Implications of the Quantified Self

The emergence of mobile devices, constant connectivity, and big data has led to unprecedented visibility into our lives. We now constantly have applications tracking our searches, our likes, and every step we take (maybe even every breath we take?).

This parallel identity can be called the “quantified self”- the aggregation of all the actions we take online, collected into a measurable history from which a capable data scientist can construct an eerily accurate demographic and psychographic profile. This is fantastic news for marketers, and enables companies to more accurately target the right consumers with the right offers, at the right time (and increasingly, in the right place). We as consumers benefit from this as well- we receive less “spam” and irrelevant information, and receive better education and better deals on the things we actually care about. There’s no doubting that the evolution of the quantified self has been good for business- but what about the effect on our personal lives?

The aforementioned trends started to remind me a lot of George Orwell’s prescient novel 1984. As depicted in that novel, we now have “screens” that monitor us 24/7- our smartphones. While smartphones don’t actively record us or every conversation that we have, they do collect an amount of personal data that would have shocked Orwell. Think for a minute about all of the data that Facebook is collecting on you- while Big Brother isn’t watching you, Zuckerberg and his team certainly are.

The key distinction between 1984 and today is that an absolutist tyrannical government isn’t forcing this upon us- we are all willingly signing up for this data collection when we sign the Terms of Use for every “free” app and service (as an aside- and not for the easily offended- South Park hilariously lampooned Apple’s iTunes agreement in the “Human CentiPad” episode). Admit it- you never read those ridiculously long agreements- no one does. So who knows how your data is actually being used?

I believe that data today is (for the most part) being used purely for commercial, and not nefarious purposes. However, it will be an incredibly important issue for us to monitor as a society, as it appears that a small oligopoly of companies is collecting more and more data (think Facebook, Google, etc.). Also- behind the scenes, how are the NSA and other government agencies accessing our information? We don’t know the answers to these questions, but they are questions that should impact how we conduct business, how we vote, and how we interact with technology.

Bringing the analogy full circle- Apple made a big splash early on with its 1984-inspired Super Bowl commercial. There’s a certain element of irony that they now more closely resemble Big Brother than the hammer-throwing rebel that symbolized their brand in the commercial.


Insights on the current Digital Boom

I had the good fortune of hearing Henry Blodget, CEO of Business Insider, speak at last Tuesday night’s Digital Investing class. Mr. Blodget shared stories about founding and building the company, explained the trends that Business Insider is capitalizing upon, and his thoughts on where the news media business is heading. A few weeks before that, he presented at the Digital Life Design Conference in Munich, and shared some insights that should be eye-opening for anyone whose business is affected by digitization (in other words, all of us). The slide deck is available here.

Because you probably don’t have time to read through the entire deck, I wanted to synthesize some of the key themes and highlight some of the most compelling points.

The first and most obvious point is the growth of all things digital, and especially mobile- growth in smartphone sales, connected devices, etc. There are some surprising datapoints here- for instance, tablets are growing at the slowest rate since introduction (perhaps due to cannibalization from “phablets”, the fastest-growing mobile category). Also, contrary to popular belief, the market dynamic is not just Apple vs Samsung- Chinese smartphone manufacturers now represent ~25% of worldwide sales.

Secondly, it is sometimes easy to mindlessly praise at the growth of technology, and overlook the “creative destruction” and decline of traditional media delivery vehicles. Print revenues for newspapers are significantly less than half of what they were at peak in 2005-2006, and the growth in the online businesses for newspapers has only made up a very small fraction of this difference. Uber and other digital businesses promise to provide the same level of disruption to other traditional industries.

Perhaps the most mind-blowing fact in this presentation is the absolute growth and domination of Google- it is now bringing in significantly more ad revenue itself than ALL newspapers and magazines in the US combined, and is roughly half the size of the ENTIRE global TV ad market. Wow. Additionally, Google is crushing it in terms of Chrome, Android, and YouTube market share in each respective market as well.

Similarly, according to Nielsen, Facebook reaches more people 18-24 than the four major TV networks. Netflix now has more subscribers in the US than HBO (though the release of the standalone HBO Go app may change that). It is inevitable that money will follow the eyeballs, and this represents a big threat to any traditional media companies who don’t get directly into the digital distribution game themselves. However, a growth opportunity exists with the lines blurring around “primetime” TV, as people time shift their viewing and watch more on mobile devices. This effectively creates an 18/7 split, meaning that media companies can potentially monetize ads 18 hours a day due to increased consumer engagement- representing an increase in the inventory that they can deliver for advertisers.

Despite all of the positive trends and optimism regarding digital revolution, Blodget points to historical booms/bubbles as well as the inevitable busts that followed. He articulates that, based on capital flows and fundraising, we are in a boom but not quite a bubble like the late ’90s (though I would argue we are pretty damn close- 2014 numbers weren’t fully reflected on his charts, and those valuations are creeping towards late ’90s levels).

Based on these charts, the average period from beginning of boom to bust appears to be around seven years. If you categorize the beginning of the current boom as beginning in 2009, that posits a bust occurring sometime in 2016.

Is the party over for these guys? I don’t think so, but they might want to exercise those stock options before the end of the year…


GoodGoogle? No, BadGoogle

To paraphrase Winston Churchill’s famous quote on democracy: Cost per Click (CPC) is the worst form of advertising, except for all of the others that have been tried.

CPC is a beautiful concept- instead of merely paying for impressions (as in the traditional CPM model), advertisers are paying for performance based on how many times people click on their ads. Advertisers can easily track campaign performance, optimize on the fly, and sleep soundly knowing that they won’t exceed their marketing budget.

However, anytime there is a great idea worth billions of dollars, unscrupulous types will try to game the system. In the CPC market, the leading form of misconduct is known as click fraud.

One recent example of click fraud involves GoodGoogle, a hacker (or group of hackers) based in Russia who trolls online forums offering to make competitors’ Google ads disappear. GoodGoogle achieves this by using a botnet (computers that have been hjacked to repeatedly perform simple actions, like clicking an ad), as well as advanced algorithms to enable the individual bots to fly under Google’s anti-fraud radar.
dr evil

GoodGoogle directs the bots at advertisements targeted by its client, repeatedly clicking on the ads. With Google AdWords, an advertiser specifies how much it will pay per click for a given keyword, as well as a total budget. Once that advertiser’s budget is met, Google will begin displaying ads from the second highest-bidder. Hence, by rapidly exhausting the #1 bidder’s AdWords budget, the #2 bidder can gain the top spot while paying a lower price.

Even after paying GoodGoogle its fee (in the form of BitCoin or other cryptocurrencies), a shady advertiser can lower their overall campaign cost with these tactics. It’s a fair assumption that a number of people have done this, since the service has been around since 2011.

At the time of writing,it is unclear whether GoodGoogle still exists (the reference article is from ~six months ago)- but if it does, I can’t imagine it will exist much longer. GoodGoogle has several Gmail addresses linked, and even advertised its services on YouTube, so Google should be able to identify and pursue the perpetrator(s). Further, the onus is on Google to preserve the integrity of the AdWords platform- if advertisers don’t trust that the clicks they are paying for are legitimate, the CPC model will collapse.


Sea change or a blip on the radar?

Did anyone notice an unfamiliar interface when searching for a site on Firefox recently?

For most of us, “Google” has become not only a verb in our collective vocabulary, but also synonymous with search- we don’t even consider going to an alternative when we need to quickly find something. This is partially due to the fact that Google had signed an agreement with Mozilla in 2011 to become the native search engine for Firefox, meaning that it was the default search engine for roughly 50% of browsing (the market share of Firefox and Google’s Chrome browser combined).

However, in November 2014 Yahoo signed a five year deal to supplant Google as Firefox’s native search engine. Users in the habit of typing a search term in their browser window are now automatically directed to search results on Yahoo. Google loyalists like myself (I swear that the relevancy of results is still superior to Bing and Yahoo) now have to make the extra step of consciously going to the Google homepage and entering the search term.

Due to this change in the typical user’s “workflow”, Yahoo is now able to claim one search conducted each time this happens. Google has seen an immediate dip in search market share in the US from 79.3% to 75.2%, while Yahoo’s share has grown from 7.4% to 10.4%. While those raw percentage deltas don’t seem high, that impact across the millions of users in the search market is significant.

It’s my personal opinion that Google will continue to be the dominant player in search, and gambits like this by Microsoft and Yahoo will fail to unseat them from the leader position. However, this is indicative of a trend of more and more anti-Google alliances forming- chiefly backed by Apple, Microsoft, and Yahoo, all of whom have tremendous amounts to gain with each point in market share that Google loses.