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I finally found two people who agree with me that Google is overrated


Yes, I'll just say it. I think that Google is overrated -- and I don't mean just a little bit.

What's shocking is that I've discovered that there are two other people on the face of the earth who actually agree with me. One is new ZDNet columnist (apparently he doesn't like being called a blogger) Andrew Keen, and the other is Donna Bogatin, whom Keen recently wrote about.

Google logoBefore I tell you why Google is so overrated, let me first say that Google.com is my homepage and has been my favorite search engine for a long time. In the late 90's I used to bore my wife by telling her how cool it was that this little company called Google used a farm of cheap off-the-shelf servers to create the world's best search engine. While Yahoo and Microsoft were throwing tons of money at the problem, the little guys at Google simply outsmarted them. It took a few years to convert her (she was an AltaVista user back then), but like the rest of the world, she eventually became a Google fan, too.

When Google came out with it's IPO, a lot of my non-technical friends and family asked, "So are you going to buy Google stock?"

I just looked at them with a quizzical smirk and said, "Why would I do that?" As much as I loved Google's technology, the pragmatic business side of me looked at Google and saw no business model that was even close to being worth investing in.

At this point, you're waiting for me to do a mea culpa and write, "Boy, did I screw that up!" However, I honestly don't think I made a bad judgement about Google. No one could have predicted that Google's paid search ads would take off they way they have and been such a financial windfall, and anyone that does is not being honest.

Sure, it would have been nice to buy some Google stock and cash it in now that it has skyrocketed to obscene heights, but I don't believe in using the stock market that way. I have this old fashion notion that the stock market is for investing in companies that you believe in from a business standpoint and want to support in their business objectives, and not for trying to make a quick buck.

Even with its huge growth in paid search, Google is not a sound long-term business in my view. It is a one-trick pony that is due for a "correction," in stock market parlance. It has no other substantial revenue stream from businesses other than paid search, and that golden goose is currently under attack from a lot of different directions.  

Don't get me wrong, I'm not rooting against Google. As an employer, Google has done a lot to improve employee benefits and work atmosphere, and as a result they are raising the bar for other technology companies as well. I love them for that.

I just think that most of the world is under a mass delusion about how good Google really is as a business, and it could come back to bite investors and the rest of the technology world, if we're not careful. And I am really glad to have found two other human beings that feel the same way, as I discovered in Andrew Keen's recent column (don't call it a blog post).

About

Jason Hiner is Editor in Chief of TechRepublic and Long Form Editor of ZDNet. He writes about the people, products, and ideas changing how we live and work in the 21st century. He's co-author of the upcoming book, Follow the Geeks (bit.ly/ftgeeks).

61 comments
dsimp
dsimp

I remember life prior to Google. Several of you admitted you use Google often; let me suggest you do so because it Works. It's very hard to define overrated when it is the tool you reach for First. The speed and accuracy of Google searches I do today, still blows me away. They are so much better than their competition, I think those who criticize Google dont know what searching was like before they came on the scene.

jljones
jljones

I would think that any of the so-called "search engines" and others of of their ilk are grossly overrated. I avoid Google and Yahoo with a passion. I try to only utilize those search engines that are NOT federal government (NAZI) lackeys. Jerald L. Jones

TechExec2
TechExec2

. From (1): [i]"...In standard Internet search, [b]Google has more than five times the usage of Microsoft's MSN and Windows Live search engines[/b], according to researcher Nielsen//NetRatings in New York. [b]Since Microsoft first released its own search technology more than two years ago, the company's share of the market has declined[/b], according to Nielsen...."[/i] ------------------------- (1) Microsoft to Buy Tellme, Adding Phone Search Software (Update1) http://www.bloomberg.com/apps/news?pid=20601103&sid=a7r16T5IolH4&refer=news

TechExec2
TechExec2

. I am not about to say that there are not risks in Google's business model. Not at all. And, today's $1B suit by Viacom against YouTube is not a good thing for them. :0 But, consider this: [b]Observations[/b] - Google has momentum. Escalating growth year after year. - Internet advertisers pay Google because their advertising works for them. They will continue to put their advertising dollars in something that brings results (customers, sales). - People are going to choose the search engine that gives them the results they are seeking, including paid search results. - This is a self-feeding model. - "Google" means search in the mind. It's a strong brand. - Google is building out a huge very expensive infrastructure (barrier to entry). - Anecdotally: I use Google 99.9% of the time. [b]Consistent Dramatic Growth[/b] Contrary to what some have posted here, Google's financials are outstanding. In particular, [u]margins are excellent[/u]. [u]Profit margin is growing every year[/u]. [u]They are dramatically growing the top line and bottom line every year[/u]. [u]The stock is way up. Other metrics such as revenue and profit are up a lot more.[/u] the P/E ratio is falling down every year. This doesn't look like the financial profile of a company about to implode to me [from (1)(2)(3)]: Year...................... : 2006.........2005.........2004.........2003 Stock: Price..................... : $500.........$460.........$200.........N/A EPS....................... : $10.21.......$5.31........$2.07........$0.77 P/E....................... : 49.0.........86.6.........96.6.........N/A Income: Gross Margin.............. : 65.6%........62.9%........58.9%........61.0% Operating Margin.......... : 38.9%........39.1%........31.0%........27.1% Profit Margin............. : 29.0%........23.9%........12.5%........7.2% Revenue................... : $10.6B.......$6.1B........$3.2B........$1.5 BILLION Income.................... : $4.0B........$2.1B........$0.6B........$0.3 BILLION Balances: Assets.................... : $18.4B.......$10.3B.......$3.3B........$0.9 BILLION Liabilities............... : $1.4B........$0.9B........$0.4B........$0.3 BILLION Equity.................... : $17.0B.......$9.4B........$2.9B........$0.6 BILLION Between 2004 and 2006: ..Revenue up......... : 331% ..Income up.......... : 666% ..Equity up.......... : 586% ..Stock up........... : 250% [b]The Bottom Line[/b] Year over year growth shows no sign of letting up any time soon. If Google can continue growing, the stock will not fall. ---------------------------- (1) Google Profile http://www.marketwatch.com/tools/quotes/profile.asp?siteid=bigcharts&dist=bigcharts&symb=GOOG&sid=1795093&time=8 (2) Google Financials http://www.marketwatch.com/tools/quotes/financials.asp?symb=GOOG (3) Google Stock http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=goog&sid=0&o_symb=goog&freq=2&time=12

georgeou
georgeou

Donna has lots of good coverage on Google and offers a little balance against all the hype.

dawgit
dawgit

I found that out last year with this post here on TR, with "Search Engines, Do they really make sense?" @:[ http://techrepublic.com.com/5208-6230-0.html?forumID=87&threadID=196096 ] Google does have a good purpose, as do the many others. But, just like all technology, it does get turned around to being useless to it's intended purpose. Is your TV really the same as it was 40-50 years ago? Your Radio? 60 years ago the Radio was the lifeline to the world, now it might supply background noise in a corner somewhere. -d

tdambra
tdambra

I am sorry but your piece is self-serving. Are we supposed to be abashed at such prescient wisdom and foresight shared by only a very few. That the Google business model is unsustainable is not news. That the search product is good is again not news. Markets will deal with these issues as soon as Google's growth falters and income starts to fall. What is of concern is the strangle-hold Google has over SEO. The whole Google PR SEO machine is a distortion of web site marketing, with a web presence held ransom to Google's undocumented and unaccountable process of Web page rankings. Also of concern is the integrity of the Adsense regime, with siginificant hits understatement against Google Analytics figures. Use your platform for discussing real issues not for self-promotion.

Absolutely
Absolutely

They outsmarted Yahoo & Microsoft, by your own account. Now, it's your turn to admit that they, [b]and those who invested in Google[/b], have also outsmarted you! "While Yahoo and Microsoft were throwing tons of money at the problem, the little guys at Google simply outsmarted them." [i]Before I tell you why Google is so overrated, let me first say that Google.com is my homepage and has been my favorite search engine for a long time. In the late 90's I used to bore my wife by telling her how cool it was that this little company called Google used a farm of cheap off-the-shelf servers to create the world's best search engine. While Yahoo and Microsoft were throwing tons of money at the problem, [b]the little guys at Google simply outsmarted them[/b]. It took a few years to convert her (she was an AltaVista user back then), but like the rest of the world, she eventually became a Google fan, too. When Google came out with its IPO, a lot of my non-technical friends and family asked, "So are you going to buy Google stock?" I just looked at them with a quizzical smirk and said, "Why would I do that?" As much as I loved Google's technology, the pragmatic business side of me looked at Google and saw no business model that was even close to being worth investing in. At this point, you're waiting for me to do a mea culpa and write, "Boy, did I screw that up!" However, I honestly don't think I made a bad judgement about Google. No one could have predicted that Google's paid search ads would take off they way they have and been such a financial windfall, and anyone that does is not being honest.[/i] False. Those that invested their time -- a part of [b]their very lives[/b] -- believed it had promise. What did they believe to be the likelihood of the [b]extent[/b] of its success? That's not for you or me to know. The premise upon which they decided is that it had [b]merit[/b], and the potential to succeed in the [b]free[/b] market. They acted accordingly, and have been rewarded appropriately, [b]by the market[/b] from which they [b]EARNED[/b] their money. Those that [i]invested[/i] their money, which they also [b]EARNED[/b] with the exercise of [b]their effort[/b] during [b]their[/b] time (Note the possessive pronoun: [b]My[/b] time belongs to [b]ME![/b] While I am at work, I am providing my productive effort to my employer. I offer [b]nothing else[/b] in exchange for $$$$$$$$$$$$. My [b]time[/b] is mine.), which they might have spent doing other things, also [b]EARNED[/b] their money, fair and square. Complaining about being surprised that it was [b]so[/b] successful in no way undercuts the validity of the earnings of those who had better instincts, better judgement, or better expertise than you. Google is not "overrated". I believe there is a much better argument to be made that Google is over[i]utilized[/i] by a [b]market[/b] (that's you, all you whiny little twits!) which tends to prefer extending the [b]breadth[/b] of individual knowledge to improving our depth of knowledge of any topic. Another thread, perhaps. [edits: [b]I[/b] added some [b]emphasis[/b] and some CAPITALS here and there, and some necessary "quotation marks".]

jasonhiner
jasonhiner

We're in complete agreement on the fact that Google is a great search engine. I am not saying that Google is overrated as a search engine - I don't believe that at all. My point is that Google is overrated as a business and the stock price is completely irrational, and because of that it is due for a major correction that could send shockwaves through the tech industry.

fw32
fw32

I don't believe you would recognize a NAZI if one fell on you. You are the lackey of ignorace. Why is it that millions of immigrants line up to become citizens here every year and other millions enter illegaly every year?

jasonhiner
jasonhiner

Google has a great search engine. I love it. I use it every day. However, they have a very limited business model and the inflation of their stock could eventually send shockwaves through the tech industry when it falls back to earth. That's what I'm trying to say.

tdambra
tdambra

> Year over year growth shows > no sign of letting up any > time soon. If Google can > continue growing, > the stock will not fall. This is what a bubble does until it burst? Google and the Web for that matter are not immune from the real economy. The US economy is heading for a dive, and Web marketing will be the first target for cost-cutting when corporates seek to maintain "the bottom line". Google is desparately seeking to diversify because even they know that their current business model will not survive the next inevitable economic downturn. Btw, the insinuation made elsewhere in this thread that "techies" know nothing about business and finance, is more grandstanding. In former lives I was a banker, performance auditor, and business manager, and like many other "techies" actually run my own business. I also hold a two business degrees. I therefore consider myself more than qualified to comment on business issues.

jasonhiner
jasonhiner

There's nothing that I'm promoting here. I'm simply saying that Google is in for a major fall and it could end spilling over to other tech and Internet companies. So all you techies out there should quit buying Google and driving the price up because it's going to hurt us all! [That's sarcasm, by the way]

Justin James
Justin James

"What is of concern is the strangle-hold Google has over SEO. The whole Google PR SEO machine is a distortion of web site marketing, with a web presence held ransom to Google's undocumented and unaccountable process of Web page rankings. Also of concern is the integrity of the Adsense regime, with siginificant hits understatement against Google Analytics figures." I agree 100%. Imagine going to the marrket to buy some bananas, and at the checkout, they said, "tell how much you are willing to pay, at most, per banana, and what the maximum amount you are willing to pay for bananas for today" and then they charged you the maximum amount you were willing to spend total, and gave you 5 pounds of bananas, but would not tell you how much you spent per pound, or why you were charged what you were charged. And every day, when you went into the store, they charged you your maximum "banana budget" with no explanation of why or how, but if you did not set your maximum price per pound high enough, you would still pay your max budget, but onhly get the rotten bananas. That is what it is like being a Google AdWords/AdSense advertiser. I would be sued for fraud if I sold a physical product the way they price their ads. J.Ja

fw32
fw32

who has rated google? I use it 99% of the time for my initial searches and like it a lot. If I need more info I modify my query or try other engines until I get what I want. It has never let me down. The stock price means to me that google will be around for a while. I don't do stocks. Also, many of the databases that google used have been modified to prevent access by google. Many sources I would like google to use are now closed to non-members. Thats the market place doing its thing.

jasonhiner
jasonhiner

that doesn't change the fact that they have no long-term business model. When the Google IPO first came out I couldn't honestly invest in them if I didn't believe in them in the long term, even if the stock had great short-term potential. That's why I do not regret not investing in them. In my book, the stock market is for supporting companies you believe in. I abhor the fact that it has simply become a form of white collar gambling. As for your overutilized argument, that's a stretch. Google built a great product and captured lightening in a bottle with their paid search product. Some might say that they simply got lucky. Either way, they still have the best search engine in the world and they will be around for a long time. However, their business model and stock are overdue for a major correction to bring them back to earth. And the longer it takes, the bigger the fall could be. And when it happens, it could also drag down other tech and Internet companies. That's my biggest fear.

Antagonist
Antagonist

I completely agree and I also predicted that google's ipo would be very successful. I recommended it to all of my friends and many of them made a lot of money because of that recommendation. Google kicks ass, is the ONLY search engine worth anything, and ask.com sucks.

dsimp
dsimp

Sorry Jason. Yes I agree with your point of view. Great engine, silly stock price. Maybe taking some long term Put options might be the smart thing to do? (until the correction happens) Kind regards

dawgit
dawgit

I've been saying that for a while now. (Re: see my post above.) Are people just now waking up? What bothers me is the 'Business Model'. And that the American people paid twice for what should have been 'their' company. The whole operation was financed by the American tax payers, (DARPA) then the founders pocketed the 'windfall' from the IPO. :0 Geeeze, Wake up America. X-( -d

Justin James
Justin James

... Google's cooperation with the US government's request for search histories. Not defending his remarks, just an explanation of what he meant. Definitely guilty of reductio ad Hitlerium... J.Ja

TechExec2
TechExec2

. I read the blog! :-) I'm not saying that Google's stock will never fall. I'm not saying that Google will not have some serious competition some day. I'm not saying there are not risks in Google's business model. [b]Strong, consistent, dramatic growth[/b] The fact is, Google has shown very strong consistent dramatic growth every year since going public. The stock is way up, but key financials are up a whole lot more. Google has a lot of momentum (1). [b]Diversification[/b] I agree with you that they cannot rely only on search, but they seem to know this. They are using their cash to diversify (e.g. Google Checkout). Personally, I think they need more adult supervision and better execution with these new ventures. But, they are certainly not sitting back and relying on search. [b]Enter Microsoft[/b] Microsoft is entering the online services space, including search. But, Microsoft does not have the leverage in that space that they do with desktop operating systems. Microsoft cannot pull an "Internet Explorer" (to kill Netscape Navigator) or a "Virtual PC" (to kill VMWare). There is no guarantee that Microsoft will do well there. They might even fail. Thus far, Microsoft's biggest gains have come through using leverage -- killing competitors -- not by building great products and winning in the marketplace against competitors. Microsoft is going to have to learn to do that in order to beat the competition in the online services space. [b]Google is not like Red Hat[/b] Google is not like RedHat (stock soared high after the IPO, then crashed). Google's IPO was well after the dot-com bust. Google has real profits that justify the stock price. If Google keeps growing, the stock will keep growing too, just as it should. ------------------------------- (1) Google has MOMENTUM http://techrepublic.com.com/5208-6230-0.html?forumID=102&threadID=213858&messageID=2190740

TechExec2
TechExec2

. If there is a crash in the U.S. economy, then all bets are off, now aren't they? ;-) The article here is saying that Google is heading for a dive all by itself. Some posters here act as though Google has no momentum at all and can be easily overtaken by Live search or Yahoo. Not that easily. Some posters here incorrectly cited Googles financials. It's clear they are talking without thinking, don't even know their facts, and don't know anything about finance. That's what I was responding to. --- I don't see the "desperation" in Google that you mention. They are sitting on huge sums of cash and are publicly claiming to not being that interested in investing it. Their behavior reflects this. Even if Internet advertising slowed down, they would still be very profitable. They have strong margins. I think they are simply diversifying because they are accumulating massive amounts of cash. --- But, you could be right about the U.S. economy. And, if you are, all bets are off for Google, every other U.S. business, and a lot of rest of the world too. Let's hope you're wrong. We don't want a global recession. Cheers...

fw32
fw32

sell elsewhere. (edited) Google conducts an auction for ad space. The higher the bid the better the return. Low budget equals poorer results. Lowest bid gets rotten bananas at the highest price you are willing to pay. There is no conspiracy.

Absolutely
Absolutely

A business would not succeed in a free market, if it were as terrible as you describe. My guess is that these smart guys came up with a billing algorithm using the same advanced thinking that helped them build the best search engine around, and that they're being very accurate about billing their customers only for the real advertising provided. It may be complicated, but judging by Google's success, and my own experience of its utility, I suspect it's accurate & fair to all the advertisers.

jasonhiner
jasonhiner

a legitimate divesified business model emerges. Then, I might be glad to sign on. I don't have anything against Google (in fact, they treat their employees very well and are a credit to the tech industry from an organizational standpoint). I just have a problem with the irrational inflation of their stock and the overhyping of the company in the media and on Wall Street.

Absolutely
Absolutely

[i]Also, many of the databases that google used have been modified to prevent access by google. Many sources I would like google to use are now closed to non-members.[/i] Non-members? Databases closed to Google? I thought they maintained their own databases, of people's Google searches, and tuned future search results according to those, & ... Um, I am just not clear what it is that you're saying cannot be accessed, by whom, and what impact that has, on whom. Please clarify. Thanks,

Absolutely
Absolutely

I do agree that Google is the best search engine, and shouldn't have implied that it was overutilized [i]relative to its competitors[/i], although my clumsy, careless phrasing suggested exactly that. Rather, what I meant is that the public (those members of it most familiar to me, at present, anyway, myself included) over-utilize search engines and other sources of brief synopses such as wikipedia. It's just the banal, monotonous 'sound bites' complaint. Perhaps I should thank you for having assumed I was saying something more novel, albeit incorrect? "As for your overutilized argument, that's a stretch. Google built a great product and captured lightening in a bottle with their paid search product." Best search engine for me, without a doubt. I just look too often for tidbits, when it would really behoove me more to gain deep expertise in a smaller number of subjects.

Absolutely
Absolutely

"Google kicks ass, is the ONLY search engine worth anything, and ask.com sucks."

jasonhiner
jasonhiner

Google did do a little bit to help make the Internet more useful.

fw32
fw32

also youtube, myspace, aol, yahoo, etc

Absolutely
Absolutely

[i]jljones made a vile slur against me through my government in a false comparison to NAZISM. I do not believe the reductio pun was anything more than an effort to calm the situation that my obvious umbrage caused. I wish everyone would jump upon those who so falsely impugn our glorious nation. The effete behavior of intellectual snobs who don't relish conflict on matters of principle is nauseating.[/i] I've learned a different rule about Hitler & Nazism: as soon as either is mentioned, the thread can only devolve to petty bickering, and one may as well go elsewhere for worthwhile discussion.

fw32
fw32

jljones wrote," I try to only utilize those search engines that are NOT federal government (NAZI) lackeys." I wrote,"I don't believe you would recognize a NAZI if one fell on you. You are the lackey of ignorace. Why is it that millions of immigrants line up to become citizens here every year and other millions enter illegaly every year?" Justin James wrote, "Google's cooperation with the US government's request for search histories. Not defending his remarks, just an explanation of what he meant. Definitely guilty of reductio ad Hitlerium" I wrote, "Reguest v demand does not equal hitler. Get serious! The primary responsibility of The U.S. Govenrment is the protection of the nation. Only the far left will consider a legitimate REQUEST for information as "Hitlaryan". I lived in Germany for three years during the 1950's as a GI. While the shooting war was over, Stalin was still alive. Stalin was a real NAZI. He made Hitler look like an alter boy. In fact the Catholic Church including the Pope, was a defacto supporter of Hitler's anti-semitic program while the Russian Orthodox Church still supports antisemitism." Justin James wrote, "we are in agreement. The phrase "reductio ad Hitlerium" means the attempt to make an arguement by comparing something to Hitler (or Nazism, Fascism, Communism, etc.) in only the most basic way, and then saying, "well Hitler did it too, so it is wrong!" In this case, the government demands information, does not necessarily equal Nazism. Likewise, I eat breakfast, Hitler ate breakfast, does not make eating breakfast bad..." Absolutely wrote, ""Breakfast is the most important meal of the day", but that does not imply "breakfast uber alles"!" with which I agree. I am an Engineer, Northwestern University 1961. We did not need latin, english was sufficient. jljones made a vile slur against me through my government in a false comparison to NAZISM. I do not believe the reductio pun was anything more than an effort to calm the situation that my obvious umbrage caused. I wish everyone would jump upon those who so falsely impune our glorious nation. The effete behavior of intellectual snobs who dont't relish conflict on matters of principle is nauseating.

Absolutely
Absolutely

"Breakfast [b]is[/b] the most important meal of the day", but that does not imply "breakfast uber alles"!

Justin James
Justin James

... we are in agreement. The phrase "reductio ad Hitlerium" means the attempt to make an arguement by comparing something to Hitler (or Nazism, Fascism, Communism, etc.) in only the most basic way, and then saying, "well Hitler did it too, so it is wrong!" In this case, the government demands information, does not necessarily equal Nazism. Likewise, I eat breakfast, Hitler ate breakfast, does not make eating breakfast bad... J.Ja

fw32
fw32

Reguest v demand does not equal hitler. Get serious! The primary responsibility of The U.S. Govenrment is the protection of the nation. Only the far left will consider a legitimate REQUEST for information as "Hitlaryan". I lived in Germany for three years during the 1950's as a GI. While the shooting war was over, Stalin was still alive. Stalin was a real NAZI. He made Hitler look like an alter boy. In fact the Catholic Church including the Pope, was a defacto supporter of Hitler's anti-semitic program while the Russian Orthodox Church still supports antisemitism.

tdambra
tdambra

Cash is fine, but when the Google share price collapses, as it will, they will need that cash to buy back shares. But hey, you guys know it all. Just like Iraq. Let's wait and see.

Absolutely
Absolutely

[i]In any event, the point is that a business with a diversified cash flow and a tangible business is more likely to survive a downturn.[/i] That is a point, not the point. Another point is that in a downturn or a dive, their available $11.2 billion would be just the thing to allow them to adapt while others are floundering, simultaneously attempting to change course and figure out what course to set based on fluctuating market indicators. Under those conditions, what could possibly be more helpful than a large cash reserve? http://articles.techrepublic.com.com/2100-10878_11-6164605.html [b]Google doesn't know how to spend all its cash[/b] [i]by Reuters , CNET News.com | 3/6/07 Tags: Web sites | Acquisitions and mergers | Business planning [b]Takeaway[/b]: Company's CEO apparently rules out for now any big mergers or other major changes in how it spends its cash. [b]Google is accumulating mounds of cash from operations, but Chief Executive Eric Schmidt appeared to rule out seeking big mergers or making other dramatic changes in how the company uses it.[/b] Speaking to investors at the Morgan Stanley Technology Conference, Schmidt was asked by analyst Mary Meeker whether Google would consider changing course on how it uses cash. "It is highly unlikely," Schmidt said. "One of the problems in high-tech industries is that successful companies tend to generate cash pretty liberally (but) they don't have good places to put it." He added that, while Google itself is generating a mounting pile of cash, "it is not obvious to me where it would go." Google invests heavily in data centers and network capacity that it uses to expand the range and depth of its Web services. At the end of 2006, Google had $11.2 billion in cash and marketable securities on its balance sheet, up around 40 percent from the end of 2005 when it held $8.03 billion, according to company statements. Google's blockbuster $1.65 billion purchase of YouTube last year was a stock transaction. [/i] There's a perspective: They acquired YouTube for $1.65 billion, [b]and[/b] had $11.2 billion afterward!

tdambra
tdambra

A dive is a downward reversal in growth, not a crash. Look at today's news of the US home mortgage fiasco as an indicator where that economy is possibly heading. In any event, the point is that a business with a diversified cash flow and a tangible business is more likely to survive a downturn. Google is a turnover business: a major fall in turnover will cut margins dramtically.

fw32
fw32

"That is how my customers (and I tend to agree) feel about Google." What's the bottom line for your customers? Do they need you? Are you charging too much for what you contribute? Is there room for a middleman? Google gives the best locations to the highest bidders with the largest daily budgets. It's a cruel world.

Justin James
Justin James

... to continue the (horrid) analogy: a significant portion of the bananas are rotten, but it is up to you, post purchase, to figure out which ones are no good, and since the vendor will not let you inspect them before buying them, you have no recourse but to pay for the rotten bananas. I have not really made myself clear. It is not "my" business. I act on behalf of others. So while it is not my money, I am the one who gets to hear the complaints when the Google bill hits. I may add (see one of my other posts) that these customers are sick and tired of the Google pit. I may also add, continuing to do business with a company does not equal satisfied. For example, I despise Time Warner Cable with an absolute passion. They are late for their appointments 100% of the time, the service stinks, the quality stinks, the list goes on. However, in my area, the only other broadband options are satellite (ugh) or DSL through the local Bell, who is even worse than TWC. So to have broadband, TWC is my "best" choice, despite the fact that they stink. That is how my customers (and I tend to agree) feel about Google. Google is a wretched rip off. But the MSN and Yahoo! networks gets so little traffic, if you must use paid search engine ads, you really have no choice but Google's endless money vacuum. J.Ja

Justin James
Justin James

... there is no legitimate reason to not know the cost in advance, other than "that is the formula Google chose". They could choose a fixed bid format like Yahoo! had until a few weeks ago. Indeed, one thing we saw was that the budget was being hit, *no matter how high it was*. If the budget was high, the CPC was high! Google's formula, in reality, seemed to be geared towards hitting the budget everytime, within the confines of the max CPC defined. I may also add, that my customers have *never* been happy with Google ads. The all stopped using the AdSense program because the conversion rate of the clicks was well below the conversion rate of organic search engine clicks, or even the paid ads, and it was almost exclusively overseas ads, from sites located overseas (they run a global business and cannot restrict by contry). In other words, the AdSense ads were mostly click fraud, and quickly draining the budget. Two months ago, one of my customers cancelled his most expensive Google keyword that he used to consider "indispensible" and this month, when they were outbid on many keywords, they refused to up the ante. In the years they have been advertising with Google, the costs have tripled and quadrupled on many keywords, with no noticeable, attributable increase in sales from Google ads. They stuck with Google because they felt that the "needed to", but now they do not. Again, I cannot think of any other product where you are notified of the cost per unit *after* the sale. I do not consider that a fair or equitable business practice. I recommend organic search results. Are they hard to acheive? Heck yes. But they are free, and the techniques that lead to high organic search results also tend to result in a more usable site, better accessability to handicapped users, and a more easily maintained site as well. Good sites tend to bubble to the top of search results, assuming that they are not flooded out by AdSense bait. J.Ja

Absolutely
Absolutely

I wasn't clear about which part of your post I found "exaggerated" -- it is the magnitude of your complaint. [i]And every day, when you went into the store, they charged you your maximum "banana budget" with [b]no explanation of why or how[/b], but if you did not set your maximum price per pound high enough, you would still pay your max budget, but only get the rotten bananas.[/i] I think your complaint is overstated, especially in light of the fact that you [b]have not[/b] taken your business elsewhere. Merely one opinion.

Cactus Pete
Cactus Pete

You must assume that it is worth it, or you would stop paying. And you just described why you can't know ahead of time - the calculations are done in real time. But that brings you to your complaint that the budget is hit every day - but that's why they have the daily cap, isn't it? So you don't go over your budget? In your banana analogy - the bananas are actually given to you until later. I think that finishes it off more accurately.

Justin James
Justin James

This is *exactly* how their billing for AdSense and AdWords works: * For each ad, or group of ads, you defined the maximum cost-per-click (CPC) that you are willing to pay. * You then define a total maximum daily budget for the account overall. * The actual CPC is dependent upon a variety of factors: the ad's real-time click-through-rate (CTR, how many times the ad has been clicked as a percentage of the times it has been shown), the position that it is displayed in, your maximum CPC compared to your competitors, and a few other options that I cannot recall offhand. But that is the meat of it. The CPC changes at real based on a formula that the consumer has no access to. * The actual position of the ad is determined in an approximately similar fashion. * The ads run until your daily budget runs out. At that point they get cut off, until the daily timer (and therefore, the budget) get reset. Google will not tell you what position your ads will run in. They will not tell you how many times they will run. They will not tell you how much each click will cost. Their formula determines in real time what position and cost each ad has, based upon factors such as click-through rate, how much other people are bidding on, and so on. All I see, as a paying customer, are "average cost-per-click" and "average position". That is not right. Somehow, no matter what bids are set to or the "estimates", the budget gets hit every day. Google is an abusive monopoly, plain and simple. At least Microsoft can tell me what the cost of Windows or Office is, before I purchase it. J.Ja

Cactus Pete
Cactus Pete

OK, then in your professional opinion (and if it's not a professional opinion, please state it as such) at what price should Google's stock be now? I'm not saying I disagree, but you threw out "irrational inflation" which does seem to have been sustained for some time now. I was wondering how you came to that and just how irrational it is to you.

Dr Dij
Dr Dij

they have earnings and give dividends that would pay me back within 20 years even if stock price doesn't rise. (sound of bubble bursting - ****POOOOP****** ) I guess that looks suspiciously like POOP, which if your stock bubble burst, you might think...

fw32
fw32

when google first began you could access most federal, private & public university, and industry technical data bases directly and get the information you sought at no charge. Now you are first directed to the abstract of a paper. The full document, with references which often involve an additional purchase to get the exact info one seeks, can cost more than twenty bucks.

dawgit
dawgit

I have a question for you also, would you mind a PM later? -d

dawgit
dawgit

That would be some very interesting info indeed. -d

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