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> Google is able to "ignore the demand side" To me this shows how disconnected from reality Google's executives are. They think advertising is just the "supply
by pdonis 3y ago
> Google is able to "ignore the demand side"
To me this shows how disconnected from reality Google's executives are. They think advertising is just the "supply" side and that they can ignore the "demand" side entirely. In fact, since advertisers are Google's customers, Google is the supply side--they supply the advertising opportunities--and the advertisers are the demand side--they pay for the advertising opportunities that are available. Users are neither supply nor demand to Google, economically speaking: they are a capital resource that Google uses to produce what they supply to their customers.
In other words, the complacent position Google's executives feel themselves to be in is not because they are somehow avoiding supply and demand economics: it is because, due to their first-mover position in search, they have a huge capital resource--all the users who use Google search because it was the first good enough search engine available and force of habit is very strong--which their search competitors do not have. But that resource is not unassailable. Google's search experience has been deteriorating because of ads. But Google's executives don't even see that. They think their search team is doing an awesome job.
- pinkmuffinere 3y agoI don't think it's accurate to say that users are only a capital resource. The users are still customers for Google, even if they are not explicitly paying out of their own wallets for the service -- they are free to walk away at any time. Google has to keep both the users and the advertisers 'happy enough' if they want to succeed. The article highlights that the bar to keep the users 'happy enough' is fairly low.
- pdonis 3y ago> The users are still customers for Google, even if they are not explicitly paying out of their own wallets for the service -- they are free to walk away at any time. No, that still doesn't make them customers. It makes them a capital resource that Google does not have complete control over. Which is something I'm not sure Google's executives fully grasp. It is true that there can be customer relationships, in the economic sense, even if the value exchanged is not money on either side of the relationship. But in a customer relationship, the value exchange choice is voluntary on both sides. That is not true in the case of Google and its users; Google's value exchange choices are voluntary (it decides how its search service works and what ads to show the user, and what data to harvest from user interactions), but many user choices are not (users can choose whether or not to use Google search and what terms to search for, but they cannot choose what ads they get shown or what data Google harvests from their search activity).