Google Q4 2008 Results: Some Thoughts on Mobile and SME Ad Budgets

Just read through the details of the Google Q4 2008 results conference call on Seeking Alpha. I extracted a couple of interesting comments.

On mobile:

Eric Schmidt, CEO: “In the area of Android and mobile, we’re going to open up mobile devices to developers to stimulate innovation. As an example, 800 free apps are already onto the Android marketplace and making the mobile Web much more user friendly, with billions of page impressions already available through the G1 phone.”

Jonathan Rosenberg, SVP, Product Management: “It’s also clear more people are searching from mobile phones and they’re doing that more often. Our general objective there, with mobile, is simply to make search from a mobile phone as easy and as fast that as it is from a computer. In some cases, like with the voice search feature that we launched this quarter for iPhones, we’re making it even easier. You basically just pick up your phone and talk. I mean it couldn’t be much easier than that. (…) With all of our improvements, mobile search traffic went up substantially this year and not surprisingly it peaked at the end of December.”

On SME ad spending:

Jonathan Rosenberg: “What we see is that small and medium advertisers tend to cut their ad budgets back less than the larger direct advertisers. We think what happens there, is that the larger advertisers are much more prone to doing more across the board media spend cut”

On blended search:

Jonathan Rosenberg: “We’ve also mentioned universal search on many calls this year, and for perspective over 2008, we tripled the number of queries that trigger different types of results across images, videos, news, blogs, websites, and of course, books.”

What it means: Google continues to bet on mobile as they see more usage with new smart phones. They are hopeful Android will be successful but, until the mobile OS has a larger installed base, it’s still an early adopter product and ecosystem. On SME ad budgets, Google is confirming what everyone in the directory business knows, that directional advertising is much less susceptible to budget cuts in a recession. Finally, Google is experimenting with more types of blended search to deliver a better search experience to the users. Their long-term vision is trying to “guess” your search intent to deliver you the best results possible. I’m surprised Rosenberg didn’t mention “local” in his universal search examples…

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Bill Gates: Print Yellow Pages Will be Dead in Five Years

Went to bed yesterday reading this article from the Seattle Times. The paper reports on a speech Bill Gates gave to some of Microsoft’s top advertising customers. Other than the usual story of newspapers demise, there was an interesting tidbit about print directories.

The traditional Yellow Pages are doomed as voice-activated Internet searches combined with on-screen interfaces on smart mobile devices get better and proliferate, Gates said. The company’s recent acquisition of voice-technology provider TellMe is accelerating the trend. “When you say something like ‘plumber’ the presentation you get will be far better than what you get in the Yellow Pages,” Gates said. “After all, we know your location and so we can cluster [results] around that. … Yellow Page usage amongst people in their, say below 50, will drop to near zero over the next five years.”

What it means: knowing how strong the print directory ecosystem is, I would be very surprised if it became completely irrelevant in the next five years. I’m also surprised Gates would come out so strongly and say their TellMe acquisition means they’re competing directly against directory publishers, especially at a time when people are starting to root for Microsoft to counter FOG. In any case, if you are in the directory space, you have to make sure you’re not solely dependent on one medium. Like the Kelsey Group used to say (and I’m paraphrasing), “don’t sell in the medium, sell in the database”. That means making sure your content can be accessed via different entry doors like print, online, voice, mobile, instant messenging Nintendo Wii, search engines, etc. As entry doors multiply, make sure you hedge your bets by being present in these various access points.