Google Charts, Presentations (Pre-Announcing a’la Microsoft)

Almost a year ago I wrote about a visual comparison of Google and Zoho spreadsheets. At the time, Zoho simply KO’d Google, which had no charting support whatsoever. Of course this was more then just a “beauty-contest”: charting is simply the most effective way of visually conveying a message, and as such a “must have”.

It’s time to update that comparison (I’m using the same spreadsheet, updated to today’s numbers), since Google has announced charting capabilities today, adding 18 types of charts to select from (Zoho has 27, and ThinkFree 32).

Clearly, Google is catching up on the appearance front, the new charts are appealing. (Click on the pics to view the public version of the original spreadsheets).

On the publication side, Zoho still leads: instead of using images, like I did here for the sake of comparison, I could have simply embedded the system-generated script which would keep my Zoho Sheet inside this blog post up-to-date. In fact sometimes it makes sense to publish only the chart, without the underlying spreadsheet, like this:

Feedburner Subscribers in % - http://sheet.zoho.comThe chart to the right is not an image, any changes in the originating spreadsheet will be immediately reflected in the published article.

The addition of charts was announced today in Google’s usual, understated style; in fact the first blog post on the subject was titled How to make a pie. For all I know it could have been Grandma’s Apple Pie recipe. smile_tongue

Contrary to this the other Google announcement came with a lot of hoopla, CEO Eric Schmidt dropping the news of Google’s Presentation software in front of ten thousand Web 2.0 Expo attendees. The only problem is, unlike Zoho and ThinkFree, Google does not have the Presentation creator/manager yet, it won’t be coming for months, and as Google Blogoscoped observes, this preannouncement “Microsoft-style”, instead of just releasing products and let users discover them is “uncool” – and a break away from Google’s good traditions.

Talk about announcement, Zoho, which has made it a tradition to launch a new product at just about any event – and in between – surprised: there was no announcement. Are the sleeping? I think not, in fact as Advisor to Zoho I am quite happy with them announcing no announcements: they plan “not to release any new application until we open up our existing private-beta applications (Notebook, Meeting & Mail)”.

Those who attended the SMB Application Marketplace session at Web 2.0 Expo may have picked up on something more to come though: responding to a moderator question, Zoho Evangelist Raju Vegesna stated they want to “become the IT department of small businesses“… and there is clearly more to SMB IT than just an Office Suite.

Like I’ve stated before, 2007 will be the year when it’s all coming together.

Update (4/18): Note to Google: it’s *not* a very good idea to display my email address on spreadsheets I choose to make public. Sorry, Google, my mistake, I used the wrong URL (not the public one).

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Freshbooks Launches Benchmarking Service: SaaS Will Never Be the Same

Way back at the Office 2.0 conference FreshBooks CEO Mike McDerment dropped a bomb in the last 20 seconds in his presentation: being software as as service, they can aggregate customers’ data, categorize it by industry, size ..etc, and once they do that, why not turn it into a service, providing customers with their own performance metrics as well as benchmarking them against their peers.

A few months later, the Small Business Report Card service will launch tomorrow at the Web 2.0 Expo as well as online. The service will be free to all Freshbooks customers, who will:

  • all receive their own performance metrics, and
  • if they select their peer group based on (currently) 80 types of business / professions, geography and several other business criteria, they will also receive their relative position, “score-card” within that group.

The sample below is a mock-up of the actual Report Card, but is shows the initial metrics reported. Clearly, as they further enhance the program, there will be more and more criteria, and FreshBooks customers will have a say in what performance metrics they find valuable.

Remember, FreshBooks’ customers are mostly small businesses who don’t have an army of MBA-types crunch the numbers and look for business (in)efficiencies. In fact it’s probably fair to say some would not even know how to interpret the numbers, until they are put in prospective – hence the value of relative benchmarking.

But why will SaaS never be the same? This isn’t just about FreshBooks and its customers.

It’s *the* hidden business model enabled by SaaS. An opportunity not talked about, but so obvious it has to be on the back of all SaaS CEO’s mind. Benchmarking is a huge business, practiced by research firms like Forrester, Hoovers, Dunn and Bradstreet, as well as by specialized shops like the Hackett group – none of which are affordable to small businesses. More importantly, all previous benchmarking efforts were hampered by the quality of source data, which, with systems behind firewalls was at least questionable. SaaS providers will have access to the most authentic data ever, aggregation if which leads to the most reliable industry metrics and benchmarking.

Being pioneers always carries a risk, and clearly, Freshbooks will have to keep an eye on their customers feedback. There may be a backlash due to data privacy/ownership concerns; some customers will not opt in, they may even lose some customers entirely. But I believe the majority will see the light and benefit from the service. If Mike’s blog post on the subject is any indication, the feedback there was overwhelmingly positive, with 13 comments for, 3 against.

I suspect a year or two from now benchmarking based on aggregate customer data will be standard industry practice, and little (?) FreshBooks will be looked upon as the pioneers who opened up the floodgate of opportunities.

Last, but not least a word on the creative launch – or a lesson on how to launch from a conference you don’t officially participate atsmile_wink:

Yugma is a web-conferencing company and an exhibitor at Web 2.0 Expo. What better way to demo a web-conferencing product than by showing real-live use… without Yugma having to move a finger to create content. They created Stage 2, a platform for companies to showcase their products remotely at the Yugma booth and simultaneously to the World through a Net broadcast. Both the presenters and Yugma win – congrat’s, and my personal Creativity Award to Yugma thumbs_up

Update (4/19): read Jeff Nolan’s comments.

Update (10/8/2008):  Congrat’s to Freshbooks for getting on  Fox Business.


Do We Need Another Web Meeting App?

Does the World need yet another “webex-killer“?  The answer is probably no. Other then Webex, whose name became a synonym to web-conferencing, there is  GoToMeeting, VyewTeamslide, DimDim  1videoconference , Vyew, Live Meeting, Thinkature and probably quite a few more I forgot about.

So why on Earth has Zoho announced Zoho Meeting, entering such a crowded market?  One answer is that it’s a “software-making machine”, turning out new product regularly, so why not … but I think there’s more.

Zoho Meeting has a few unique features, and as usual, TechCrunch provides a good review, so I won’t even attempt to “compete” with them.

smile_wink  I’d rather lament on what this really means.

After a year of pumping out standalone products ( I think the count is at 15 for now) this year Zoho will start focusing on tying them together.  This means integrating them, as well as some external products, create workflows and use some “glue” products in the process.  Mail, Wiki are such glue products (both are going through enhancements), and to some extent so is Meeting, as well as Chat.  They will enhance collaboration in context, while you work on your document, spreadsheet, presentation..etc.  The video below shows how Meeting is embedded in Zoho Show:


If you watched the video you may have noticed a spreadsheet in the background, while Raju was talking about embedding Meeting in Chat, which in turn will become part of all other applications. While the integration of Chat into Zoho Writer was somewhat of a non-event, I can give you a sneak preview of how it will work in Zoho Sheet, where the consequences are far more significant.


What this means is that Zoho Sheet, which recently added the capability to plot 21 different types of charts now supports real-time collaboration with instant updates on the individual cell level – this has been Editgrid’s competitive advantage so far.

This is just the beginning – keep an eye for Meeting, Chat and other “glue” products making our online life easier.

Last, but not least, several of the companies mentioned here will present at the Under the Radar Conference tomorrow, so if you have a free Friday, you may want to register here – today is the last chance to get $100 off.

(Disclosure: I am an Advisor to Zoho) 



Why I’m NOT Writing about Google Apps

Of course it’s a significant  move.  Not that it happened today… or was unexpected.  It’s been evolving in front of our eyes, the significant news IMHO is not the pricing, but the Service Level guarantee of 99.9%.

(Well, on second thought, there is a surprise: where is JotSpot?)

But is there anything else to discussNot really, already dozens of posts appeared, and before  you know TechMeme will become useless for the next two days, as it will be completely overwhelmed with me-too posts on the Google announcement.

I’ve actually been planning a more speculative post on Google’s foray into the SMB Business Applications market, but that will now have to wait for the echo to die off….

Update: Hehe .. Robert got to the same conclusion.  

Update (2/22):  Sound of reality from Zoho’s CEO:

“Our business plan is not based on us beating Microsoft or Google, it is based on serving customers well enough to earn a profitable share of the market. Business is not superbowl, though it often appears that way in a 24×7 news cycle. It is perfectly possible for a smaller company to offer a compelling product to customers and earn a perfectly good living, without “winning” the market.”



Zoho Announces Multimedia Notebook at DEMO


The Zoho folks will be announcing yet another product at DEMO – this time it’s a multimedia NoteBook. Since whenever they release a product, the Microsoft / Office analogy is quite unavoidable, let’s just get it out of the way: this is Zoho’s “OneNote” – and a lot more. (Bias alert: I am an Advisor to Zoho).

Notebook is an online application to create, aggregate, share, collaborate on just about any type of content easily – all in one place, without having to switch applications. You can create multiple books and within that multiple pages. There are a number of page-types to begin with, including Sheet, Writer, Calendar, Contacts, Planner, Task – these correspond to Zoho applications – or simply start with a blank page.

You can easily create any type of content within a page: text, image, drawings, audio, video – these could be embedded youtube videos or record from your own camera / microphone directly into Notebook. Place your content anywhere in the page by freely dragging it around, resizing, reshaping it. Aggregate content from multiple sources: embed Show, Sheet data, web pages, RSS feeds, file attachments. IE and FireFox plugins allow easy clipping of web-content.

If it’s Zoho, it has to be collaborative; but this time NoteBook brings real-time online collaboration to a new level: you can share book-level, page-level or individual object-level information. This means you can selectively collaborate with certain users on your text, while sharing the chart with yet another group, and hiding the rest. Updates to any of these objects are reflected in the NoteBook real-time. Integration with Skype allows Skype presence indicators in the individual shared object as well as direct IM-ing over Skype. Needless to say, version-control is taken care of at the object-level, too.

Now, for the bad part: NoteBook is currently in limited Alpha mode … so hang on for a while ..

fingerscrossed and in the meantime, enjoy this demo video:

NoteBook is unquestionably the sleekest of all Zoho apps, and a technological marvel. There are clearly specific target demographics, like students, where an All-In-One notetaker is the killer app. In a more typical business environment one might wonder where it fits in the range of products available, and what application to use when. Update (1/31): Dennis lists much better use-cases:

“I can see huge potential for this among those professionals who need to assemble audit and M&A resources for example. It makes the creation of a multi-disciplinary team very easy with the ongoing ability to collaborate as projects evolve while remaining in an organised, controllable environment.

I can see other use cases arising in forensic work, planning, budget management, time and expense management – the list goes on. In this sense, Zoho Notebook could become the de facto desktop for knowledge workers because you don’t need to leave the service to do pretty much all the tasks you’d expect a knowledge worker to undertake. I can also envisage some interesting mashups using accounting data from a saas player that gets pulled into Notebook on and ad hoc basis. Does this mean Notebook is a ’silver bullet’ application.

I’m going to stick my neck out and say a qualified ‘yes.”

About a month ago, while reviewing then new Zoho Wiki I expressed my hope to see tighter integration to the Zoho Suite – specifically Writer, Sheet and Show. Well, now it’s here, albeit in a separate application. Ideally I’d like to see the wiki equipped with Notebook’s powerful editing /collaboration options – or is it the other way around? If you take NoteBook, and allow linking between pages/books … well, that’s quite close to a wiki.

smile_wink. Update (1/31): In the same post I’ve just referred to, Dennis says: “Zoli Erdos has an interesting take on whether the collaboration features put Notebook in the same class as a wiki.”

Let me clarify my point: I’m not comparing NoteBook to Wiki as it stands now. What I do believe is that the feature sets of the two should be merged somehow. Combine the “digital dumping ground” as Dennis says, i.e. the absolute flexibility of creating/aggregating any type of info with the linking, back-linking, navigation, search in the wiki, and you have a truly killer business app.

Zoho has a tradition of initially developing products individually, but share the code-base early, and integrate them later. What do you think? Should Wiki and NoteBook be merged to create the super-product, or is there a need/ market for them to be independent in the long run?

Update (1/30): See related posts on TechCrunch, Read/Write Web , Zoho Blog , Scobleizer, /Message, CMS Wire, InformationWeek, PC World.

Update (2/1) : Robert Scoble’s summary: ““cool” has different meanings: 1) That it’ll change how you work. Zoho’s Notebook wins here.

Update (2/2): The video of Zoho Notebook’s launch at DEMO is now up here.

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24SevenOffice Acquisition Rumors

24SevenOffice, the European SaaS provider of an integrated, All-In-One system for small businesses may be in acquisition talks with a major US vendor. The news went almost unnoticed, partly because it leaked just before Christmas, partly because the company is largely unknown outside a few European countries – not for long if a deal comes through.

I covered 24SevenOffice, a very promising SaaS provider for the SMB (SME) market several times. Their system is modular but integrated with a breath of functionality I simply haven’t seen elsewhere: Accounting, CRM (Contacts, Lead Mgt, SFA), ERP (Supply Chain, Orders, Products, Inventory), Communication, Group Scheduling, HR, Project Management, Publishing, Intranet. Essentially a NetSuite+Communication and Collaboration.

About the only thing I did not like was the lack of availability for US customers – this might change soon. The news release and blog post mentions three names:, WebEx and Google, but adds a somewhat cloudy remark: “the companies here are only examples of what the rumors have outlined.” It does not explicitly confirm one of these specific companies as the potential buyer. I should also add that while I had in the past been in touch with Management, at this time I have no information whatsoever from the company, so the ideas below are purely my speculation. as suitor: A well-integrated All-In-One product would come handy to which could dramatically expand their customer base this way. However, they’ve gone a long way in the other direction, trying to become a platform and extending their reach via the ecosystem built around the AppExchange. Acquiring 24SevenOffice would be a huge about-face for Marc Benioff, and essentially would mean admitting that archrival Zach Nelson of NetSuite was right all this time about the superiority of the integrated All-In-One approach.

WebEx: Their original market, the web conferencing space is being commoditized, they clearly are looking for more lucrative markets, as evidenced by the recently launched WebEx Connect (their “AppExchange”). I haven’t heard about much activity since the announcement – certainly owning a product like 24SevenOffice (btw., it really should be called 24SevenBusiness) would allow WebEx a powerful entry into the SMB applications market.

Google: No way, you might say. Google and business process / transaction oriented software are lightyears apart – at least today.

Yet unlikely as it sounds the deal would make perfect sense. Google clearly aspires to be a significant player in the enterprise space, and the SMB market is a good stepping stone, in fact more than that, a lucrative market in itself. Bits and pieces in Google’s growing arsenal: Apps for Your Domain, JotSpot, Docs and Sheets …recently there was some speculation that Google might jump into another acquisition (Thinkfree? Zoho?) to be able to offer a more tightly integrated Office. Well, why stop at “Office”, why not go for a complete business solution, offering both the business/transactional system as well as an online office, complemented by a wiki? Such an offering combined with Google’s robust infrastructure could very well be the killer package for the SMB space catapulting Google to the position of dominant small business system provider. Who’d benefit from such a deal? Google, millions of small businesses, and of course 24SevenOffice.

I admit I would feel somewhat sorry for 24SevenOfice though, as I clearly think they could have a shot of becoming a billion-dollar business on their own – the next NetSuite. Either way, if they make it to the US market this year, they’ll likely see explosive growth. When they are a well -known brand, remember, you discovered them here.thumbs_up


Zoho Adds Wiki to Online Suite – It’s All Coming Together

It’s nice to get your dream fulfilled fast.  Writing about Socialtext 2.0 in October I wrote:  “My ‘dream setup‘ for corporate collaboration: a wiki with an integrated Office 2.0 Suite.”

A little later in my post on the JotSpot/Google deal I specifically called for my friends at Zoho (I’m an advisor to the company)  “to make their move soon: they either need to come up with their own wiki, or team up with a wiki company…So far Zoho is ahead of Google in Office 2.0, if they want to maintain that leadership, they will need a wiki one way or another.”

I did not have to wait long, Zoho Wiki is here, announced simultaneously on TechCrunch and the Zoho Blog

This product is perhaps the first showcase of how Zoho’s long term product strategy will play out.  To begin with, if you are a registered user for some of Zoho’s other products, your single sign-on automatically gives you access to the Wiki.  (For now you can create 3 wikis, but I don’t expect this restriction to last long.)

While most wikis I know of started their life without  WYSIWYG editing – yes, you had to write ugly markup language – Zoho Wiki shares the codebase of Zoho Writer, so right at the start you have all the bells and whistles of the popular editor, including formatting options, special characters, emoticons, inserting tables and a spell checker, amongst others.  As for appearance, there are 5 themes to select from, should you not like the default one.

A wiki is all about linking: Zoho supports multiple options of creating new pages and linking to them:

  1. there is a large “create new page” button displayed consistently on all pages
  2. you can use the link icon from the editor and pick wiki pages, email addresses or external URLs.
  3. you can just type a WikiWord (also known as CamelCase) to create a page and link to it. (LinkAsYouThink)

#1 above is normally followed by creating links to the new page, but my personal preference is either #2 or #3, both of which create a “shell”, i.e. a link to a not-yet-existing page, that you can click on to actually create/edit the new page – this is way you can be sure you won’t end up with orphan pages. (I wrote more extensively about the orphan problem here)

Perhaps the most distinctive feature is how you can embed objects from other Zoho and 3rd-party applications: spreadsheets, graphs, presentations, forms, videos, slideshows…etc.  The screen-shot below comes from my test wiki, where I used a chart originally plotted in Zoho Sheet, using data coming from Zoho Polls, and originally published on my blog.

Pre-Google JotSpot became known as the “application wiki” for including a few pre-defined forms; think of the possibilities when you can use the full power of Zoho Creator to create forms/applications and embed them in your wiki.   Of course whichever application the data is updated in, it will be reflected in all other apps, typical Zoho-style.

For non-Zoho apps, see these two examples: a Youtube video and a Bubbleshare slideshow embedded in a Zoho wiki.

As for permissioning, both read and edit access can be independently set to either private / everyone or group; group members then can be managed individually.  What I would like to see in the future is the ability to centrally manage “groups” across all Zoho apps: for example set up a group in Virtual Office, where all my contacts are, then just refer to the group by name to share spreadsheets, wikis, presentations..etc.

And talk about wishlist, since I was recently fairly critical about SocialText 2.0, I have to be fair and state that I am missing some of the same features here, too: inbound links (backlinks), breadcrumbs to ease navigation, nested comments, improved history, and the ability to email to wiki pages.  The Zoho team reassured me that these are planned for future updates.

Notably absent is attachment handling and versioning, a standard feature in better business wikis, yet I don’t consider it an omission, rather good strategy. Why?  Document management/versioning in wikis solves a critical problem, but does so on the basis on yesterday’s (OK, today’s ) technology.  Even with proper versioning one has to download documents, locally update them, then upload them back up to the wiki. 

That’s a lot of work, and Zoho has a an easier, more streamlined  approach to do it all online. Not only they integrate Writer, Sheet and Show to the wiki, but have also provided tools to easily access documents originated by Word, Excel, Powerpoint online.

The current integration is still somewhat clumsy (but working): you invoke the applications separately, save your work, and either link to the document’s URL from within the wiki, or embed it by using the “insert html” icon.   What I’d like to see eventually:

  • Easy access to invoke to editor / sheet /show ..etc applications from inside a wiki page – perhaps a colored area on the sidebar
  • Smart linking: link button would bring up list of not just wiki pages but all my Sheet, Writer ..etc files
  • Single button embedding without having to copy/paste html code
  • Last but not least, text search not only of wiki pages but all my data across all Zoho applications.

Considering Zoho’s breakneck speed of product releases, I am quite optimistic that we don’t have to wait long.  It’s all coming together – in 2007.



Related posts:




The "Hidden" Business Model in SaaS: Benchmarking


While we saw a lot of exciting products at the Office 2.0 Conference, the biggest “surprise” was not a product announcement, but FreshBooks CEO Mike McDerment letting the cat out of the bag:

“He basically announced the hidden value proposition enabled by SaaS: competitive benchmarking. All previous benchmarking efforts were hampered by the quality of source data, which, with all systems behind firewalls was at least questionable. SaaS providers will have access to the most authentic data ever, aggregation if which leads to the most reliable industry metrics and benchmarking.

Two months later FreshBooks published the first set of raw data. It includes stats on payment methods, invoicing by email vs. regular mail, browser an operating system usage. It’s a rather limited set, and only covers two months, but it’s a start, certainly to be followed with more business-critical data. CEO Mike McDerment also takes a first cut at analyzing the data, for example:

“Browser Usage

– Internet Explorer 7 – October 5.02%, November 9.68%

– IE 6 – October 37.64%, November 36.77%

– Firefox 2.0 – October 6.61%, November 24.51%

– Firefox 1.5 – October 44.26%, November 22.07%


Both IE and Firefox have new versions out. Clearly the Firefox community is quicker to switch to new versions. Remarkably quick in fact.”

I’m not sure I’d agree with the analysis: certainly Mike is right, the Firefox community appears to be quicker in switching to new versions, but aren’t we missing a bigger picture? I’ve dropped the data into Zoho Sheet, the web-base spreadsheet app which generated this chart:

Browser Usage -

The “bigger picture” is that IE gained market share vs. Firefox (something that as a FFox user I’m not happy with smile_omg). Clearly, the majority of new IE7 users are not IE6 upgraders, they came from the Firefox camp.

But I’m not here to discuss browser use, nor do I intend to ridicule Mike’s analysis. I picked this example to make a point: the same data set may carry different meaning to you and me. The art isn’t so much in the accumulation of data, but the proper aggregation and analysis allowing customers to benchmark themselves against industry peers – that’s where the real value is, not in raw data. So much so, that I probably wouldn’t entirely give it away; rather market it as a for-fee premium service.

SaaS providers may become the benchmark specialists themselves, but think about it: businesses will likely end up using a few systems from different providers, and if your purchasing, sales, invoicing, service ..etc data are all in different systems (and consequently aggregated by the different providers), wouldn’t you have a better competitive picture benchmarking yourself based on all those aspects? Does this mean we’ll have independent benchmarking consultants in the SaaS world? If so, will there be a secondary market for raw aggregate data?

But wait … whose data is it anyway? Trust in your data being secure, not lost, published, traded with is the cornerstone of the SaaS model’s viability. But we’re not talking about original customer data, rather its derivative – does that change the picture? There’s a potentially huge market opportunity here, yet SaaS veterans like, NetSuite, RightNow …etc haven’t explored it yet. Why? I suspect for this very trust/ownership issue, which can be a potential mine-field. In the early days of SaaS it simply would not have been appropriate to address it, but now with mainstream SaaS acceptance (MicKinsey predicts 61% of $1B+ corporations will adopt one or more SaaS applications over the next year) it’s high time the industry starts addressing these issues.

Kudos to FreshBooks for being a pioneer in building the service as well as bringing a major industry dilemma to the forefront.

Update (01/04): Jeremiah is thinking along the same lines, discussing how storage companies will (?) eventually pay for your data. Yes, he talks about storage while I talk about applications, he talks about advertising while I talk about benchmarking, but in the end it’s the same: user data being processed to deliever business services.

Update (9/28/2008): Here’s another showcase of benchmarking turned into action messages on CloudAve.


IdeaWins: Apprentice the Microsoft Way

I’ve previously covered Microsoft’s Contest for Innovative Small Business Idea: basically a promotion for the new MS Office Accounting 2007 package, dressed up as a contest. Still, it’s an opportunity for entrepreneurs, especially those in retail.

Originally MS released the site in a rush and not all components were ready, so submissions were only by emailing a downloadable form. They’ve fixed it now, so here’s the new fancy interactive submission page.

Microsoft also picked “celebrity” judges, lead by Carolyn Kepcher of ex-Apprentice fame.  Now, here’s my challenge: try to find this information on the IdeaWins site smile_eyeroll.  I couldn’t. 

Why hire “stars” (just how much of a star she will be without The Donald is still to be seen…), and “hide” the fact?    I only know about it from an email by MS PR – or so I think, it came from a gmail (sic!) account.  The press release calls Carolyn’s appointment an “unprecedented move to galvanize the imagination of millions of Americans”.  Hm… I don’t know about galvanizing… perhaps I’d feel galvanized by the end of the video, but I admit I did not watch it all the way.  Why?  Because I generally prefer knowing what I am getting into upfront.   In my previous post I stated:  

 “the FAQ is actually all about the Accounting package, and the contest terms are somewhat hard to find.”  

Now it got worse.   There is a  contest-related FAQ – well-hidden, unless you use my direct link.  The real catch: this is only available from inside the interactive signup, *after* you have chosen the high-bandwidth option.  If you picked low-bandwidth, you’re out of luck – and info. smile_zipit.   A “good” example of bad design getting in the way of creativity.  Which is quite typical of  The Microsoft Way. smile_sad




Google’s Unfair Advantage

Google’s Adwords is a fair system – with enough money you can outbid anyone and get top position … or .. can you?

Joe Kraus’s last blog post, It’s a great time to be an entrepreneur has become a much -quoted classic.  Part of his argument is how Search Engine Marketing changed everything, how one can now reach millions of small customers just buy buying the right keywords. Following this strategy a lot of startups spend most of their marketing budget to one company: Google.

Online collaboration company  Central Desktop followed the same path: frugal start and steady growth to profitability simply by having a solid good product and focused Adwords-based marketing. (They have  a really good integrated suite that I warmly recommend to small businesses as well as ad-hoc groups in need of  collaborative editing, groups, calendar, wiki, project management, tasks ..etc.)

It wasn’t until one of Central Desktop’s competitors, Joe Kraus’s very own JotSpot got acquired by Google that CEO Isaac Garcia started to investigate how Google plays its system against their own customers.

“You see, I’m not afraid of competing with Google – but I *AM* afraid of AdWords. Here is why……….
Google Cheats
Google holds the top advertisement (Adword) slot for the following key words:
intranet, spreadsheet, documents, calendar, word processor, email, video, instant messenger, blog, photo sharing, online groups, maps, start page, restaurants, dining, and books (somehow Amazon has managed to appear in the #1 ad slot for ‘books’).
spreadsheet, blog and video, in addition to squatting the premium ad position, Google Products also dominate three of the first four search results.
In such cases, Google Product Links and Ads can account for up to 25% of your viewable screen resolution – 30-40% for lower screen resolutions – almost guarantying that users will click on a Google Product over any other search results, sponsored links or text ads.
What this tells me is if you are trying to advertise a product that is competitive to Google, then you’ll never be able to receive the Top Ad Position, no matter how much money you bid and spend.

How successful do you think *your* ad buys would be if your competitor trumped your position no matter how high you bid your key words? “

His three questions to Google:

“1. How much does Google pay *itself* to claim the top ad position for searches relevant to its own products?
2. Does Google hold itself to the same minimum CTR thresholds for Ads placed?
(In case you aren’t aware – Google recently changed its Landing Page criteria; increasing keyword buys to $5.00, $10.00, $15.00+ for companies who’s Ads were not meeting a minimum (unknown) CTR.)
3. What alterations does Google make to its search algorithm to guarantee top rank for search results relevant to its own products?”

I think Isaac hit on something really big here:

“In the beginning, AdWords was hailed as the revolutionary platform that enabled small start-ups, mom and pop stores and businesses all around the world to ‘compete fairly in an open market bid system.’ It was written that “small businesses can now compete evenly with big business – it levels the playing field.””

Yes, it levels the playing field – as long as Google itself has no interest in your particular field.  So if you’re a small business owner, startup entrepreneur, how safe are you?  Today you don’t compete with Google, but considering Google’s appetite for acquisitions chances are tomorrow you will.  Is Google abusing its monopoly *against* you?

Update (11/8): The Inside Adwords blog responds:

“…our ads are created and managed under the exact same guidelines,principles, practices and algorithms as the ads of any other advertiser. Likewise, we use the very same tools and account interface. As does any advertiser, we aim to give our campaigns a budget which is in line with their value to us in terms of the increased traffic we might see. We actively monitor and manage the success of our ads by adjusting ad copy, keywords, bids, and so forth in the same way any advertiser who is concerned with their account performance would. That said, there are no special buttons to push or levers to pull that give our internal account managers special treatment or leverage.

Well, if I want to absolutely win a $10 item on eBay, I may auto-bid generously… $12, $15?   I certainly won’t bid $100.  Not that the price would reach $100, but eBay’s system will keep me in the winning position against all other bidders, who in a crazy bidding frenzy might drive my price up to .. $20? $30?  And, this being real money, I’d have to pay “too much”, above the value of the item.  Of course, if eBay as a company was bidding against me, they could afford that $100, or even $1000 bid – after all, it’s only “funny money”, just like Google bidding for Adwords.
Or, as ZDNet puts it:

“A Google AdWords self-promotion at, however, IS unique in a key way; The house is playing against the paying players.”

Update (11/8): Nick Carr’s When the auctioneer bids is a must-read.

Update (12/20): “Google recently emphasized they need to pay the same budgets as everyone else to advertise on Google using AdWords. What they might not have told us is that Google might simply not use AdWords in the first place… and instead, display a graphical “tip” Onebox on top of the organic results.”  Full story on Google Blogoscoped.

Update (7/7/2008)Ross Mayfield pondering on why he always gets outbid by Google.