Google's success mantra: It's all about interacting with users

By Anant Rangaswami and Durga Raghunath

Nikesh Arora, Senior Vice President and Chief Business Officer of Google, in an interview with Durga Raghunath, Vice President Products and Executive News Producer of Firstpost, and Anant Rangaswami, Editor, Storyboard, reveals the secret of winning users over on the web .

In the first part of this two-part interview about technology, infrastructure and digital marketing, Arora says the key is to ensure the product is ready. “For once you have those users, you can figure out how to make money with those users,” he says.

Let’s look at things from a marketer’s point of view. Just when they think they’ve figured out what the Internet has to teach them, it or Google comes out with something new, and you have to start all over again.

Before we think about marketing, you have to look at consumers and what consumers are doing. In that regard, India could learn a lot from what is happening in different parts of the world. I was in Korea last week and the US. There are things happening with consumers which are very interesting.

So if you look at consumers today, they have pretty much lived their lives on their mobile devices as opposed to sitting and watching TV. Earlier, you would look forward to that two hours in the evening where you can watch TV. It was compact programming and not 500 channels. So you knew there were two channels that you had to watch. But today, I can’t keep track of the number of applications my 16-year old uses. And she said something interesting to me the other day. She’s like “Dad, email is for formal communication.” The perspectives of consumers have changed. I think the fundamental task for any marketer is to relate to consumers. So, they have to be where the consumers are.

You’ve said before that we limit ourselves by calling mobile, mobile. What you mean when you say that?

One of the fascinating things that has happened as technology has evolved is that we have been dealing with devices in isolation. That made sense a few years ago when your television was your television and it never talked to your computer, and your computer was a computer and your phone was your phone. And none of these talked to each other. Today, you’re slowly beginning to see devices talk to each other. So, I can collect my music on my PC, off the internet, and I can use my phone to play it. Now suddenly your phone is starting to talk to your PC.

There are many applications which I’m sure you use on your PC and on your phone. There are instances where people have put their televisions online as well; where I can take a YouTube video and play it on my television. So you’re beginning to see devices talk. When devices talk, I think, what happens in the future is that you have a multitude of screens around you. Your watch could be a screen, your TV could be a screen, your tablet, your computer, your phone - all these are screens. And over time, services are going to become the thing that you want to use across all screens. So the mobile becomes a context. It becomes your sort of geo-spatial context. You say “Oh, I happen to be home, I happen to be at work, I happen to be at dinner with my parents, I happen to be sitting, waiting for somebody at a meeting”, and you can think about that. If I’m sitting waiting for somebody in a meeting, I’m more likely to read Firstpost or a newspaper or something else. If I am sitting at home, I might watch a video. If I’m at work, I might search for something else. Suddenly where you are becomes your context and that sort of becomes your screen of choice. So it’s no longer mobile phones. When I’m mobile I will always use my mobile screen. What if I have a tablet? What if I get my computer with me with Wi-Fi? So when I’m mobile I can have access to multiple screens. As long as my screen knows where I am, it can be more useful to me.

The consumer is constantly faced with making choices. We have readers who are moving from a website classic format to the tablet format to the mobile format. For advertising to remain powerful on digital, across these devices, how would you approach dealing with multiple devices, multiple attention and consumption patterns?

First, let’s talk about content and making money. Historically, as you have seen changes in media, there have typically been two or three ways advertisers have made money by funding content. If there are newspapers, it is a combination of advertising and subscription. That’s how television makes money too, right? There is a combination of some function of cable fees versus advertising and television. There are some channels which don’t take advertising, so you have to pay more. Somewhere in that spectrum or continuum, you pay for content or content gets monetized by advertising and that’s still true in any media you can come up with.

Content will be paid for because consumers interact with content. And it is going to be paid for either directly by the consumer or indirectly through advertising. The question is what form does that advertising take when you start interacting with a smaller screen, or different sizes or different content. What becomes very important is the big transitional shift.

In the past, you had very little idea about the user. Take a newspaper. You have no idea who is reading the newspaper, but you can make up demographics of who the newspaper reader is. For television, you kind of know the households involved. There are some agencies or third party measurement services which will figure out, based on household samples, who is watching it. But you really didn’t know. But if you look at today’s technology, you have a reasonably good idea of who that person is. You have a lot more data about them because of the applications they interact with or what they do. You have a lot more data about their physical and social contexts. And that makes advertising three to five times more powerful. So the big challenge for advertisers or marketers is how to leverage the information that you have about individuals and how do you go from a mass market broadcast type advertising concept to a more personalized, more individualized concept of advertising.

In India, especially, more than other markets, we’ve shifted from being a hugely under measured market. When you meet with marketers or advertisers, do you think they are up to speed with data changes? For example, nobody understood data 10 years ago and today they are forced to or they’ve missed the boat.

If you think about it, in every business there are people at each ends of the spectrum. In our business too there are people at each end of the spectrum where they understand as well as us, and in some cases better than us because they have other data in addition to the data they get from us or interact with us. And there are people who still haven’t gotten the hang of it. I think it is fair to say people who operate only in the digital space have a very clear idea about data because that is their livelihood. They have no other choice. If they don’t understand their data or consumers, they are not going to be able to make their services interesting or their advertising interesting.

For instance, the travel sector understands it well since a lot of ticket purchasing happens on the web now, around the world. So, they totally understand the data, they know analytics and understand how every small change in their website impacts their revenue.

They understand how every act of advertising impacts their revenue because they can control and watch the study. The spectrum changes as you go further down. I think, CPG (Consumer Product Goods) is probably more towards the end of the spectrum because CPG is still physical things we all consume. There is a broadcast mass market, tremendous advertising and traditionally CPG has never had a direct relationship with the consumer because you always went to retailers to buy these goods. I think that is going to change as well.

So, there’s this 10% ceiling that everyone talks about in terms of marketing spends or ad spends for digital. Five years ago, you had to fight to get digital as a part of the conversation. Now everyone says, “Sure, this much is for digital.” But still that proportion is fairly small.

You mean in the Indian context?

In the Indian context. And sometimes you hear it in the West too, right?

NA: That’s not always true. I mean in places in Europe, we are up at 25-30%.

What do you think makes one move beyond that 10%?

Consumers. This is the cart before the horse problem. It is definitely the consumers. If everybody in this country was not watching television, they had spent their entire lives on tablets and mobile phones, you would have no spend on television. So, if you think about it that way, you come back. And I believe that in time - it would probably take slightly more time in India because of the infrastructure reasons - but our TVs are going to be connected. And when our TVs are connected, there is no choice. There is no point in broadcast.

Do you feel that is the next breakthrough in terms of internet through television?

Well again, it’s not like mobility. The internet is purely a communication mechanism. It is a large pipe coming to your house, which can send individual content - that’s what the internet is. Television is an efficient form of broadcast, using a medium in such a way that it gets the same content to everyone, at the same time, in a cheap way. But if I could make sure that you could get a large pipe coming to your house, and you can get a lot of content on it, then you would prefer the customized content. Do you really want to watch that movie at 9 ‘o’clock with 40 million people in the country at the same time? So we all are in sort of an “I want it now, I want it at this time, I want it when I want it”. We are this set of people who want instant gratification.

When you look at the true view experiment as a marketer, you have the ability to choose certain formats. You can spread money across five ads and see which is doing better. Do you see marketers and advertisers sort of embracing that or that sometimes too much innovation is something that people find intimidating?

We don’t have enough innovation at all. We are still in the infant years of advertising in a digital space. If only 10% is moved (to digital ad spend) after all the efforts in the last seven to eight years, you still have 90% to go. When you think about the transition that happened from radio to television all the advertising spend was on radio, and now we could actually see those people.

The first TV ad was a Barbie ad where a man was moving a doll with his hands. And they ran the radio jingle. You already have the audio, let’s create a video that goes with the audio. And today we do the same thing. You say “Oh, we need advertising on the internet. Let’s do something. We already have the video. Let’s put it on the internet.” So people take ads made for television and put on the internet.

Do you think part of the problem is in terms of finding exciting, breakthrough formats or ways in thinking in terms of interactivity?

Fascinating things happen when you take away crutches and take away legacy. When you have legacy, you live in the comfort of legacy - you talk about changes in innovation. When you have no legacy, you have no crutches. Then change is evolution. I think that is why internet companies do well, because they don’t have legacy and they don’t have a choice. They don’t have to maintain an old way of working. They don’t have to wait for new changes to come. Change doesn’t come. You have to lead it. So in terms of the opportunity and not the problem, there is going to be phenomenal opportunity for people to innovate in this space because there is a change in consumer behaviour. I think advertising will follow that change in consumer behaviour. Some people will try and lead it, some people will follow it. I think the winners are the ones who are going to lead it.