Will a revised corporate structure like Alphabet with its Chinese walls protect Google from regulators? Expect further break-ups of Google core services as EU fines and pressure come to bear, DMI co-founder Ian Dodson tells Siliconrepublic.com.
At the forefront of digital marketing in Ireland for the last 10 years, Dodson co-founded the Digital Marketing Institute (DMI), which has developed a global certification standard in digital marketing education. The number of countries that DMI now has a presence in has grown 135pc in the last year, from 32 to 70, and the organisation reported a 94pc growth in student numbers year-on-year.
The DMI this week signed its first education partner in the Irish market, IBAT College in Dublin.
Earlier this week an internet storm was unleashed when Google co-founder Larry Page revealed that Google was now going to be a subsidiary of a new holding company called Alphabet.
For Ian Dodson, founder and president of the Digital Marketing Institute, the move, while unprecedented, is really business as usual at one of the world’s most unconventional companies.”
“Alphabet/Google, like all publicly-traded companies, is a slave to shareholder value. Shareholders are not just interested in how you make your money but where you’re spending it.
“In the last five years Google has bought or built 35 companies in fields as far flung as solar-powered drones, life sciences studying longevity, autonomous cars, thermostats and smoke alarms — an eclectic group of businesses that have used cash from the core Google business to stay afloat.
“Investors want transparency, which they’ll get with this restructuring, in terms of separating these businesses out and gauging whether or not they can really stand on their own two feet.”
What’s really going on with Google
Dodson believes the Alphabet move is really about protecting shareholder value ahead of a raft of antitrust and anti-competition lawsuits that will be leveled at Google in the years ahead.
“This summer the EU Commission filed formal antitrust charges against Google for favoring its own shopping comparison service in search results over its rivals — an initially narrow but very tactical move on behalf of the EU Commission to gain an early win in the competition wars, but definitely the tip of the sword as the EU eyes the 90pc market share in European web searches and Google’s 80pc market share in mobile handsets. Mobile companies that adopt Android are forced to default to Google browsers, maps, apps etc on their handsets.”
Google headhunted Ruth Porat from Morgan Stanley earlier this year to act as their new CFO. Porat was Obama’s first choice in 2013 for Treasury Secretary and was a principal adviser to the US government on the Freddie Mac/Fannie Mae mortgage debacle. She has spent her entire career on Wall Street and knows what investors want.
“She is also a heavy hitter in government regulation and Google hired her fully aware that they will be spending more and more time in the coming years dealing with antitrust and anti-competition violations.
But will a revised corporate structure like Alphabet with its Chinese walls protect Google from regulators?
“Not yet, but further break-up of Google core services will follow as the EU brings pressure and fines to bear.”
‘It’s no coincidence that Alphabet choose a CEO who has championed Google’s evolution in the mobile sphere
– IAN DODSON
Dodson believes the appointment of Sundar Pichai as CEO of Google is an effort by Alphabet to stem the flow of high-level defections, such as Marissa Mayer to Yahoo.
“Sundar Pichai has been a target of several other Silicon Valley companies, the most recent rumoured to be Twitter, and Page and Bryn needed to relinquish the reigns a little more to provide a career path for their top people. Promoting the talent that they’ve been building internally also provides the marketplace with clear succession planning.
“It’s no coincidence that they choose a CEO who has championed Google’s evolution in the mobile sphere. While search traffic is being attacked from all sides, Google’s fight back is dependent on their ability to engage users with a range of applications (Mail, Videos, Maps, Photos) through mobile devices. Android accounted for 80pc of all phones shipped in 2014. Google’s future is mobile and Pichai is best placed to realise that potential.”
Ad-blocking backlash worries publishers
Outside of Google, Dodson notes a recent study by Irish start-up PageFair and Adobe which suggested that close to US$300bn is being lost a year by online publishers through ad-blocking, mostly by millennials using ad-blocking software on browsers like Chrome and Firefox.
He said the answer to the problem lies in why millennials are choosing to block ads.
“A lot of internet advertising is irrelevant, intrusive or clogs up the performance of the browser and your device, or it offends on all counts.
“We’ve all visited websites that have had distracting — rather than relevant and interesting — ads at eye level with the content we’re trying to read, or seen browsers become unresponsive and — particularly on mobile — crash when the ads are too heavy on the load.
“This is particularly hard on tab surfers, who open a lot of tabs on a publication and then read through them.
“With this as the experience, it’s natural that folks turn to blockers that not only cull the ads from their screens but also stop a lot of scripts firing in the background that are useful for analytics.
“The consumer is simply reacting to the activities of the digital advertising world as a whole, and we’re going to need to respond with better ads that start to think about things like browser overhead and even battery drain on mobile devices.
“Publishers need to feed this back to the networks they work with, and actively move their inventory over to the people who are only serving up relevant and technically-sensitive advertising.”
Programmatic for the people
The rise of programmatic advertising, where brands and publishers will be able to automate the delivery of entire campaigns across digital, is a progressive move, and web publishers of all sizes could benefit, says Dodson.
“In the UK, 45pc of display ads were programmatic last year; and the IAB reckons it’ll go as high as 80pc by 2018. It’s already more than half in the US. The reality is as it gets bigger it’ll become more democratised. As with anything, early adopters had to contend with new technology costs and a high barrier to entry. Over time we’ve seen the entry level for a programmatic buy from one of the well-known providers come down from US$50k to US$5k and I expect that to continue.
‘It’s not like flying an airplane, becoming a digital marketeer doesn’t require tens of thousands of euro and full time investment to convert yourself into someone who can take a job in the space and get on the ladder’
– IAN DODSON
“There’s a lot of inventory out there, viewability of ads has been falling and as we see with ad blockers, users are getting ticked off. So anything that might enable us to target better and respond to them on the fly, across more than just the display medium I should add, will be a positive that all marketers will flock to.
“The very nature of programmatic, meanwhile, means that niche players will actually find it easier to get in front of the audiences they want; in places that are hard to find or underused. The internet is a big place, there’s plenty of room for everyone. The key thing is to educate yourself as a marketer and talk to the right people to get on the boat while we’re still in the relatively early days.”
The digital future of news
I point out to Dodson that Facebook and Twitter are rapidly becoming the front pages of news for most consumers and soon Apple will be entering the fray with its news platform. What does this mean for news?
“Facebook and Twitter are popular because they provide a consistency of product, but first it’s always worth noting that there are plenty of other — and many uninvented — mediums that people flock to and will flock to on the internet. So I don’t subscribe to the view completely that the internet will be these two or three companies, or maybe five or six if you think Netflix and Google and Apple and the likes as well.
“Still, we do know that they’re influential and have captured a lot of time for users. But how then is optimising for Facebook so different to optimising for SEO? Google moved the dial on mobile friendliness significantly by just announcing an update to their algorithm earlier in the year.
“Everyone was falling over themselves to do something they should have done anyway, because scary Google told them to. So, marketers and content producers and promoters need to think about and optimise for Facebook or Twitter.
“Go all the way back and it’s not really so different to having to optimise the front page of a magazine, and have a distribution department to make sure it was near as could be to eye level on the stand in the shop. The methods are different, more complex perhaps, but we’ve always had to think about distribution and relevance.”
Digital marketing talent is lacking in SMEs
Last year, the DMI produced research that suggested Irish marketing talent is lacking in the digital area, with a shortage of skilled marketing executives hurting firms’ growth. Supply is still a problem, he admits.
“Just look at the marked increase in digital marketing vacancies vs 12 months ago and the upward pressure on salaries coming from the recruitment agency surveys. It tells its own story: the economy is bouncing back, so we have lots of opportunities for digital marketers — great news.
“But there’s too few of them, and too few specialised people in areas like data analytics and e-commerce. So headhunting is rife, tenures are short and people are hopping around for better deals. That’s good for them, but bad for our competitiveness and bad for the firms trying to get value from their digital teams through experienced people who bed in for several years.
“We need more supply, and I’d urge anyone tangentially near the digital space — in traditional marketing for example, or coming up through college in that direction — to take a look at the vacancies that are there and ask, what do I need to do to get the skills and experience listed?
“It’s not like flying an airplane, becoming a digital marketer doesn’t require tens of thousands of euro and full-time investment to convert yourself into someone who can take a job in the space and get on the ladder,” he concluded.
“The opportunities are there. We need more clever people with good attitudes and the employers and educators like ourselves in the space will help do the rest.”