Google: Search and revenue
Karim Temsamani is the new general manager of Google Australia, and was the previous group director at Fairfax General Magazines and commercial director for newspapers.
Karim tells SmartCompany readers about the new direction for Google in Australia and the trends in online search that are key to the company’s fortunes.
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Amanda Gome: What are the current trends in “search” by consumers?
Karim Temsamani: The online economy is buoyant. We’re seeing users – and large and small businesses – embracing search. This is driven by three perspectives.
The first one is the lowering of the cost of the tools of production. It’s a lot easier for any user and any business to put information online whether it’s a video or blog about their services or from a user perspective about what they do in life and what they want to share with their friends.
The second part is the adoption of broadband. Now about 60% of Australians have broadband and this number is increasing dramatically.
The third part is cheaper storage. And cheaper storage as well as faster computers are a really key part in terms of overall development from a web perspective. Every 13 months the ability to store information is doubling.
So you’re seeing more users and more businesses putting more information online.
And it’s more difficult finding exactly what you want and that’s where really Google comes into play and the search element is really critical.
Those trends have been around for a while, but what’s really exciting news?
You can’t under-estimate the element of acceleration. The trend is to make it more relevant, so local search is a very key part, and also making it broader so that you can find all sorts of information that you want online. So the universal search that Google has launched in Australia is a critical part of that as well.
You have set up Google in verticals. How many key verticals are out there and will they keep up their unique role?
We need to be set up from a business perspective to be able to answer the need of business customers and that’s why we have set up some of our teams along verticals. The verticals are basically the industry verticals that you would find in the market. We have a finance vertical, a travel vertical, a retail vertical and so on against most of the industries that are key and large in Australia.
We also have set up an agency team because a number of businesses small and large use agencies to gather expertise and we need to have very strong communication with these agencies to be able to communicate with them effectively. That way they can understand the benefits of search. We also have a very strong agency team and they are there to help all businesses learn more about online. We’re training them very extensively so that they can train some of their smaller business partners themselves.
Google has been very successful at generating a great revenue model through [paid] search, but the price of paid search is increasing faster than the rate of searches in total. How do you plan to add value to companies as the return on investment decreases?
The important thing to remember is that it’s not always based on return on investment, and the return on investment for these companies is increasing.
It is very clear from any company that is doing business with us where they are getting returns from, and where they’re getting the customers from. If something doesn’t work for them they would turn off their search with us and that’s clearly not what we’re seeing.
We’re being more successful with small and large businesses because they are able to pinpoint exactly what return on investment they’re getting from us.
I don’t agree that the cost of clicks is increasing faster than the search queries are increasing, but what is really important to remember is that the return on the investment is what is driving the business. And if our clients are doing well, we will be doing well.
The Google phone – what are going to be some of the special features that are going in to make it better than some of the other players out there.
Just to be precise, there’s really no G-phone. There’s a platform that we have created with a number of different business partners, but it’s a platform for third partners. It’s not a phone per se.
Google has put in a patent application for the customisation of content and advertisement publication. What is your plan? Are you looking to shift your online advertising model to print? You’ve got a background with Fairfax.
That’s something that has been considered in the US and a number of trials have happened in the states. It’s not something that we’re looking at from an Australian perspective at this stage. The structure of the Australian market is very different and certainly our focus from a management of the business perspective is different in Australia at this stage.
What are your key goals in taking up this position? You’ve been there since September and you did come from a (print) background. What do you see as your key goals at Google?
Some of the vision that we have for Google is that as much as people are talking about Google when they’re searching for services online, or when they want to find information online, we want businesses to think about Google when they want to promote their products or their websites.
It is really our key vision for growing the business.
Ultimately we really want to partner with small businesses around Australia. We think that Google is really the ultimate ally for small businesses. There’s really no more effective method of advertising for small businesses than outwards. It really lowers barriers to entry.
It’s a very low-cost model. You try it before you buy. You have the ability to target niche audiences and compete with large businesses. You get additional services from us including free listings and Google maps.
Overall we think that small publishers and small clients are making money from using a number of tools that enable small businesses not only to get more customers through us very efficiently but also to make money with the help of Google.
We also have a number of applications that enable small businesses to lower the costs, so we have Google apps that are available to small businesses so that they can use the application of documents, to be able to collaborate effectively and lower the cost of doing business.
Finally we have free analytics tools that enables them to measure traffic and understand exactly where they’re getting their traffic from, and how they’re converting the traffic that they’re getting.
There’s a number of other elements that we’re developing that I won’t go into directly now, but we’re constantly trying to improve our products so that more businesses in Australia can use them and use them beneficially to their business.
On being able to target your advertisements specifically, do you ever feel that there’s a risk of some people being conscious of feeling too targeted by the advertisements, thereby reducing the impact and the cut-through of the advertisement?
Google doesn’t do behavioural targeting if that’s what you’re getting at. Google’s very strong to ensure that no businesses can buy certain keywords that are relevant to their business and if they buy the keywords they can bid on the amount of money they’re placing into value for their keywords and then be placed within [a/our] sponsor link depending on the relevance of their website pages and the amount of dollars that they bid for it. So it’s really based on what’s bringing the return investment, and not behavioural targeting.
There have been estimates that Google has more than $500 million revenues in Australia. What percentage would be coming from small business in search?
We won’t comment on our revenues overall.
Can you talk about what percentage revenue comes from small business?
No we don’t disclose any of our numbers with regards to the overall revenue number or the percentages that make that number.
What do you see as the biggest opportunities for Google in Australia outside search? You are developing mobile phone software, presentation programs...
What we have to remember first is that search is still very much in its infancy in Australia. It’s a needle in a haystack and as such the content online is growing extremely fast and search is going to play a more important role with regards to finding the right content for our users, and certainly for businesses to get to the right people online.
So we believe that our main focus has to be search.
Aside from search we’re definitely delighted to see some of our products being very strong. We’re seeing YouTube in Australia being a very key part of our future, and certainly the applications – Google applications and g-mail and art docs and spreadsheets are also playing a key role in our growth in Australia overall.
Now people love Google, but there also is a feeling that Google has a lot of power. What is the feedback you get on this growing power?
That’s a very competitive market out there. We’re only always one click away from losing it all. We have set up an operation in Australia that is very young and we are ensuring that we have the right investment in Australia to be able to communicate more effectively with all our users and all our consumers and businesses alike.
So we’re constantly in dialogue with our users, the community in general and governments to ensure that people understand what Google does – but certainly it’s a big market out there and we have a lot of competitors.
What we want to do is the right thing from a user perspective, and we’re extremely focused on ensuring that we do the right thing from a user perspective.
This is an edited transcript.