Google is going to make a stack of money, and here’s how…
Google now gives you the option of tracking your web history. Found a great article yesterday that you can’t find today? No problem, use your Google web history. There’s one hurdle though, you need to give Google “permission” to track you your browsing history.
In parallel, Google are running a private beta “cost per action” (CPA) network. Instead of an advertiser paying on a click through (CPC), the advertiser pays on an action, like when someone clicks through and buys something. This is how the affiliate networks run, and it’s a significant industry. From what I recall from one of their slide shows, LinkShare is the sixth largest public tech stock in the world, and they are an affiliate network.
Traditionally permission marketing works like this. Alice signs up for a one week trial with, say, a fitness center. During the week, Alice receives a couple of phone calls from the company to make sure everything is going alright. After the trial, the business tries to turn their new friend Alice, in to a customer. If Alice doesn’t buy, she’ll probably still receive a bunch of promotional junk from the company for many years to come.
Now, let’s combine Google * CPA * Permission Marketing. Alice gives Google permission to track her browsing history. For a few weeks, at the start of Alice’s health kick, she surfs the web reading articles and browsing the gym equipment. During this period, Google is busy processing and linking the sites that Alice is visiting, and correlating what other “permission givers” have purchased/clicked on when they went to those sites.
Tired of running in the rain, Alice is now after a treadmill. She surfs the web looking for gym equipment. Google, relentlessly plants advertisements in front of Alice that Google knows converts well. Sure enough, Alice follows an advertisement for a treadmill, which she decides to purchase. Google, the introducing web site, and the merchant all make a cut of the purchase through the CPA system.
This is like Amazon’s “You purchased this, so we think you’ll like this too” system, but spanning the entire Internet. That’s both brilliant and scary.
If US stocks didn’t have such laughable price to earnings ratios I would consider going long on Google. As it is, Google’s PER is 47.44 which wreaks of too much speculation for my liking.
