Wednesday, February 27, 2008

Google Is The Algorithm OK?

Google (GOOG) may have hit a wall based on comments from ComScore, is it? The comments are based on one month’s data. Head for the hills we have confirmation that the sky is falling. What some investors have found surprising is that the sky may be falling on Google. If it is, the corporation will have to demonstrate maturity with its first major set back. Watch and see what they do? Can they manage a business and fix problems or are they just riding their surf boards on the most perfect wave that is maybe over?

From my position as a very small blogger I have watched with interest as perfectly targeted ads appear supposedly tailored to the interests of my readers. Regular readers will note that my comments are almost exclusively skeptical. As a matter of fact I call myself “Financial Skeptic” The idea is to write from a caveat emptor perspective and urge caution when considering investments. Lots of corporate executives, investment relations professionals and PR flacks do not like me. That’s very good.

The majority of ads served on my blog while they are financial and investment focused are all oriented to the buy side. Lists of stocks which will enable you to become the next Buffet abound. So how good is this Algorithm anyway?

Just recently I wrote about Lz-E-Boy. Shortly ads appeared to sell you Lz-E-Boy furniture. I do not believe I made any money on that ad. People searching for furniture probably do not read my blog. Several years ago I chastised Sprint about a press release they issued regarding hurricane preparedness. Ads appeared to sell survival tents and surplus outdoor gear.

Hence pardon my sketicism about the Google Algorithm which targets perfectly. Is it really a pipe dream? Can you target perfectly when the consumer is changing or are desperate advertisers being sold snake oil.

I am waiting for asymmetrical targeting. If you are an investor maybe you should see ads for golf equipment or fine wines. The demographic may be applicable. After all take a look at what the Wall Street Journal is doing with their Personal Journal. All the ads are not financially oriented. You have real estate and automotive as well as other major consumer categories. Last I heard it seems to be working for them. Let’s see what the search engine industry comes up with.

One final point about targeted ads. Anyone who writes daily knows some pieces are stronger than others. It is impossible to be consistent daily. Sometimes the information is not available. Sometimes the clock beats you and something has to go out. On days when I know in my heart of hearts that the piece was weaker than I wanted the click rate is much higher than days when I wrote a good strong piece.

My conclusion is that the investment community is information seeking. If they are happy with the piece they move on to other activities on or offline. If they sense something more was needed they will click on an ad. Unfortunately the conclusion is strong satisfies and weak sells.

Google and search engines have a long way to go to figure out the bi-polar manic depressive psychology that constitutes the stock market and financial advertising.