By Thomas ClaburnInformationWeek
"We have no plan to pay our users to use our product," Fox stated. Google, he said, will compete through user experience and quality, rather than "paying users nickels and dimes."
Fox brushed aside worries about the impact of departing talent on Google. "The level of churn is actually very, very, very low and easily outweighed by the high-profile additions we bring on board," he said. "It's not something we're particularly concerned about internally. ... Honestly, I think it gets overblown in the press."
Fox's message to investors was that revenue opportunities for Google abound, particularly through refinements in search relevance, user experience, and ad quality.
The percentage of queries for which Google actually serves ads remains fairly small, said Fox. "A large portion of those queries really should have ads," he said.
The challenge for Google is developing systems to help advertisers place ads automatically for relevant queries that they haven't planned to bid on. "We need to surface these opportunities to advertisers so they know what they should be targeting," he said.
Fox explained that Google continues to improve ad quality, which means serving ads to those most likely to respond to them. He offered the example of bidding on the search keywords "Harry Potter," which would result in a low click-through rate because so many people with different goals search using those words. What Google hopes to do is give advertisers more insight into the intentions and desires of its users. Thus, those seeking to buy a Harry Potter book, as opposed to, say, those seeking information about Harry Potter films, could be presented with the opportunity to buy the relevant book via an ad.
That sort of targeting remains Google's goal in the context of social networks, which haven't proven to be very effective places to advertise. "The whole industry has probably been surprised in the difficulty in monetizing social networks," said Fox.
The issue, Fox explained, is that searching demonstrates a clear user intention. "On social networks, you don't really know," he said. "There's a lot of entertainment going on. You don't quite know what is the right ad to serve." He added that users of social networks also engage in a lot of noncommercial activities "like throwing sheep," which makes advertising more difficult.
Fox was more optimistic about revenue opportunities in mobile search. "Mobile actually monetizes quite well," he said. "The iPhone was an eye-opener in a lot of ways in that if you get the device right you get the searches."
Fox also stressed that Google's ongoing technical refinements to search will drive revenue growth. He cited Google's universal search effort, which brought video and other kinds of media into Google's main search index. And he said that Google also makes hundreds of incremental improvements each quarter that lead to a better user experience. That in turn leads to more traffic and revenue.
Google also stands to gain from the increasing use of the Internet around the globe, Fox suggested. "Search query growth will come from more people doing more searching," he said.
That's irrefutable logic indeed, if global gains are actually to be had. In the United States in April, Americans conducted 10.6 billion searches at the major search engines, a decline of 2% since March, according to ComScore.
Google nonetheless continues to grow. Its share of the U.S. search market reached 61.6% in April, up from 59.8% in March. Yahoo, Microsoft, AOL, and Ask, meanwhile, all lost market share by ComScore's count.
See original article on InformationWeek
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