Vascellaro: Well, back in 2008 — when a Google employee was working on this — they were specifically thinking about ways to show people ads targeted to their interests. And obviously, the more relevant the ad, the more the advertiser will pay for it. So what Google’s looking to do is, “We have a ton of data about users, what could we use to help deliver more relevant, and therefore, also more expensive, ads to consumers?”

Ryssdal: Give me an example, would you, of how they know what they know about us? How do they know what to set in my Gmail advertising space, for instance?

Vascellaro: The ads that you’re seeing in your Gmails, they’re related to what’s written in your Gmails. So if you have e-mailed a friend about a vacation to Hawaii, you’re most likely going to see a Hawaii text ad. Google employees do not sit there and read everyone’s e-mail. They have computers that do the matching.

Ryssdal: It seems to me, and you point this out in your article, that the power structure on the web really has shifted from people who have the most eyeballs going to their sites, to people who have the most data about the users who go to their sites. And then they can trade on that data and make more money.

Vascellaro: All ad companies are looking for data, you know, they’re looking for it to sell more advertising, but also just to make the actual Internet service more customized and personal. A good example is search. Google can tailor what search results you see based on data about what you’ve searched for in the past. So there’s a big land grab out there to get the most on lots of different interactions people are having online, because there’s a lot of money in it.

Ryssdal: Google is, obviously, far and away the biggest money maker from ad search out there, but as you point out in your piece, their revenue growth is slowing, they’re under pressure to find new ways to make money. Is that sort of driving this move away from the whole “don’t be evil” mind set to “how do we maximize our value?”

Vascellaro: Google’s founders and team is saying that they’re sticking to their goal of really putting the user before the advertiser, which is how I guess they would define “not being evil.” But clearly, as you said, search advertising growth has really slowed, so Google has to look into new types of advertising. And the one that it’s staking the most on right now are these display ads and the banner graphical ads you see on web pages as you browse around. And that industry is full of players that are very much into targeting big companies that are hoarding data, so that’s really caused Google to say, “OK, how can we get into this area? While we’re trying to, as closely as possible, stick to our principles of letting users how we’re using the data.”

Ryssdal: Google being the 800-pound gorilla that it is, though, if they make some seismic shift in how they use data, they have the ability to force almost everybody out there to do, in essence, the same thing, right?

Vascellaro: Google can influence market in a number of ways. I mean, one just is the sheer number of users and advertisers is has. If it makes a new sort of ad targeting available, more people are going to see those ads, more advertisers are going to buy them. So, where they draw the line and what they use and how they think about this will shape the industry.

Ryssdal: Jessica Vascellaro writes on the media for the Wall Street Journal. Her piece today on Google is part of the paper’s “What they know” series on privacy and data and all that good stuff. Jessica, thanks a lot.

Vascellaro: Thanks for having me.

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