“Paid Services May Be Google’s Future”

Google chief economist Hal Varian recently spoke to an audience of industrialists, bankers, journalists and academics at the SNS Finance Panel in Stockholm. Netopia was there.

STOCKHOLM Professor Varian’s main message concerned how big data services can be useful for both businesses who want to better understand their consumers as well as governments looking at inflation goals or public elections. By combining tools like Google Trends, Google Correlate, and Google Consumer Survey, marketers can learn things like how a preference for American-assembled products correlates to searches for Chevrolet trucks and country music. Yes, you had a hunch, but Google has the evidence demonstrated Varian as he showcased the tools.

Governments can use data on searches for unemployment benefits to predict recessions. This does not compete with regular government statistics, but can work as a complement to better understand them or to get advance indications, suggested Hal Varian.

Professor Varian also offered a new word: HPPOs, or hippos: Highly Paid People’s Opinions. Google’s tools offer the choice of an experiment rather than relying on hippos, at least in some cases. In other cases, experience and judgement can be more important, according to Hal Varian. Netopia took the opportunity to ask about the sustainability of Google’s business models:

Is the demand for advertising endless? Can Google grow infinitely on mainly ad revenue?

Varian: – Excellent question! Is advertising endless? Most people would say there is too much of it. Look at commercial television. The ad revenue per viewer is about 25 cents per hour. Most people would rather pay the 25 cents and not watch the commercials. Finer, better-targeted ads are more accepted. But attention is a scarce factor. We want to see less advertising, not more. In the long term, we [Google] may move toward paid services. Until then, we should make ads more specific and more targeted.