Google: Screwed if They Do and Screwed if They Don’t

It’s not often I feel pity for Google. In fact, pity is one of the emotions I most rarely associate with Google. But sometimes I do feel a twinge of pity for their engineers and decision makers, because no matter what they do they’ll always be screwed.

Take for example the travel industry. In a lengthy and heart-felt open letter, the owner of a small tourism company admonishes Google for pushing SMEs out of business by allowing Google search to be dominated by big brand aggregators:

In its simplest form, it means the big bags of money control the opportunity not the product. You can’t necessarily find the right product anymore, you find what they want you to find. Google just facilitated the demise of countless businesses by search prominence on the main avenue to commerce. It sounds like supermarkets all over again, except it’s worse. I have to drive to a supermarket, but can see the other shops on the way, who interestingly are having a comeback for all these reasons.

This situation is of course the inevitable end result of the manipulation of Google’s organic search algorithms. If a system can be manipulated for profit, inevitably it will be dominated by big companies who can afford to spend the most effort on manipulation. This is true for financial systems and commodities markets, as much as it is for Google’s search algos.

The only way Google can level the playing field is to make their search algorithms smart enough to give SMEs the same authority as big brand websites, so that they can rank high for relevant searches.

Google has been unable to do this, so they do the next best thing: they give small businesses an artificial leg up by introducing a Google-powered element of the SERPs that allows SMEs to claim some visibility on a relevant search result.

This effort was called Google Local – since then renamed a few times, most recently called Google Places until a few weeks ago when the latest label has been slapped on it: Google My Business.

The trouble with that is that it pissed off the big brand aggregators. Because it’s a Google-powered system that now pushes the aggregator websites down the search results, these big aggregators feel Google is cheating and rigging the game in its own favour.

So the big brands combine forces, form lobby groups like FairSearch.org, and convince antitrust regulators that Google needs to be muzzled and controlled.

Google simply can’t win. Either they do their best to give small businesses an advantage in search, and piss off the big brand aggregators, or they give in to the big brands (and the Pigeon update certainly seems to indicate that) and the small business owners are left behind.

Either way, Google gets all the flak and none of the credit.

I only feel a tiny bit sorry for Google though. Because after all, despite this hassle, they do seem to be doing just fine.

General

Comments

  1. I find it odd that small companies complain so much about a free service, if they want to be seen by more people do what companies have been doing for years and throw money behind it. It isn’t like the larger companies have been getting freebies handed to them.

    Naturally there is an argument that larger companies have more money to do long term things (SEO) as well as the short term stuff (PPC), but historically that has always been the case, if you have more money you can try more stuff.

    What smaller companies need to do is use their limited size and budget as a plus and be able to pivot and change with the times in ways that larger companies cannot.

    Source: I run a small football betting company in an industry full of Paddy Powers.

    Reply »

    1. I think that’s a bit of a naive comment, Toby. Spending money on marketing means finding budget to do that in the first place. When margins are tight, squeezed on all ends by supply chains, inventory, salary costs, taxes, creditors, and banks holding the company’s assets hostage, there simply isn’t any money to spend on ‘pivoting’.

      Add to that how user behaviour has changed drastically in a relatively short time due to the rise of Google, so many old rules of doing business have ceased to apply, and you can understand how many SMEs struggle.

      In the real world where ‘pivot’ is just a hollow Silicon Valley-invented term that simply does not apply to real businesses, where venture capitalist funding will never materialise because it’s all boring old industries, where there’s no sexy new startup next door to go work for the moment your existing job becomes obsolete, people just don’t have a choice.

      Reply »

      1. Point of clarification:

        I was using the meaning of the word pivot before silicon valley fucked it, small changes in direction to steer towards a moving target. :-)

        Perhaps it is naive of me.

        squeezed on all ends by supply chains, inventory, salary costs, taxes, creditors, and banks holding the company’s assets hostage

        These are the things SMEs should be angry at then.

        Reply »

        1. I’m sure they are angry at them, but there’s little point in that. Equally I reckon there’s little point in being angry at Google, but it does make one feel better, if only for a little while. :)

          Reply »

  2. Toby’s comment isn’t that naive. If a business is finding it impossible to resource efficient marketing activity, then that business likely falls into one or more of the following:

    1/ Just not very good at generating profit from their core activity
    2/ In a shrinking industry, dominated by enterprises that can generate profits on lower margins
    3/ Bad at marketing efficiently
    4/ Has a poor product
    5/ Cannot identify and/or use its unique advantages

    In any of these cases, the business *will* fail over time unless there’s a significant change for the better. This is normal, and one reason larger businesses have more staying power. Small businesses that do the above well over time become large.

    Marketing (SEO, social media, print, CRM, WOM, relationships… etc) is the essential core activity of all enterprise, large or small.

    Luckily, it is much easier to market when your offering is meeting a real need and is of remarkable quality, and here small firms have a *huge* advantage compared to corporates.

    Reply »

    1. Jack, let’s go through a hypothetical scenario that’s relevant to what triggered my post. Say in the 1980s you got some money from an inheritance, and you decided to buy a holiday home and patch it up. You rent out the home, and you see a nice business model there.

      You go to a bank and show your business case, and you get a loan to buy some more holiday homes. You expand and get talking to travel agencies that will send you more bookings. As you keep growing, travel agents want a better deal for their clients as they feel pressure to keep holiday costs down. So you make decent deals with a few large travel agencies.

      You need to hire staff too of course – cleaners, receptionists, admins, handymen, etc. Your business grows but everyone wants a bit, so margins are tight.

      Then the internet comes along, and everything changes. Those relationships you built over years with travel agents become useless as suddenly there are websites that cut them out of the loop. Now you have to get yourself listed on those websites, but their rates are even tighter and your margins shrink even more.

      You decide to build your own website, but you can’t get it to rank because the big aggregators have bigger budgets and outrank you on all commercially interesting search terms.

      Then the recession hits, aggravated by a season of bad weather, and you have to go to the bank for a loan to make ends meet and pay your staff salaries. In the meantime Google makes it harder and harder to get new business in via your own website unless you spend more money on AdWords advertising and SEO. But that means taking money out of another aspect of your business, so you cut a few corners.

      However those cut corners don’t go unnoticed and you get some bad reviews on the big aggregator websites. As a result your bookings decrease and you find yourself in even more dire straits. Banks aren’t lending any more to you and are instead increasing the pressure on you to pay back what you already owe. There’s no VC fund in a million miles in any direction willing to look at your boring old industry.

      Then Airbnb comes along and puts even more pressure on you, taking an even bigger cut, and squeezing your margins further.

      Now how would you ‘pivot’ your way out of that? What investment would you make to get out of that, and where would you get that money from? Keep in mind that if you fail, there’s no backup plan. Jobs will be lost, bankrupcy declared, retirement funds depleted, cars and homes repossessed, and lives ruined. There’s no savegame to reload, no fallback career. Failure is not an option.

      What do you do?

      Thousands of SMEs would be very keen to hear your miraculous solution, I’m sure.

      Reply »

  3. If you run a business, viability assessments are a regular part of good management. In the above scenario, you may exit by selling all or part of the portfolio. A part-sale could help cover losses during a turnaround.

    Hospitality (note, I’ve worked in the holiday rentals industry) is one where cut corners will nearly always come back and hurt you, as in your example. Commercially, very stupid and not a survival tactic for small players.

    BTW, the old agents / local tourism boards tend to charge much higher fees than the online aggregators (HomeAway or Holiday Lettings etc), and AirBnB’s fees are fairly OK. There’s always been price pressure, but the market has also grown strongly.

    Basically, there are no easy answers. Your example essentially describes a business owner behaving like an ostridge for too long: There are usually options if there’s analysis and action taken before the situation is dire.

    Yes, jobs are lost. The impact is mitigated by doing the above well. I suppose another lesson for SMEs is to ensure they have good advisors around, professional or not.

    I don’t have a lot of sympathy for business owners who ignore essentials such as cash flow or market analysis and then fail. Yes, it’s hard to do correctly, so is anything which has a good payoff.

    The ‘good old days’ only existed because the market was undeveloped, and mainly populated by unsophisticated actors.

    Reply »

    1. You haven’t actually answered my question, Jack, which I suppose is an answer in itself. :)

      In my scenario I don’t think the owner behaved like an ostrich – they stuck to what they knew (which is sensible imho) and got overtaken by developments outside of their control. That’s a real situation for vast amounts of SMEs, and they simply do not have the option to spend their way out of that.

      Selling the business doesn’t solve the problem, it just passes it along to the new owners. In the end, lives are destroyed because someone in Silicon Valley wants to get richer and ‘disrupt’ an industry, collateral damage be damned.

      Too many people see the economy as a game to be played or a problem to be solved, rather than the societal engine that provides a livelihood for all of us. For countless millions it’s not a game but a matter of life and death.

      Reply »

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