My Google bag

My first grade daughter has been bringing a swim bag to camp most days this summer -- it was one of those tchotchkes that I got at an industry event. So last weekend she was getting ready to go to a swim birthday party and asked, "Mom, where's my Google bag?"

I stopped dead in my tracks and said, "Honey, it's a Yahoo! bag."

"Oh yeah, that's right. Well, do you know where it is?"

My daughter is your typical Silicon Valley kid who knows how to use the Internet, can type in URLs, and has heard me and my husband talk endlessly about companies like Google and Yahoo!. What struck me dumb was that even though she was carrying around this large purple swim bag emblazoned with Yahoo!'s name on it all summer, she thought it was her Google bag. It's incredible to me that the Google brand carries such weight that it became top of mind for my six year old.

Just to double check, I asked her later if she knew what the difference was between Google and Yahoo. "Yahoo! is the place where you go to play games (she uses Yahooligans)," while "Google is what shows up on your screen when something doesn't work." (Google is the default search engine on the kids' computer so it appears to the side of the Web browser when a page can't be found). My son (a second grader) chimed in that Google was good for finding stuff you needed to know about, while Yahoo! was the place you go to find pictures, play games, and check your email.

So while Yahoo! doesn't appear to be top of mind for my daughter, she definitely has a more positive opinion of Yahoo! than of Google. There's hope yet for Yahoo! to win the mind as well as the heart of my daughter.

What struck me is that my informal, anecdotal survey of my children closely mirrors the brand perception of the major portals. Hitwise recently published some data about the brand attributes of three major search engines – Google, Yahoo!, and MSN (collectively known as GYM). Hitwise took the top twenty search queries across all search engines that contained the name of these three sites to gauge their respective brand attributes. Hitwise GM Bill Tanner wrote:

Google's queries center on finding things, be that information, geographical location or multimedia content. This confirms what we've seen with our breakdown post, that Google, despite building some very attractive "portal-like" tools, maintains in consumers minds as a brand that helps you locate things.

Yahoo! in contrast, demonstrates a clear portal identity with well rounded interest on a variety of their channels or portal offerings. There is a clear difference when we compare Google's terms with Yahoo's... search versus engage in an activity or consume a specific type of content.

MSN queries are clearly distinct from both Google and Yahoo!, with their queries dominated by specific tools such as the new Messenger download, but also showing some portal characteristics with Music, Games and Money.

The data also shows how far Google still has to go to shed it’s one-trick pony image with consumers -- even though I believe they are starting to make progress in this area.

Google's "one-trick pony" is learning new tricks

I’ve long called Google a “one-trick pony” because so much of their business comes from one primary revenue stream – online search ads. This has been further reinforced by recent articles like Businessweek’s article, “So Much Fanfare, So Few Hits” where the uses traffic data to show that most of Google’s new products haven’t gained traction in the market (with the exceptions of Google Maps and Google News). Paul Kedrosky also takes an excellent look at the Hitwise data to reinforce this point.

I don’t dispute the facts, but make a different conclusion – I think Google is actually making progress in diversifying out of search and into new businesses – yes, the pony is learning new tricks. But just like training a real animal, it takes time, patience, and the pony performs some tricks better than others.

I took a look at Google’s most recent traffic data from Nielsen//NetRatings but looked specifically at Google’s unique users and page view data. I wanted to see what percent of Google’s users were using search versus its other properties. I also compared the traffic between June 2006 with traffic from June 2005. I found that traffic to Google Search accounted for 88% of Google’s unique users in 2006, down from 91% in 2005, and drew 49% of total page views in 2006 versus 62% of page views in 2005 (see the figure below). More importantly, properties like Gmail almost doubled in unique users from 4.3 million uniques in the US in June 2005 to 8.3 million uniques in June 2006.

Note that there problems with this methodology: I don’t know how NNR categorizes the properties or if they were consistent from 2005 to 2006; the data from NNR wasn’t available for Google Local/Google Maps, and I don’t know half of Google’s page view traffic is going if it’s not going to Google Search. But I still think it provides a different, temporal look at Google’s portfolio.

So, Google’s done a decent job in building momentum behind a few of its properties and will likely continue to gain steam. Its biggest problem was pointed out in the Businessweek article – that there’s only so much that you can push through a single search query box. Google understandly doesn’t want to clutter the home page, but it should take a close look at Ask.com’s new home page redesign which pushes its most popular tools to the surface – and allows users to customize the interface as well.

The other problem is actually diversifying the revenue base. Pay per click search ads remains the mainstay, but Google has been busy developing cost per impression display ad options, cost per action ads, and extending into offline markets like radio. None of these products will be run away hits, but with billions of cash on hand, Google can afford to be patient as these markets develop.

My point is that we should give Google’s product team a break. Before you think I’ve gone soft on Google I haven’t – I’m just asking for a bit of realism in thinking about new product development at Google. It took Google several years to become the dominant search player – and this is for a product where there are very few switching costs. As I wrote in March about Google Finance, it’s going to take a long time to tear users away from highly involved, personalized services. It’s only been four and a half months since Google Finance – it’s going to take a while for it to gain traction against Yahoo! Finance’s ten year lead! But you gotta start somewhere and at least Google’s getting started.