Google Exec: Hell No We're Not Paying Anyone To Use Google

Not that anyone ever expected Google to chase after Microsoft’s (MSFT) new “Cashback” gimmick, but at Goldman’s annual Internet conference, Google product director Nicholas Fox didn’t beat around the bush:

“No, we have no plans to pay users to use our product,” he said. “Our fundamental belief is that we should compete by building a great user experience — making our users happy by delivering excellent search results and excellent quality. And that’s where we’re focusing our efforts, rather than paying users nickels and dimes.”

Fox and ad platforms exec Neal Mohan also talked about improvements Google’s making to its ad serving algorithms, the company’s opportunities in mobile advertising, and how DoubleClick will be integrated into Google’s ad business. No news here, though — see our live notes below.

See Also:
Whoa: Microsoft Cashback Google-Killer Generates NO Revenue For Microsoft
Microsoft Cashback Test Drive: Slick! (But Won’t Kill Google)
Microsoft’s “Cash Back” Google Search Killer: Great Idea, Won’t Work

LIVE Notes: Google product AdWords product director Nicholas Fox (Director of Business Product Management for Ads Quality and Bidding) and Neal Mohan (Director of Product Management for Ad Serving Platforms) chat at Goldman’s annual Internet conference in Las Vegas.

Neal: Was VP of Strategy at DoubleClick. Now in charge of ad management platform at Google (GOOG). Was at DoubleClick since ’97 via NetGravity acquisition.

Nick: Been at Google for about five years. (Longest title ever, too!) Part of AdWords product — search ads. Ad quality: Set of improvements and changes they make to ad serving system. Where to place ads, quality score, what ads look like, etc. Focus is to provide better user experience, which leads to more clicks and more money!

Talking about recent trends in revenue growth, been discussion of PPC vs. paid leads — query growth. Tweaks you make in coverage that drives click-through? Can drive growth above general traffic growth? Significant opportunities. Four drivers of revenue: Queries, ads per query, click rate, quality, and price per lead or cost per click. Across the four, we see room for growth.

One way to think about opportunity: Fairly small portion of queries have ads because made decision not to show ads on some queries. While probably true that some queries more difficult to monetise, but need to do better job putting ads on some queries. From quality side, while we believe our ads are best out there, still lot of opportunity to improve ad quality. Ad quality still lags search results.

Take keyword “flowers” and realise it’s valuable on “Las Vegas florist” etc. Trying to work on systems that remove work from advertisers, so advertiser doesn’t need to think about all of queries — Google can do that for them. Also know the right signals for what’s a good ad versus a bad ad.

Has universal search made more challenging? Not more challenging — the logic behind universal search and quaity efforts in general is to provide best uex. realised that as web has evolved, a lot of what people are looking for is video, images, etc., needs to be incorporated into single search experience. Tends to have fairly small impact on ads — when searching for video, probably not going to click on an ad. On flip side, a lot of opportunities: What is right image, video experience for an ad? In a lot of ways, has opened opportunities for us.

Tell us about your innovation! What’s helped traffic, PPC? On traffic side, user experience big. Universal search is big one we’ve talked a lot about. General improvements we’re making in search quality have helped. Hundreds of improvements per quarter. More than one per day, including weekends! iGoogle — provides great uex. As more people set Google as homepage, query volume goes up.

On monetization side: Aggregate of things we don’t talk about probably bigger than things we do talk about. Continual improvement on search ad quality, algorithms. Some of things we have talked about: Changed colour of top ads to yellow from blue. The way the user interacts with results page is incredibly sensitive to tweaks. Also quality of ad landing page. Worst thing is user who clicks on ad gets to landing page — what advertiser showed was completely different from what’s promised.

What are limiting factors of search growth? Why Goog growing so much? Query growth will come from more secular shift from consumers doing more online. Don’t think we see too many limits. Broadband users do more searching than dialup. As more users see that Internet is where they can get answers to everything they need, more searches on Google instead of Yellow Pages.

Social networks? Whole industry has been surprised at difficulty to monetise. We were pretty bullish on what we could do 1-2 years ago, and we found it more challenging than we initially expected. Harder than search to tell what people are looking for. On social network, you don’t really know what right ad is to serve. Users probably doing a lot of non commercial things: Throwing sheep, playing Scrabble. Not searching or trying to engage in commerce. Makes advertising more difficult.

Who’s done well? Pyramid schemes, folks trying to trick people into downloading ringtones. monetise well in very short term, but not long-term. Bullish on advanced targeting.

Mobile? More info about user intent? Mobile is much more similar to search than social network. Mobile monetizes quite well. Few interesting things: Biggest is new devices. Apple’s (AAPL) iPhone an eye-opener. If you get device right, good things follow. Form factor, data plan, software. Largely what’s behind Android strategy. If you track usage metrics between mobile vs. desktop: Desktop usage peaks on Monday, mobile peaks on weekend. (Interesting.) People using them different where they’re sort of complmentary.

Long-term mobile oppty? Higher CPC? Lower queries? How do you think about revenue oppty? Haven’t looked at it that way. Gut would be that over the long term you’d see higher value per lead/click because typically looking for “nearest pizzeria” or “nearest florist” — very valuable from advertiser’s perspective. Higher value per lead –> higher cost per lead for Google. More commercial activity going on there, a lot of adult activity on mobile. Not quite sure how that will evolve.

Why did Google buy DoubleClick? What does it bring that Google couldn’t build internally? Started off as first ad media network of scale. Led to technology platform company when publishers wanted DART. Shifted to purely a technology platform company for online advertising. Two flavours of DART for publishers and advertisers. Adjacent products: Rich media products. Mobile product. Optimization and targeting solutions. (Suspending updates until this commercial is over!) Long-term vision: CMO dashboard to optimise between search and display, etc.

Reasonable to extrapolate that year-one benefit is pursuading publishers to accept AdSense? We have a very aggressive integration roadmap: Do something even broader, provide publishers and advertisers more choice for advertisers, etc. Primary focus to bring more monetization choices to publishers on display side.

Q&A begins: Thoughts on impact of MSFT CashBack? Haven’t looked particularly closesly at CashBack product — affiliate product similar to UPromise, etc. We believe pretty strongly in CPA advertising vision, we’ve been pushing on that. Starting to see strong results. On the user side, we have no plans to pay users to use our product. We should compete by building a great user experience, making our users happy by providing great search results, etc., rather than paying users nickels and dimes.

Transparency: General Google philosophy that transparency is a good thing. (Sure!) Trying to move toward more. Trick is provide right information so how advertisers can improve. But not to get advertisers who have bad intentions to get around quality.

Uptake for publishers on OpenSocial, etc.? Not OpenSocial experts. Too early to tell what it will do for ads.

Matching based on current query + immediately previous query. Improves click through rate by incorporating that info. Less excited about your browsing history. More focused on incorporating what user is trying to do: Example: Is user traveller versus something else?

Seen a number of departures from key Google people. At what point would you sort-of advocate that we as investors are beginning to look at Google as reaching apex in ascendancy? Seen very low turnover — the few people who leave get publicity, but churn is very, very low, and easily outweighed by high profile additions we bring on board. Not something we are worried about internally. Churn can be healthy: Fresh ideas, opportunities for people to move up. On DoubleClick side, nobody we’ve wanted to retain has left.

Last question: DoubleClick int’l footprint? Extensive footprint in Europe. That part of org. is in mix of getting integrated into Google’s large footprint in Europe. Sales and services based presence. Sell all of our products locally. Substantial portion of business comes from Europe. Asia where we could benefit from Google’s channel to further grow DoubleClick.

Session ends.

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