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Google Analyst Day 2007 – Part 2

Google Analyst Day 2007 – Part 2

we’re going to move to Omid and his team. They’re going to run a panel
helping us figure out how we’re going to monetize a bunch
of the functionality that we just showed you and
talk about some of the enterprise efforts. So with that I’d like to turn it
over to my good friend Omid Kordestani. OMID KORDESTANI: Thank
you, Jonathan. JONATHAN ROSENBERG: Brother. OMID KORDESTANI: I call him
brother, brother Jonathan. So hope this morning’s session
has been interesting to you. I noticed a lot of smiles in
the audience when some of those cool spreadsheet
features were demoed. I don’t know what the
smiles were about. Do you guys have new plans for
your junior analysts and what savings they’re going to have
with all the technology we’re going to put in their hands? So hopefully they can be even
more productive for you. So where’s my team? Come on, guys. Come on up. I’m going to introduce
you afterwards. Let me just emphasize
the strategy that we’ve talked about. As you heard from Jonathan
and you’re going to hear throughout the day, this three
legged strategy is really a big focus for us on the way
we’ve organized ourselves really to collaborate across
these businesses, and really focus on search, ads and apps. And I’m going to really focus
on the ads monetization. All these great new features and
functionality that you see here, how we really plan to on
a global scale take advantage of this as platforms and
monetize them, and really also talk about our enterprise
business, and how some of the consumer applications of apps
you see is going to translate to enterprises and small and
medium sized businesses. But first what I thought the way
I would organize this is really think about the lot of
the questions I hear that come up during the Analyst meetings
we have as well as the quarterly calls we
have with you. So a lot of the themes and
questions I have organized for this panel is trying to take
some of the more insightful questions that you asked
during these calls. So hopefully it will be very
a productive with you. I would like to start by really
discussing how we view what our next multibillion
dollar opportunity to be. We hear that a lot. And I just have to say that
the next billion dollar opportunity is really our
existing core business in search and network
monetization. And from both the sales and
engineering perspective, we are putting huge investments
in all of these areas. We are changing our monetization
platform, making it deeper and wider in many
different directions. We think there is tremendous
opportunities in better targeting and different formats
of targeting, and really applying this ROI-based
innovations that we’ve done in search and extending
it to all media. With me on the panel today are
a number of key leaders, both on the product side and sales
side and partnership side that I will introduce you as their
sessions come up. Nick Fox is sitting there all
the way at the end there. He is really leading all of
our advertising quality efforts, which is a
delicate balance between quality and revenue. And we do a great job of both
improving quality and revenue at the same time. And he leads the
effort for us. David Fischer is in
my organization. He leads the North America
Online Organization, which is really a global platform we use
to have the most efficient channel of serving
our advertisers. And we’ll talk a lot about how
we serve both the smallest appetizer that spends dollars
and tens of dollars with us to all the way advertisers that
spend millions of dollars with us and a very efficient channel
that offers on a global scale. Brian Axe, who is in product
management, leads our network business for us in the product
management group. And we’re spending a lot of time
on this and how better to monetize this network,
especially as the dynamics of this network is changing,
social network traffic becoming a big component of it
from our own properties as well as the network partners. Next Tim Armstrong, who
is my partner in the North America business. He leads our most sophisticated
and largest region in the world in
terms of revenue, the North American business. And a huge part of his
organization continues to be focused on search
monetization. And one of the biggest
challenges we had this year was to really figure out how to
organize ourselves not only around the core business, but
really try to incubate all these new areas that we’re
extending into from this, display advertising, Youtube
monetization, the trials we are doing in the TV space all
the way to print and radio. And we’ll ask him a lot
of questions about that space as well. Our customers are really
demanding from us to be holistic with the way we
approach their business and really solve their
search needs. That works really
well for them. They understand it. But they’re continue wanting
to invest in that, and get better returns on it, as well as
tapping into all these new incremental opportunities that
we are exploring together. Last but not least, there is
[? Roy ?], who is in my organization. He leads our enterprise efforts
as well as the Google Apps efforts for
the enterprise. And he has done a tremendous
job building that business. And we’ll explore the enterprise
business with him as well as the penetration
of the applications into this new space. So the other point that I would
like to raise for you is this is one of the questions
that came up during the analyst call was how
do we take this as a disciplined approach? How do we decide between the
different investments we’re making in the sales force in
the different countries? This year we are using what
internally we have coined as market investment model. It’s really a challenge
for us. Because we are operating
truly at scale in every country in the world. And we’ve come up with this
model to in a very disciplined way decide on incremental
investments by looking at each country, whether it’s a very
mature market or an emerging market or a developing market,
and really distinguish between them what are our costs
in operating in each of these regions? And where do we make these
incremental investments based on the opportunities we see in
the core search area, as well as all the other new
areas we have? The product organization
and Jonathan– we’re starting to work very
closely to do the same job with them from a product
perspective? How do we launch in as many
places as possible, but from a monetization perspective
prioritize our investments in each of these markets on a
country by country basis, and again decide how we go from an
emerging space all the way to a maturing market? And we can talk about
that during the Q&A session with you. But let me start the discussions
here with the panel by asking a couple
of questions from them. And then we’ll open it up
to the rest of you. So first open it up with Nick. There’s a lot of interest in how
do we do this optimization and trade offs between
quality and revenue? And a lot of times to the people
outside the company it seems like it’s a black
box approach and a very complex approach. And I would like to have him
share with the audience here what are our philosophies
here and how we approach this trade off? NICK FOX: Thanks, Omid. Good morning, everyone. I think you’re right that ads
quality certainly is a complex error sort of under the hood. But I think the goal
of ads quality is actually very simple. The goal of ads quality is to
show the highest quality ads to our end users, or as Larry
would put it, the goal of ads quality is to show a set of ad
results that are as or more relevant than our
search results. It’s a tough goal, but it’s sort
of what we’re working on. It’s where we’re trying
to get to. The reason that we care about
ads quality and the reason that it’s a key focus for us is
because we believe that if we show the best ads to our
end users, our users will look at ads. Our users then will
then click on ads. Our advertisers as a result
of that will get leads. Our partners will
earn revenue. And Google will earn
revenue as well. So the model has worked very
well for us, basically focusing on the end users first.
And all else follows in a nice virtuous cycle. There are a few levers that the
ads quality team can play in actually ensuring
that the ads are as high quality as possible. We start out by looking
at ranking. Basically we want to show
the highest quality at the top of the page. And then the lower quality
ads get shown lower down on the page. Some ads are such low quality,
so bad that we don’t want to show them at all. In that case, what we do is
what’s called disabling. So the second thing
we can do– we essentially disable
the low quality ads. Sometimes our ads are such high
quality that we want to show them in more prominent
locations or in additional contexts. We have a system called
promotion which enables an ad to get promoted from the top of
the right hand side of the page to show above search
results, which is really reserved for the case where the
ads are such high quality that we really think that giving
them a more prominent location will improve
user experience as well as our revenue. The fourth and fifth
things we can do– the fourth thing is basically
how we match ads to queries. So it’s not always obvious how
a key word should get matched to a query, or how specific
ads can get matched to a query. So we spend a lot of time
figuring out what are those relevant matches. And which ones are
not relevant? And then the final thing we can
do is change the UI of the ads, the look at the ads. One of the changes we’ve talked
about the past is for example changed the color of the
top adds, the background from blue to yellow. These are the types of changes
we can make in UI. That’s sort of the set of
things we can change. Maybe I’ll talk a little bit
about the approach as well. There are actually three core
elements to the approach. Number one is that we have a
very algorithmic approach. Number two is that it’s
experimental. And then number three is that
it’s a lot of little things that actually add up to a lot. In terms of algorithmic, as
Google we do a great job with very impressive data centers,
great machines, and great algorithms. So in ads quality,
we’ve taken the approach of saying let’s look at all the ads
in real time for every ad for every single query, and
throw that at machines, and basically build incredible
machine learning algorithms to predict in real time which
are the best ads to show. This has a number
of advantages. Number one is that
it enables us to really use user feedback. So the users are the ones that
are telling us which are the good ads. It’s not someone like me or
someone else in a room making judgments on this. But numbers two and three–
number two is that it’s very scalable. We can actually do it
in a way that’s appropriate for every query. And number three is
that it doesn’t rely on human’s judgment. It’s something that we can
do fairly for all ads. The second core element of
the approach is it’s very experimental. At any given point in time
we’re running dozens and dozens of experiments that are
different changes and tweaks or whatever it might be
to the ad system. We don’t rely on people like
me or the engineers on the teams to say here’s what’s
likely to work. And here’s what’s not
going to work. Instead we rely on the data. We’ll run the experiment. We’ll see what works. If it doesn’t work,
we throw it out. If it works, we’ll launch it. But we’re seeing data even by
the hour of what’s working and what’s not working. And we can make those changes
really quickly as a result of that. The third element is that it’s
a lot of little things. I think analysts– you guys tend
to focus on sort of the couple of things we mentioned. Because it’s the things we
actually talk about. So for example, in the most
recent quarter we talked about a change to the top
promotion formula. But the reality is that
behind the scenes– I think Jonathan mentioned this
on the analyst call– there were over 20 changes last
quarter that we made to our ads quality. The reality is that it’s
actually the sum of all these little things that are adding
up to the impressive results that you see rather than the one
or two things we actually proactively talk about. I’ll give you an example. We need a change in the
beginning July in Germany. It was called German
decompounding. Basically something
I didn’t know– and the German team
told me this– in German what would normally be
multiple words in English– these words are often combined
into a single word. I’ll give you an example. Flower bouquet in English
is actually blumenstrasse in German. There’s no space between
those two words. That actually creates a problem
for our ad system. Because we want to be able
to match flowers to that. We want to be able to match
bouquets to that. So what we did was we launched
a change in German that actually enables us to handle
that much better. It was an incremental change. But it was one of these things
actually adds up to impressive results that we see. Overall there’s no plan
to launch one big thing every quarter. Instead it’s once the
experiments indicate that we should launch something,
we launch it. It’s a incremental very data
driven approach that we take. OMID KORDESTANI: Thank
you, Nick. We’ll turn it over to David
Fischer who manages this online platform where, as I
mentioned earlier, is the most efficient way we can serve our
advertisers on a global scale. And it represents a diversity of
advertisers by geography is as well as size. And I’d love to hear from
David how do you see opportunities there? How do you see the existing
accounts as well as the opportunities for
new acquisition? DAVID FISCHER: Sure. As Omid mentioned, it’s a huge
challenge but also a huge opportunity to serve such a
diverse and broad range of advertisers from the smallest
mom and pop shops, local businesses, maybe your local dog
walker or baby sitter all the way up to huge brand names
that everyone here would recognize spending
big sums with us. And in addition to that range,
what’s really rewarding for us to see is sometimes thanks to
Adwords, you see the people, e-commerce players who start out
small and through Adwords they are able actually to
actually move on up, and in some cases even compete in spent
at levels comparable some of the big players. What we see though is a lot of
growth primarily in the core search business. Omid is exactly right when he
says– and we try to focus on this every day– that the next
billion dollar opportunity is our core search product. And one of the pieces of
feedback that I hear a lot and our team hears a lot from our
advertisers is saying we love what you’re doing for us. We love the ROI that Adwords
generates for us. But we want a lot
more traffic. How can you help us with that? We probably can’t ask for a
better challenge than that. But that’s an important thing
that we have to work on with our advertisers. And there’s a bunch of things
that we do both in the back end working with our engineering
teams and with our teams around the world to
provide that for advertisers. Quite simply on the most basic
level of advert when advertisers are asking us for
better performance and more traffic through the core search
product, there’s a number of optimization
techniques we can do working with their accounts,
with their key word lists and so on. And what we see is that we
can also help them most importantly with their ROI. Because we really think about
this as a win-win partnership. If we can drive their success,
obviously that’s very much in our interest. But also in terms of driving the
number of places they show up, their distribution,
and so on. And so we do that through our
teams. There are also a bunch of optimization techniques that
we’ve launched on the product side. Perhaps you’ve heard
of some of these. But things like budget optimizer
that in an automated way with minimal to no work on
the advertiser’s part best allocates their budget. There’s a website optimizer
that allows them to test different landing pages,
conversion optimizer, which I think Brian might talk
about differently. So we’re constantly innovating
and testing on ways that we can better serve our advertisers
and help them maximize their ROI. It’s also important when we
think about our core business, we think a lot about the
Adsense network. And I think everyone probably
knows we have a very large network out there. And it’s growing. And there’s a lot of benefits
to that scale. But we also want to provide
our advertisers precision at scale. And what we’re increasingly
hearing is how can you help us target really effectively? And probably one of the most
utilized tools we have– and the growth on this has been
fast in the last year, and continues to grow, is site
targeting, letting our advertisers actually choose
where across the broad content network they want their
ads to appear. And then on the other side of
that performance placement reports which let them actually
understand a very detailed level. So the idea is to take that
scale but provide precision that let them pinpoint
targets. The final thing I should mention
is that while we have a very large and diverse
advertising base, we’re also very cognizant of the fact that
still in the big scheme of things that it’s
still early times. And there’s still a lot of
headroom there, and in terms of the number of advertisers
we have. Even in the US when you look
today particularly at the local market, there is still
over half of all small businesses don’t even
have a website. So there’s an opportunity. And we’re trying to help
bring them online. And as we do that some of
those folks will come to advertise with us quickly,
some down the line. And likewise around the world,
there’s a lot of acquisition opportunity that we’re
focused on through a number of channels. And we’re constantly testing
there as well. So we see a lot of opportunity
in our core business. But obviously, lots of growth. And we still feel like it’s
early in the game. OMID KORDESTANI: Thank
you, David. So Tim and I spend a lot of
time with our biggest advertisers and media companies
across the US. Tim, could you give the audience
your perspective of what you’re seeing from the
CMOs, CEOs in terms of their view on search, opportunities
there, as well as extensions of our business. TIM ARMSTRONG: Sure. So I think from an industry
level, it’s accelerating. I think the velocity of interest
in online as a total subject matter is actually
increasing both on the advertiser and agency and on
the media partner side. Overall within those pockets
I think there’s a couple of really key areas that
we’re focused on. I’ll give you a quick example. I was at one of the largest CPG
companies last week, and meeting with them. And one of the things that we’ve
kind of pioneered at Google is these things we call
asset maps where we basically in a very mechanical way help
a company that may be a very large multibillion dollar
company put all of their assets, all their products
services, and advantages on one kind of map. And when we sat down with this
company, who is a great partner today. I’m sure will be a great or even
a better partner in the future, we realize that they in
essence only had brands in Google’s system right now that
represent 1% of their overall revenue or company revenue. And I think from our standpoint
and their standpoint, we look at that
relationship as a very positive relationship already. But when we look at this asset
map and said wow we’re having a lot of success here
in this 1%. Is it likely we could spread
this to the other 99%? I think the answer
clearly was yes. I think that type of interest
level, but also just very focused deliberate work on our
part with these companies to make sure two things happen. One is in their products and
services, whether it’s advertisers or media companies,
follow the digitally transitioning
consumer. And number two is that
we do it at scale. I think that most of the
customers that we have today are very heavily involved
with us in search. And we have a lot of room
left to grow there. I think second of all, some of
the things we’ve been doing in the brand ad space and the
testing that we’re doing in the offline areas are of high
interest to these customers. Are still on a small scale,
but the scale doesn’t represent their interests in
those areas that we have a high level of interest. So in general, if you were to
look at the top 100 partners for us in the advertising world,
I think you would see all of them if you checked down
if they were spending more or less, or their interest
is more or less, I think you would see green
dots next to all of them directionally. And then two, I think you’d see
us investing very heavily in terms of very consultative
teams that are really were on the phone with these people
every single day. One big difference our program
versus I think other people’s program is our program is
actually built entirely on consumer schedules, not on media
schedules, which doesn’t sound like a big thing. But when you build your company
and our process and our products and relationships
on the consumer schedule, it means you’re basically real time
24 by 7 in contact with these customers based on how
different consumer patterns are changing. And I think on the publisher
side, we’re doing the job of that as well. OMID KORDESTANI: Great. Thank you. Brian, on the network side I
think the diversity of it is really representing the
diversity of the web today. And especially social networking
is really taken off as a big component of that. How are you seeing the dynamics
of the network and monetization opportunities
evolving on our network business? BRIAN AXE: Great. Yeah. Start with our history and the
core group itself has really been driven by the same
tenant that search ads have been driven by. And that’s useful ads. When we first launched Adsense
for content– it’s been almost four years now, almost five
years actually, the idea was pretty new to the web, that here
we took these assets that we’ve created within search
that were finite and laser focused to an interest, and
placed them on topic areas that were very laser focused
and interesting. So for example, mountain biking
ads on a mountain biking page. And was just not possible
before Adsense for content had launched. And that’s really what’s fueled
much of our growth. So that’s kind of the theme
for the drivers that we’re seeing in the way that we look
at the future growth of the content network. So ads quality being first, and
many of the things that Nick had mentioned applied
directly to content. The next one being the traffic
acquisition from publishers, and the features that we
offer our publishers. And then the third one being
the advertiser controls, different ways that advertisers
can segment the inventory like the large social
network inventory that we receive. So on the first one, ad quality,
very similar to all the processes that search
ads go through that Nick had described. The one thing that’s a little
bit different is that our signals are not as pure. What’s the intent of the user
when they’re reading a news article or on a sports page? And we work very well on
the contextual signals. If you’re researching a camera
or if you’re on an outdoor magazine reading about mountain
biking trails, as the example that I mentioned. Moving further into new types
of signals, this is an investment area for us, and an
interesting direction relative to taking some of the brand
dollars that have been more of the art side of it and turning
it into a science. So let me jump into the
second one in the traffic acquisition side. That there’s more publishers
that we can bring online. And a lot of this growth
is actually coming from international growth. The existing publishers that
we have, we see a lot of growth just from getting more
share of site within the existing publishers
that we have. And then lastly, new inventory
types like social networking. And social networking, we have a
very broad footprint and are investing in how better to
monetize this inventory. It’s very high usage, and not
high monetization relative to the contextual pages. One of the interesting things,
with this broad footprint we go from the Myspaces to ethnic
sites Black Planet. We’re in Facebook applications,
helping application developers to
monetize their applications. And then also the dating sites
and fun sites like Hot or Not out there. And they all have very similar
aspects to them. And the key investment area for
us is how to segment that audience based on various
different signals to put the most targeted ad in
front of the users based on their intent. One example of this– Myspace actually has as many
male 55 and olders on Myspace as the New York Times does. But if you just buy Myspace
across the board, that’s not what you’re going to get. So being able to segment the
audience per the goals of the advertisers is a really key
investment area for us. And we’ve seen some great wins
in the early stages of this. The third one is
to drill down. As I mentioned, the segmenting
audiences for advertiser control is one area. This is where I get into the
art and the science of it. So the science is the contextual
signals, and the signals that we know what the
user intent is about. The art side of it
is– well users– that mountain biking example. If I’m the mountain biking
advertiser, I may want to be on more pages, because I’ve
bought all the mountain biking pages out there. Would it perform on
sports pages? Or would it perform on
sports pages only in big metropolis areas? These are the types of things
that we’d like to enable through controls
for advertisers to experiment with. It’s sort of the art of–
they have intuition. They then try it. They turn into a science by then
looking at the feedback loops and the metrics
behind it. So all three of these together
really tie into a fourth one which is the network
effect which helps to fuel our growth. And just to describe that in
more detail, we’ve got the ads quality which produces
the better highly relevant ad to the user. So we get more clicks. Those clicks represent higher
monetization from the publishers. As the publishers monetize more,
that creates the demand for the advertisers
to come in. And as the advertisers come
in, that than increases monetization to the publishers,
which then creates the cycle of getting
more advertisers et cetera, et cetera. So we are very bullish about
the things that we’ve seen with the investments that we’ve
made, and that headroom that we have still to
go in this space. OMID KORDESTANI:
Thanks, Brian. When I was looking for a leader
of the enterprise business, one of the challenges
we faced is as a consumer company, there is this
stream of innovation like the ones you saw earlier in
Jonathan’s session, and finding a leader they can really
translate those for our enterprise customers. And as you’ve seen this year,
we made significant investments in the
space including acquisition of Postini. And Dave Girourd really leads
that business for us. So could you tell us more about
how your business fits in this Google strategy that
we’ve talked about. DAVE GIROURD: Sure. Thanks, Omid. Yeah. The enterprise business
at Google I think has amazing potential. And it has potentially a lot
of impact out there. And I mean that in several
dimensions. I mean on the enterprise IT
industry, I think we already are having an impact. And we are just getting
started. I think certainly on Google
as a company, we have the potential to be a really
important part of this company over time. And probably as important as
anything else, really to the experience that people have
every day with technology in the workplace. And I think that’s how we think
about this business. There’s a couple of very big
trends that are compelling and that I think make this
a worthwhile business for Google. To start with, the way
technology has worked in the way innovation happens
has really changed. If you think back 20 or 25 years
ago, you always had the best access to technology
when you were at work. You had the best computers. You had the best software,
the best phone systems, what have you. And when you returned home at
night, you sort of went back in time, right? You had maybe three channels
of network television. And that was about it. In the past couple of decades–
and really this is accelerating– that situation has
really inverted. You as a consumer have access
to amazing technology. And the pace of innovation on
that technology is incredible. And when you go into the
workplace, you tend to feel like you went back in time. And the technology is not nearly
as inspiring and as compelling. And you saw a lot of this in
Jonathan’s session earlier today in what we’re doing
on the consumer side. And that’s the sort of breathtaking pace that happens. And it’s not just
Google either. It’s a lot of other
web companies. It’s companies like Apple with
the iPod, and more recently the iPhone. It’s what the guys are doing
in the game consoles with Microsoft and Sony. And now Nintendo are doing
amazing things. The pace of innovation
on the consumer side just flies forward. For some reason, and probably
some very good reasons historically, there’s really
been this Chinese wall between technology for the consumer and technology for the workplace. And while that might have made
sense in the past, we think in a lot of ways it doesn’t make
sense for the future. So the core of our enterprise
business is how can we channel this innovation that’s happening
at this incredible pace on the consumer side, very
user centric, very geared toward simplicity and usability,
and channel that into the enterprise, and makes
tools that make a business more productive and the users
more happy with that technology. Now that’s fairly
unprecedented. But there are a couple of
interesting things really pushing this. We started an enterprise in
about 2002, before my time here, in a very modest way. And we aimed to solve a problem
that made sense for us to start with, naturally
search, and solving the problem of information access
and search within the context of a business. And that search appliance
business has grown nicely. And it’s really got gotten us a
solid footing with more than 10,000 customers out there. Earlier this year, we tapped
into something which we believe has potentially more
potential in terms of impact, and really the idea of
delivering Google’s hosted applications, our email
application, our calendar, our spreadsheet application that
you saw [? Rajin ?] demonstrate earlier, and package
those up in a way that would take advantage of all
this innovation, but would also have all the things
you need to deploy them inside a business. And that can be a small
business, a very large business, a university,
a nonprofit. And really by combining this
innovation with the things businesses need, which
are really security, manageability, low cost, policy
enforcement, the things that IT organizations, CIOs
think about and live with every day, you could really
have some breakthrough opportunity here. The other really compelling
trend that’s driving this is the whole software as a service
thing that’s happening in enterprise software. I’d say started
leading this initiative many years back. And we’re really beginning to
join this parade as well, and hopefully contribute to it. But the idea that hosted
software where you don’t have to install anything. You don’t have to
manage anything. You get this train
of innovation. You get it at a much
lower cost, is a very compelling story. And when you put this
consumerisation of IT together with this software as a service
hosted applications, those two come together to
be a very, very powerful opportunity. And that kind of encapsulates
what we think is exciting and what we’re trying to do in the
enterprise part of Google. OMID KORDESTANI: Thank
you very much. Nick, there’s a lot of
discussions about the headroom in our monetization as we
optimize and do this in a very scientific algorithmical
way a lot of times. What are the opportunities
that you see? There are verticals where the
prices seem to have reached high levels and the auction is
working really well, and there’s this ongoing question
of what do you see as the upside available in our
approach to search? NICK FOX: I get that question
that gets Tim at the stock pricer. So the reality is I think
the first time– I’m not sure if Omid
remembers this. The first time Omid asked me
this question was about three 1/2 years ago, I think. And he continues to ask. So we’ve looked at this
a lot actually. And there’s a variety
of dimensions by which we look at this. I think all of these point to
the fact that there is still substantial headroom within
monetization. There’s a few ways
I look at this. Number one is if you looked at
some of the presentations early today, particularly the
universal search one, you see great examples where
we’re showing fantastic search results. What my eye goes directly
to is the ads. And for example on the Hillary
Clinton query the Jack showed earlier today, the quality
of the ads was actually quite low. It shows that actually in terms
of headroom, there is a lot of opportunity to improve
the quality of those ads. We’re not the point where we’re
reaching the goal of ads that are as good or better
than search results. There is still a lot of headroom
just to improve those algorithms, to improve the
targeting, to improve the relevance of the ads that
we’re already showing. Number two is as we’ve focused
on– as quality a lot over the past couple of years, one of
the things that we’ve been saying is as we’ve been showing
higher quality ads, we’ve also been showing
fewer ads. What that’s created is a
situation where there’s actually quite a bit of
unsold inventory. There’s a whole bunch of queries
they don’t have any ads on them at all, or another
set of queries that show ads or maybe show one or two ads. Jack actually had another
great example of that. He had his ninja query. There were no ads
on that query. There are clearly ads that are
relevant to ninja, for example ninja weapons or costumes, or
whatever it might be ads. OMID KORDESTANI: What does our
policy team say about that? NICK FOX: But the reality is
we’ve gotten to a place where we actually have a lot of
opportunity to look at these queries, for example long tail
queries or whatever it might be, and find additional
opportunities to show ads on those queries. The third way I would look at
this is by looking at the work that the ads quality team,
my team, does. You might think that over time
as we do more of these ads quality changes, we’re
plucking away the low hanging fruit. And then there’s potentially
nothing left. That is not actually
the reality. The reality is that over the
course of the past few years, we’ve been developing a team
which has an incredible set of expertise in how to monetize
search results pages, how to deliver the best user
experience. And as we’ve built up that set
of expertise, the set of things we can do now is far
beyond any of the things we could have dreamed of doing
two or three years ago. What we see as a result of that
is the pace of innovation is actually increasing
within ads quality. As Jonathan mentioned on the
call last week, we launched over 20 changes in the
Q3 of this year. If you compare that to Q3 of,
say, 2003, there were probably two or three changes. That’s a 10x increase in
the number of changes. And those changes
are still having impact on the same scale. So the ability to make changes
and improve the quality of our ads has actually increased over
time as we’ve built this team of experts, statisticians,
computer scientist, economists, et
cetera, who can really understand basically the science
of monetization. The fourth thing I
would point out– and this probably goes more to
some of what we do on the sales side– is the opportunity
internationally. If you compare a market like
the US or the UK, fairly mature markets, to countries
like in Asia or in Latin America or in Europe, while
we’re still seeing strong growth in our more mature
markets, there’s even more growth that we’re seeing
internationally as we get new advertisers, as those
advertisers learn how effective Adwords
can be for them. And they devote additional
budget to Adwords. So across all of these
dimensions, I think we really do see that there is still
substantial headroom here. And we’re obviously very
excited about it. OMID KORDESTANI: Thank
you, Nick. So on those two dimensions, both
international as well as the ways we’re extending
our business. We’ll touch on that in the
next two questions. I’ll start with David to talk
about how our global operations are capturing the
international opportunity, how the investments we are making
in our platform of serving these advertisers in
the organization. How do you see these
opportunities evolving? DAVID FISCHER: Sure. Now we have an advertiser base
that we literally have advertisers in just about every
country in the world where you can access
the Internet and in every language. And in the early days when we
first launched the Adwords paper click model, and as we
thought about our aggressive internationalization plans, we
started with an assumption that we would need to really
customize as we looked market to market for the local culture,
the local advertising market, the local language
of course. And what we discovered pretty
quickly that was a key insight for us is that it’s actually
this global platform that we have that allows the single
Adwords platform for you to use that to target across
the whole world. Actually there’s a lot more in
common between all of these markets in terms of advertiser
experience, both what works for advertisers and most
importantly to what we’re going to focus on, what’s not
working for advertisers. And so what that fundamental
insight allowed us to do is build a model that really is
global in scale but focused on a lot of centralization and
efficiency as we thought about how we’re going to
service these advertisers around the world. And build a model that allows
them ultimately to help themselves and to get as much
services themselves with assists from us where
possible. And so what we’ve aimed to do
is build up large centers in each of the geographies where
it makes sense for time zone and language reasons. But rather than necessarily
being in each market the way that this direct sales team,
the folks like Tim and his teams who are out there with a
lot of face to face meetings, if you go to our European
headquarters in Dublin where we have a large team and I
really enjoy walking around the floor there. Because you walk around. Every few footsteps, you’re
hearing a new language. And I can’t even identify what
all those languages are. By last count, I heard they’re
something like 44 different languages spoken by the
employees there serving the brought [? Amia ?] market. But if you actually stop and
talk to them about the conversations they’re having
with advertisers, there’s a lot more in common. And so there’s a lot of best
practice sharing, a lot of efficiency that we get by the
global model that we have, not just within these centers
but sharing work within our locations. So around the world between
the US, between Europe, between our Asian operations,
particularly our India operations which have gotten
very large and which are providing a lot of efficiency
for us as well. There’s one other area that we
invest in a lot as we think about how we want to scale
our operations. And that is automation. Just being Google, a technology
company, of course it’s not surprising
that we think about engineering solutions. But just to give you one
example, when we launched Adwords back five 1/2 years ago,
it used to be the case that every single ad that was
submitted, we had a series of policies and some of our
syndication partners have particular policies that
the ads have to meet. And every one of those ads was
manually reviewed by a human. And as you can imagine, as we
scaled this ad system, that’s something that would add a lot
of cost and be challenging. Today it’s the case that
over 80% of ads require no human review. Because they’re all done
in an automated way. And we’re highly focused
on getting that number higher and higher. Similarly, as we think about all
our other key processes, trying to add automation and
leverage the engineering talent we have within
the company and make us really efficient. So we can ultimately provide a
great operating model, but ultimately serve our
advertisers, generate value for them in an efficient
way for Google. OMID KORDESTANI: Thank you. So I’d like to turn the
discussion over about the new opportunities especially
in brand advertising. And before I asked Tim how he
sees the opportunities and challenges with our biggest
customers now. I’d like to have Brian maybe
give us a glimpse, our only demo, versus the last session on
how some of these brands ad formats are working with us
today, and what we’re seeing– their opportunity. BRIAN AXE: Great. I have the great honor of
demoing gadget ads, which many of our advertisers are
very excited about. And [? Peter ?] is going
to help drive as I walk through it. One thing to say too
is that this is– what is a gadget ad? It’s a rich media platform that
Google offers not just for brand advertisers,
but also for direct response goals. It could be used
in either case. In this case you’re seeing a
typical website, Youtube. And the ad on the right
here is the ad. It may look like a typical ad. But as you start to interact
with it you realize that it’s not. Here you’re seeing the live
traffic updated for a local area that when you put in your
zip code, that you can see. And it’s got the draggable and
zoomable type of interface that you would see
with our maps. And the way to think of this is
almost a mini mash up that has advertising wrapped around
it, and advertising benefits embedded throughout. You can also go to the– again, tying the message
to the functionality. Here is the Nissan Altima
viewing from the inside. You can drag the interior
around. You can zoom in. And if you zoom in and actually
look really closely, you can see the navigation
system has that live traffic as well. So this ties back to the
identity of the Nissan Altima having live traffic. You just saw this great
functionality where you can see the live traffic within
an ad without leaving the website, and have this great
engagement type of experience. So advertisers really like
this, not just for the sexiness of what you can do with
this, with taking all the open standards and such that you
heard about this morning and applying that to ads, but
also because of the low cost infrastructure. There’s a great way that we
architected this in that there’s a flexibility that the
advertisers have. They can use their open standards. They host this on their
own website. And then we cache it within our
system so we can leverage the low scale cost
infrastructure as well as the Google homepage type of
performance, and deliver this worldwide in a very low
latency from a user standpoint, and then also
through the hooks that the advertisers or agencies
on behalf of advertisers can put in here. They can track over 60 different
interaction types. So now it’s almost like brand
response that you can start to have all sorts of responses that
have some value to the brand engagement, in this case
the association of live traffic with the
Nissan Altima. One last thing to mention is the
advertisers that are using this– we’re seeing them have
bigger budgets, start to point their budgets towards the buy
across the content network. Because the rich media platform
is built in with the functionality that they
get from a gadget end. OMID KORDESTANI: Thank
you, Brian. So Tim, are we getting
real engagement in these new format? What are you seeing? TIM ARMSTRONG: I hope so. So yeah. From a broad perspective– I actually just spent an hour
1/2 this morning with the team who’s in charge of this
with the customers. And I think we are getting
real traction I think for multiple reasons. I think one is the essence of–
and I think the people that we actually compete against
in the marketplace– if you listen to their
earnings call– have talked about how brand and
search are moving kind of closer together from a
metrics standpoint. So I think what Brian just
mentioned about the brand response, the more measurement
you can put on top of this type of functionality in the
brand space, it’s actually getting tremendous
traction overall. And I think from a broader
perspective in a lot of the new initiative areas
that we’re doing. A lot of it is tied
to basically a few different things. I think on the publisher’s
side, it’s tied to better yield management. So not just offering text ads
but these type of ads which potentially have as high
or higher monetization. The second piece is on the
advertiser side, when describing their asset map. Once we do that heavy work with
the advertisers, and we understand what all their assets
are, and then their goals under each asset, we can
start to layer in not just search, but start to layer in
these type of products and services behind them. So at the end of the day,
something we’ve been working towards is having a fully
functional marketing dashboard which is something that
we’ve been building. I think it takes search. It takes brand ads. The new initiatives we’re
working on in the offline space are starting to
built into those. So as a customer you can look
across not only your assets but your metrics and the
engagement cycles. And I think brand ads online
happens to be the most adjacent business for us. And I think that adjacency
is leading to some very interesting progress
and conversations. I think we’ve approached it
like we approached search. The first couple years is we
tried to do it the right way. I think even Youtube– for
instance when we bought Youtube, we probably could have
monetized it in the very traditional way brand
ads are done online. We took roughly nine or ten
months to try to figure out a really nice user engagement. That also led to very good
advertiser results. So I think we’re making
very good traction. I think other things like the
double click deal and other things will continue to layer in
more and more functionality and success in this
specific space. And then I think we have very
nice tests going on in the spaces outside of search and
brand which will hopefully continue to layer in more
information here. OMID KORDESTANI: Thank you. Thanks, Tim. Last question for the panel. So on the Google apps front,
Dave, how are you seeing the traction within the enterprises
with ISPs perhaps, universities as we saw
in the video earlier? DAVE GIROURD: Yeah. It’s been great. Like I said, we’re about
eight months or so into this product. We really launched it in
full force just in February of this year. And like you’d expect for a
hosted product, the uptake is enormously quick in
small businesses. But we actually are seeing
a lot of progress across businesses of all sizes. There’s already hundreds of
thousands of businesses using Google apps every day
and millions of users on these products. And again not referring to the
consumer side but really to the business side. Also seeing huge numbers of
universities or using this service to offer these email and
collaboration technologies to their students. And we have thousands of
universities who are already piloting and hundreds who have
already rolled it out to their students, which in our view is
a great way to produce people who grow up, come into the
professional world feeling very comfortable working in
the Google environment. We are also seeing great
traction with ISPs who really want to use the services and
offer them in kind of a private labeled fashion
to consumers. And really this is for them a
way to offer a better product at a much lower cost, and
really keep their users in the fold. And we’re seeing some great
traction there. We have million of
users through the ISP channel as well. And in kind of the
fortune 1000– if you will– large company
world, we really came into this I think earlier this year
thinking 2007, 2008 was going to be about small businesses
adopting. They’re the ones that
can move quick. And there’s a real long
technology adoption curve in bigger businesses. But we were certainly surprised
to see an enormous interest from companies of
almost every size and flavor in Google Apps and
what it can do. And we have probably 20 to 30
pilots going on in companies whose names you would all
recognize that are at various stages of deployment or
evaluation or roll out. So I think we’re going to see
over time companies of all flavors and sizes are adopting
and are very interested and compelled by this. The adoption curve I think will
always follow what you’d expect, which is for a new
radical type of technology, smaller businesses tend to
move first. But we’re definitely seeing movement,
excitement across companies of all sizes. OMID KORDESTANI: OK. Thank you very much. Thanks to all of you. Do we have time for Q&A or
should we open it up? Yeah. Are there questions we
could answer for you? AUDIENCE: I have a question
for Nick. Omid started off talking about
this balance between quality and revenue. And with that as a context, I
think most people in this room look at Google and see a company
where they can really pull the levers to
basically get to whatever number they want. That’s sort of the conventional wisdom around Google. So my question to you is with
how much precision can you really know what the changes you
are going to make mean for revenue through your
experimentation? And also how aware are you of
what the street consensus numbers are, and what people
within the company expect in terms of revenue? OMID KORDESTANI: Thanks. AUDIENCE: And you said to
ask a hard question so– NICK FOX: Thanks, man. So I think there’s a couple
parts to the question. One is how well can we
actually predict what’s going to happen? And number two is to what extent
do we use that insight combined with external estimates
to control things? The answer to the first part
is we have a huge amount of precision and insight into
what the impact of changes will be. Through our experimentation
we’ll know exactly what’s going to happen at click
through, what’s going to happen to cost per click, what’s
going to happen to user happiness, what’s going
to happen to revenue. So from an analytical
perspective, we have great insight into that, and really
rely on that to the extent that we decide to make changes
one way or another. We’re completely insulated
from what the external expectations are. We’ve made very conscious
decisions not to adjust how we serve ads to meet external
expectations. We’ve also made conscious
decisions not to adjust ads to meet internal expectations
either. We obviously do keep a very
close eye on what our revenue looks like and what our
numbers look like. There’s a process. We call it revenue force, which
is a combination of a monthly process where we meet
with our executives as well as a weekly process where a smaller
group of us meet to make sure that we understand
what’s happening with the business, where the various different metrics are trending. But we’ve stayed very, very far
away from actually making tunings or adjusting these
thresholds or you might call them dials to actually have
that kind of an impact. We don’t think that’s the right
decision for our users. We don’t think that’s the right decision for our business. OMID KORDESTANI: Just to maybe
add a little bit more to that. One of the things we decided
very early on was this process where we really have a waterfall
chart where we look at what is our base plan
for the quarter? What is a sales force quotas? What is foreign exchange Effects
What are the product upside plans? That a lot of these
plans, we need to wait to see them launched. We need to observe their impact,
and again a very sophisticated process of
watching that number every week and determining where
we’re going to end up. And we also removed this
critical point you raise which is build the real Chinese wall
where the decisions to launch are really from a product and
quality perspective, and really has a visibility all the
way to the execs and Erik making a call that that has been
done cleanly and not with any individual or with
the individual group playing with the dials. Because we’ve got to be very
careful with that. Other questions? Yeah. AUDIENCE: Hi. Bob Peck, Bear Stearns. Even just following up there
a little bit more. Directly, what inning of the
baseball game are we in for monetization domestically,
CBC, et cetera? And then where does that compare
versus internationally even just directionally. And ultimately the gadgets–
when we think about the gadget ads, is that a way for you to
monetize maybe other social networks without having to buy
stakes in them, without having to buy the companies
in general? Is there a way for the
developers actually to get paid for the gadgets they’re
making on these other social platforms? Thanks. OMID KORDESTANI: Brian
and Nick maybe? A combination? NICK FOX: Maybe I’ll
turn to Brian for the gadgets question. I’ll take the inning
questions. So that’s another question
I hear quite a bit. I try to stay away from
predicting innings. You never know if you’re going
to go into extra innings, so it’s the kind of risky
thing to predict. What I would say as I said
earlier, I am obviously very bullish about the potential both
domestically as well as internationally. I think from an inning
perspective, we are probably in an earlier inning
internationally than we are in the US. But that does vary. It’s not really so much a US
versus international thing. A market like the UK’s is a very
well developed market, probably more developed
than the US is. But as I said, I do see a lot
of upside for additional monetization gains. Whether it’s coming from CPC– we look at ROI metrics
et cetera. And we do see that our
advertizers are advertising profitably. So there’s room for
growth there. But also certainly from
the click through rate perspective, as I said, the
ads aren’t as relevant as they could be. They can certainly be more
relevant, which drives a lot of room for growth in
click through rate. The same thing on the coverage
or number of ads we show per query perspective, as I said,
we’re showing really very low number of ads relative to where
we were historically, and relative to what
we could display. So there is also
headroom there. So [INAUDIBLE PHRASE]. BRIAN AXE: Yeah. And on the gadget question,
probably the right way to look at it is there’s gadgets that
are purely about consumer functionality. There’s gadget ads that the
advertisers really have some sort of brand association
like what you saw here. And then within social networks,
there’s ads that are on the social networks
themselves. We play in all three spaces. And there’s some morphing that
could take place in each. So just taking the gadgets
themselves, we have the Google Gadgets and we’re looking at
different ways that we can monetize those gadgets. But ultimately they need to be
great for users and a good user experience. Facebook has their
version of this. And we actually are monetizing
their developers. And in our case, the developers
look like websites. So instead of doing a rev-share
with a website, we’re doing the rev-share with
the developer that’s getting the adoption of those
applications. So that’s kind of the consumer
space of gadgets. One last thing to mention is
that some of the gadgets, like in our case, could be video
gadgets that if the content has been cleared and we can show
advertisements on them, they can somewhat morph into a
advertising type of gadget as well, even though the user put
them on their page just for the consumer video
aspect of it. These are more consumer pull
we just talked about. Gadget ads are more
advertiser push. So the advertisers would look
for their segment that they’re trying to reach, and actually
target those segments. They’ve got brand messages,
interactivity. They’re fun, engaging type of
ads that people can go after. They’re typically bought
on a CPM basis today. They could be bought on a CPC
or CPA basis, similar to how we combine within the auction,
CPC ads, CPA ads, and CPM ads and come up with the highest
yielding ad based on predictions of click through
rates and conversions. So that’s the bucket
of CPM ads. And then there’s just what we’re
doing on social networks with ads that could have
interesting functionality, or they are just targeted
and useful to users. And that’s where the
segmentation of the audience becomes a really critical
signal for us. OMID KORDESTANI: Thank you. AUDIENCE: Hi. Marc Many with Citigroup. Two questions. Tim, that 1% of large CPGs
spending with Google– If we think about what are the
major obstacles there. If in five years they’re
spending 10% of their advertising online, 1/2
of that with Google, how do they get there? Can they just get there by
purely organizationally embracing search? Or do they have to be buying
display video advertising and off Internet advertising from
Google in order to have 5% of their spend with Google? And then, Nick, real quickly–
that Hillary Clinton example you made. I actually thought
that the ads on the right were relevant. The big difference was there
weren’t any video or stills in their display ads. Is that what you were talking
about in terms of the monetization opportunity? And would advertisers be willing
to pay dramatically more for leads off of those
kind of formats? Thanks. OMID KORDESTANI: Tim start. And I think I’ve got to probably
do a disclaimer here that I think that 1% wasn’t
scientifically achieved. it was a figure of speech by Tim. TIM ARMSTRONG: In this case,
actually, it was a little scientific just because we were
only running with one of their brands. So I think in that case that
did represent 1% of their– I don’t want to misalign
the numbers. But that was a real case. And two is that there’s probably
three areas that really need to happen. One is organizationally, I
think, and organizationally in three different areas. I think there’s our
organization. I think there is their
organization, the clients. And then there’s the agency
organization. And I think you actually see
all three of those areas basically doing a lot of
investing on people and infrastructure to basically
align these things correctly. So if you’re that CBG company,
the question is if you’re having tremendous success in
one brand, why isn’t that happening in all the
other brands? A lot of it comes down
on communication. A lot of comes down on the
international issues with the communication, those things. So we’re aligning that. Two is real clear metrics. So I think one of the things
that we have been working on are metrics that actually meet
their internal metrics, speaking their language. And I think a lot of the tools
we’re building actually are happening in that area. And then the third piece which
is I think important is us organizing basically the
inventory, whether it’s search or brand or those type of things
to really clearly, clearly fit their segmentation
need in terms of the consumer solution. So I’ll give you a real
life example. And this is a case where we’re
probably not optimizing this. And there is a lot of headroom
left in search, which is at my house, I have three
little kids. There’s a lot of spilling
chocolate milk on oriental rugs. And my wife is generally online
looking for how to get chocolate milk off
of oriental rugs. I think if you do that search
there’s probably very few ads coming up in terms of a value
for both the CBG customer as well as a value for my
household as a pretty important search. And I think that is true across
every single one of their segments as a whole. So there’s room to grow
just in search, which is a lot of headroom. There’s room to grow
in the brand stuff. And then the offline stuff–
this customer happens to be testing some of the
offline stuff. And I think there’s a lot
of room to grow there. So I think getting the 5% should
be very achievable as long as we work really hard. OMID KORDESTANI: Yeah. Nick, you had a component
to that question. NICK FOX: On the Hillary
Clinton– So the question is where is the
opportunity on the Hillary Clinton query? What types of ads should
we be showing? The concern I had about the ads
on those queries was, even from a tax based ad perspective,
these are not the ads that I aspire
to be showing. I think you’re right. They were relevant. But they weren’t the best. For
example, any page experience. I would say they weren’t
the best we could potentially show. From the format perspective,
we’re not spending a huge amount of time thinking about
non text formats on search. One of the things we are very
careful of is the success of the company has come from having
a very unobtrusive ad format within our
search results. And we don’t want
to lose that. So certainly anything we would
do that went beyond that would be something we do very
carefully, again with the user first and looking at what the
user is interested in. I think it certainly is possible
that, for example, a video or a graphical ad format
may be more useful to the user on a query. But we would need to do a lot
more research and studying to actually understand what
that impact is. I think a larger opportunity,
and what we’re focusing on more immediately is how to
improve the text ads on that type of a query to actually make
them even more relevant and even more what the
user’s looking for. OMID KORDESTANI: Questions? Maybe one on this side? To the right, please. AUDIENCE: Hi. Another question for Nick. And that is when you do your
when you do your testing of the new changes you are going to
make, do you have a control group where you don’t do any of
the changes so that you can see what portion of the increase
in monetization is from just an increase in
liquidity of advertisers, having more advertisers, versus
the change in the technology? And if so, over the last few
years, what portion of the change in monetization is due
to technology versus just liquidity of advertisers? NICK FOX: Yeah. So the question is to what
extent do we have a control? How are we doing these? How are we actually running
these experiments? And what portion of the change
comes from changes that we’re making to our ads quality
versus natural growth of the business? On the first side
of that, yeah. We certainly have a control
group where we’re running we’re running properly
designed scientific experiments to understand what’s
going on comparing versus the control group
in real time. And the second part
of the question– I don’t want to get into the
specific numbers there. I think we’re seeing
contribution from both the– we are seeing growth and
monetization as a result of new advertisers and of
advertisers giving us additional budget, giving us
new key words, et cetera. And we also are seeing growth
from the changes we’re making in ads quality. They. sort of reinforce
each other. Some of the changes we make from
the ads quality side may just accelerate some of the
changes that the advertiser may make themselves. For example if we make a change
that enhances the type of broadening that we do,
perhaps that’s doing little more than helping the advertiser
figure out better keywords, which those
advertisers may have done anyways. So thre’s sort of a nice
relationship there with– these two interact nicely. OMID KORDESTANI: I actually have
a nickname for Nick and hi team and also the
forecasting team that works for me. Is that I really refer to them
as the Greenspan of our operations. So there’s a lot of economic
analysis and testing that’s really value. Back. All the way in the back. AUDIENCE: Jordan Rohan,
RBC Capital Markets. A couple of softball questions
for Tim Armstrong. First, can you comment on the
status of the implementation with Myspace and Fox
Interactive. Specifically, it’s been about
nine 1/2 months since the testing and implementation
began. Is it making money for Google? Is there actually a positive
impact on a quarterly basis there? The value that search inventory,
is it greater than the minimum guarantees
paid to Newscorp? And the second question is is
there any clarity that you can give on the potential strategic
relationship or investment in Facebook? There are some reports that
just hit the tape that Microsoft has edged
its way into that at a very high valuation? Any commentary would be
much appreciated. Thank you. TIM ARMSTRONG: Sure. So quickly on the Myspace
relationship. Overall, I don’t think we’re
going to comment on the specifics of the monetization
there. But I think both companies are
actually working really well together to make sure that
deal is successful. I think even just from the
interactions, I think both product and sales and executives
have on a constant basis there that I think
we would describe it as successful. And they would too. And then I think on the Facebook
things, I don’t think we’ll comment at this point. I would just say that I think we
have tremendous respect for them as a company. And I think we have a tremendous
amount of social networking happening across
the web that Brian kind of described earlier. So I think that we’ll
leave it at that. OMID KORDESTANI: Yeah. Let me add maybe a little bit
more [UNINTELLIGIBLE] is on. When we do these partnerships,
again, we take a look at the entire length of
a partnership. And we do take risks in terms of
the guarantees we’re going to place on the monetization
and count on our rate of improvements on the product side
as well as traffic and improvements and working
with a partner. So again, based on all those
analyses, we are still confident that we are on
the right trajectory. Now we’ve got to still do a lot
of work on both sides to make the monetization improve. And the traffic on their side
has to be delivered. And we’ve got to do a lot of
experimentation on different placements of ads. And the relationship
allows for that. And we’re hard at
work on that. And I think– Sorry, Tim. TIM ARMSTRONG: Well I was just
going to say I think the process that’s been described
here between Nick and Brian, I think, is the same process we
actually bring to partners. When we sign those partnerships,
we actually have the same amount of level of, I
think, math going on, and also sales activity. And then second of all, I think
even before we do these deals, we actually apply those
to the deals as well. So I think as much as I think
we take risks on things, I think we’re also internally
very, very careful and methodical about thinking about
these partnerships at a broad scale. OMID KORDESTANI: And in terms
of new partnerships– one last thing maybe really
relating to Facebook. This applies to all the
partnerships we look at now. We are pretty confident that
we do have the best monetization globally at this
point, and that when we work with these partners, the revenue
sharing models that we build we believe in general we
can win on the basis of the economics analysis that we do. And again, in each case
it becomes a different opportunity where the partner
then has to consider not only the economic factor but all the
strategic benefits they may have to align with us
or our competition. So in terms of access to that
kind of inventory though, and a social networking inventory,
there is plenty of it with Google’s own properties as well
as the network and the Myspace relationship. Let’s see. One more question here? In this side there is a
team of people here. AUDIENCE: Thank you. Yusef Sculia-Jeffries. Question for Tim. Going back to your CPG
example before. Do you feel that you need more
consultative resources as you move or as you try to
go for that 10% or 99% of the revenues? And particularly, I guess, as
you address or you tackle the offline target or the
offline opportunity? And secondly, on Doubleclick,
how would that acquisition help you in that example
if at all? Thanks. TIM ARMSTRONG: So I think
quickly to broad base of scale, I think the answer is a
few years ago we actually took a fairly large risk as a company
to, one, really hire very consultative people and
set them up in groups. So if you came into our
organization today, there’s actually meetings with customers
here on campus happening today where there’s
about eight or ten Googlers and 10 to 30 people from
these other companies. Omid was at one yesterday. So in our consultative basis,
we are actually probably as far along or further along than
anyone in the spaces in the very consultative sense. In terms of new skill sets
within that consultative area, the marketing type, brand
advertiser type skill sets, we’ve actually added a fair
amount of people who have those skill sets and backgrounds
to the team. But in general, we have this
thing called the Google brand accelerator internally, which is
a group of people who both have Google backgrounds as well
as marketing backgrounds. They’re a centralized team which
is basically leveraging out across the globe to actually
help our teams move beyond search into these
other areas. And I think that is becoming
a real success metric for us in general. And then in terms of that
example with the CPG customer with Doubleclick, if you take a
giant step back and look at how the CPG is organized, their
agencies, and all of the different things they do in
their different divisions, you would see different pieces of
technology used in every individual division based
on their agencies. And I think one thing that
Doubleclick will allow us to do– the deal hasn’t
closed yet– but in essence the speed to
market for us to play in some of the areas we haven’t
played in yet. So if you happen to
be a division– And let’s say you were detergent
division of that consumer packaged good company,
you were using Doubleclick as a serving
process, but also using Creative Tools and things that
they had, that may preclude you just from a time allocation
standpoint from using Google’s products
and services. I think eventually they
would use them. But I think from a time to
market ability for that division to come onto our
content network, to be on Youtube, those type of things,
it’s a very important piece the puzzle for us. And just quickly brand ads has
three things you have to be successful at. One is you need to have the
right list of advertisers. We have that today. Two us you have to have a
creative tools and serving tools which meet the
needs there. And I think that’s exactly one
of the reasons we tried to acquire Doubleclick. And then the third piece
is measurement. And I think today we’re
expanding our measurements greatly. Doubleclick has been doing
the same thing. So I think the culmination of
Google and Doubleclick will actually bring a lot more
information to the advertising space in general for
these customers. I don’t know if you– NICK FOX: Yeah. Nothing to add. OMID KORDESTANI: Thank you. I think we want to keep you guys
on schedule for the rest of the calendar today. But there’s going to be
more opportunities for questions later. Just again I wanted to
thank you, the panel. As you can see, we have really
great opportunities and really great minds that are
working on them. And I look forward to spending
the rest of the afternoon with you. George– GEORGE: Great job, guys.


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