Hey, Matt. >> Hi Matt. >> [LAUGH] >> So we're confusingly both Matts. >> Yeah. >> I'm Matt Harada. >> I'm Matt Hessler. >> And we're going to be talking about search advertising today. >> God, it feels like we've been doing this forever. >> [LAUGH] >> We have. >> We go way back with search, yeah. >> Yeah, so Matt and I were both early customers of Google's pay-per-click search advertising solution. When we're both at company now known as HomeAdvisor. >> That's right, back in 2002 probably. >> 2003 for me. >> 2003? >> Yep. >> Yeah, it was really interesting, because HomeAdvisor was trying to help homeowners to find contractors, every type, plumbers, electricians, carpenters, whatever. >> And nationwide. >> Nationwide, in every zip code, to essentially replace the yellow pages with a better solution. And search was a great tool for that. But we ended up really digging in to our early Google Ads platform and created the first 1 million keyword campaign, which was crazy. It was like all these permutations, right, plumber to come to Washington, all these different things. And it was just an awesome time because we were getting really good support from Google. They were still pretty nascent in the space, that was pre-IPO. >> Yep. >> And I think we were a top five spending account. So here we are learning with them and they're learning from us and the problem we were trying to solve. And it's crazy to think that was 15, 16 years ago. >> Yeah. >> Crazy. >> And it's evolved a lot since then, but we've continued to stay with it for the most part. >> Yeah. >> And after HomeAdvisor, we met them again at Trada. >> Yeah. >> Which was essentially an agency where we're helping small businesses manage their paid search campaigns through our crowd. >> Yeah. >> So that for me was when I got more hands-on with managing those campaigns. >> Well that was crazy because as we were trying to grow that, I mean, we worked with literally hundreds of small businesses. So for me, I went from having already worked in search for six or seven years. It is really intensive, let's see how these techniques work across a huge myriad of different types of businesses from local florists to SaaS software, international company. So it was really interesting to put some of those search techniques through the grinder of like, what are all these different businesses? What's common and what's unique as far as challenges for those different businesses. >> Yeah, and we definitely started to see then Google changing a lot. >> Yeah. >> As it was growing way past where we were. >> [LAUGH] >> And starting to add a lot more features as they were becoming more and more successful. And today, now, they're at the place where they're doing $100 billion a year, just within their search business, roughly. >> Yeah. >> Of course, they're involved in self-driving cars and all that other things, but. >> Yeah. >> Generally, those are funded by the search dollars that marketers are providing to them. >> And I feel like they're more dominant than ever. It used to be a little more of a turf war between other research platforms and Google has really emerged just like. >> Great, so today we're going to talk a little bit about why they are able to command that much revenue, why marketers continue to pour money into search, and what all that value is that they're providing to the marketers, and also start to get into how do you actually access some of that value and start to build campaigns, how it all works behind the scenes. >> Awesome. >> So first question is where do they make all that money from? And I'll start off by saying that it's because they provide value to advertisers that they are able to command that much revenue. So, what is it that they do that is so valuable to advertisers? And in word, it is the fact that they are able to capture and understand the intent of so many people in the world that use Google as their search engine. It's the first place where they go as users to really, they're telling Google what it is they want more than anyone [LAUGH] else. >> And it's so interesting, right, how you can pick apart the language that people use in their search query to really understand their intent. And we'll learn a little bit more about this as we think about what key words would we choose for an advertising campaign. But the intent and the kind of thinking like your customer, and how they search for things, is a huge deal to successfully advertising with Google. >> Yeah, absolutely, so the person who typed in bicycle shops boulder, clearly, has some intents to spend money on a bicycle, which advertisers, bicycle shops, clearly have a motivation to inject their brands that information. >> And that query tells us even more, right, they're looking for something local. >> Yeah. >> They're probably going to visit a brick and mortar, right? If all he was looking for was a particular bike model, that might mean it was a thing I was going to buy online. But this tells me that I got shops in there. So they're planning on buying. >> Exactly, exactly, they're both a purchase intent and local preference. >> Right. >> And I'd say that there's multiple stages where Google plays. I think they're kind of their key important thing as we saw in that last search, is that they're involved in that purchase, that last step before the user purchases. But they're also involved in a bunch of the upstream work, the information gathering that the customers or potential customers are doing prior to getting to that actual decision of buying. And they sort of help this, and they're marketing material a lot that they can touch users across all of these different levels of the purchase model. >> Yeah, I mean, just recently bought a digital camera and the amount of research I had to do, and it's a $2,000 purchase or whatever. It starts all the way at the top where I want to read reviews, I want to hear things from photographic experts. So that awareness, always repurchase, I mean, Google is my partner in that whole process. >> Yep, and so their ability to offer businesses a way to kind of come in the side and. >> Yeah. >> And get involved in your discovery allows is how they generate all that revenue. So whether you're doing beginning research to learn about something, you could see how Roku would definitely love to get involved with this user. Or they're trying to now start to compare things and understand what are the benefits of buying a iPad or whatever it is. >> Yeah. >> They're involved in that. And then once the user has made the decision, yes, I'm going to buy it now, how do I go about do that? Now, a retailer in particular is going to love being involved. And they make it look so easy. So all of that $100 billion is still generated primarily from text ads that look pretty non-intimidating. Most people, my dad anyway, doesn't understand that there's actually a whole bunch of tech behind this, a whole bunch of different systems that are determining what results get shown to the user, >> Yeah. >> And that there's two fundamental pieces within these results. There's the paid search engine and the organic engine. >> What's the difference between those two? >> So there is a distinct team at Google that is on the organic team that is trying to really, they have one mission which is make sure the most relevant results that are answering the question that the consumer has at that time are displayed to the consumers. That's the organic stuff. >> And I feel like that's how Google's really built their trust and their dominance, right? That organic result is really out of whatever it is, 2 billion web pages, I think in this search. >> Yeah. >> They're telling you those top organic results are the ones that are most closely aligned with your search query. And they're bringing those results to you. They're accurate and they're super fast. And I think that's really built trust with customers. And if I trust Google on the organic, then I probably trust them on the ad side, too, that this ad isn't going to be relevant to what I'm looking for, right? >> Right, right. >> So the top two listings are coming from the other area of Google which is the place that you're generating all of that $100 billion worth of revenue from the paid section. So in this case, we've got two results that are paid and two results that are organic. Probably worth noting here that the companies for the top two listings are not actually paying at this phase just by showing their ad. But if the user ends up clicking on them, that's when they pay. >> And I think this is interesting because when I talk to people about this, they always say, I never click on a paid ad, whether it's a banner ad, or a Google ad. They're somewhat proud of saying like, you're not going to get me in your trap. And I think it's interesting because obviously Google is getting a lot of people to interact with these ads. It's $100 billion a year business. And for me, and I have seen, it's a little inside baseball, I've worked in this industry for 20 years, but I think the paid, sometimes it's my preference, right? If I'm at that point, like I said, I've been researching in digital camera. When I'm ready to buy, the paid ads are usually great for me because it indicates that that retailer has the product I'm looking for. And I might still be comparing prices and other things, but I do that a lot of the times through the paid ads. because it's the quicker point to a transaction. Where the organic listing, the Fuji camera might be Fuji the company, which is great to learn about, but they actually don't sell any cameras on their site, right? So when I want to buy, a lot of times, I do choose the paid ads. I don't think there's anything nefarious about it, right, I don't feel like they're tricking. It's actually a great path to get what I want. >> Yeah, so and all the marketers then who are spending money to get their ad in front of you have an incentive to make sure it's relevant to you. They do not want you to click on something that is not [INAUDIBLE]. >> They might be paying 3 or 5 or $10 a click. They're probably not going to put a product in front of me that's out of stock or, something like that would just be a waste of money. So usually, they're actually can be the great resource. >> Right, right, all right, so this is where the action happens on these pages. And Google is highly focused on making sure these results are relevant and that they essentially lead you into a click that gets you, the searcher, what it is you want to know. And so we're going to talk a little bit about how you as a marketer can make sure your paid result gets clicked on. >> Awesome. >> I think one of the misnomers or the other names for the organic results, people often talk about them as the free results. >> Yes. >> I think it's important to note that for most companies that are trying to sell a product, these typically are not free. People pay tons of money, just not to Google, to the industry that's focused around making your results rank highly within organic search. And that's the search engine optimization. >> Yeah, it's interesting because people ask sometimes like, does Google ever take payola or bribe to get them organic? And they've done a really good job of keeping a very firm separation of church and state. The ranking algorithm, at least the lore is that no one person within Google knows the whole thing. It's like the secret recipe for Coca Cola, right, they store it in two different states so nobody knows the whole thing. There really isn't a great way to game it. There's no way to pay your way into it. You're paying these professionals who have methodologies, takes a lot of hard work while creating content, time, links to rank well organically. And I don't think we're really going to dig into that today. That's its own whole field. >> Yep, yep, content marketing is another piece of that, where the more content you have, the more likely it is that you're providing the answer to that searcher for whatever search term they're using. And so there's also a big industry there. But we're going to focus on the paid side, which is known variously as search engine management, SEM, paid, paid search, search advertising. We can use all those terms interchangeably. The thing that's sort of common to all of the paid search campaigns is that they're pay-per-click. So like I said before, when the user sees your ad, you don't pay anything, only when they click on it. And that makes it easier for a marketer to know that now they've really captured some value from that user, as opposed to a lot of the other marketing. >> And that was a big shift that Google basically was stewarding 99 through early 2000s. Internet advertising was already around, but you were paying for impressions. So usually, it was priced on how many dollars you pay to show 1,000 people this ad, right? >> Yep. >> And Google said, let's take it once step further so you feel like you're getting, now the costs are more, but, you're getting at least the value of knowing you brought that user who has intent to your web site. >> Yep. >> They can't guarantee they're going to buy or any of that stuff, but like, hey, we got the right person to your door and you're only going to pay when they visit. >> And we'll talk a little bit more further along in the third part of our search talk about taking that responsibility. Once Google gives you that customer, you've paid for that. >> Yeah. >> You better do your homework to make sure you convert them and make it worthwhile. This really is why Google's been able to command that much value is because of this type of aspect of their campaigns where marketers can see that it works. And it's actually bringing them customers that generate our. >> Yeah, real performance-based marketing. >> So we're going to talk about Google a whole lot, but worth taking a moment to mention that there are other search engines out there. So Bing and Yahoo, formed an agreement back in 2011. So as a marketer, you go to Bing to create your campaign and it runs on both Yahoo and Bing, so added their market shares together. And it's still only 4.4% of global searches. Still worthwhile if you're a big marketer and you're trying to reach everyone who might be interested in your product to include Bing in your marketing planning, but. >> It's interesting because I think, at certain points people had the conjecture that this is this a monopoly. And it seems to toe the line now this dominant market share. But they haven't done it in a egregious way, right? People are just choosing Google, more or less. Bing, if you buy a Microsoft computer, that can still be part of the default settings. There are other search engines and being provided some great results. They got a nice clean layout these days. But the market's with Google. >> That's right, now interestingly, in the US, Bing actually does better than globally. So up to 10%, with Yahoo, for whatever reason, but if you include mobile there, which is clearly where more and more the market is going, it drops back down to that 4%. Google's pretty awesome [INAUDIBLE]. >> Google was, yeah, about knowing that everything that's going to head that way. >> Yep. >> And they really designed for mobile way ahead of Bing and Yahoo.
