This article is good background information for at least a dozen other ones that we’d like to write about various decisions that Google has made about how Google Voice works.

What is Google’s real business?  It’s advertising.  No, it didn’t start out that way, but that’s what it is now.  Search, GMail.com, etc. are all ways that Google can display ads that they hope will be appealing to you.  Google only makes money when you click on one of the ads.  Here’s a simple explanation of how Google chooses which ads to display during a search:  Advertisers choose keywords that they are interested in.  These might be products that they carry.  They might be the name of competitors.  Along with the keywords, they set three maximums:  (1) how much they will pay for one click; (2) how much they will pay per day; (3) how much they will pay per month.  When I search for “Google Voice”, I see ads for My1Voice.com and Toktumi.com.  Let’s say that I have some money to put into this site and I want to advertise it.  I might be willing to pay $0.20 per click, up to $10 per day and up to $200 per month.  What if Toktumi is willing to pay $1.00 per click, up to $5000 per day and up to $150,000 per month.  On the other hand, what if My1Voice is willing to pay $0.10 per click, up to $100 per day and up to $3000 per month.

Google’s goal is to try to sell all of the ads that it can.  If successful, in this example they could make up to $153,200 per month from all three advertisers.  (Once an advertiser reaches their daily or monthly limit, their ads are put on hold until the next billing cycle.)

Let’s say that there’s a 5% chance that someone will click on my ad.  That means that if Google can run my ad 1000 times in one day, they will get 50 clicks and around $10 in revenue for that day.  What if Google runs the Toktumi ad 10,000 times in one day, but they only get 5 clicks.  They get $1 per click, but only $5 for the whole day even though they ran the ad ten times more often than my own ad.  On the other hand, what if they run the My1Voice ad 4000 times per day, but 25% of the people who saw it clicked on it.  They only get $0.10 per click, but 1000 clicks per day turns into $100 per day in revenue.

Based on those “click-through” rates, Google will run the My1Voice ad a lot more often than the other two, because they end up making more per day from that ad.  Likewise, my own cheap ad might be run more often than the $1-per-click one because a lot more people actually click on it.  For brick and mortar retailers, they have to do these same sort of calculations on the value of their shelf space when decideing between carrying a high-profit, slow-moving item and a low-margin, fast-moving one.  The My1Voice ad only really earns $0.10 per click, but that works out to $0.025 for every time that it’s run.  My ad really only earns $0.20 per click, but that works out $0.01 for every time that it’s run.  The expensive Toktumi ad only earns Google $0.0005 per run.

That’s the first level of advertising optimization that they could do.  The last time that I checked, I can only place ads based on keywords, but that doesn’t prevent Google from correlating click-through rates with past searches, keywords in your GMail and Google Docs and even who you’ve called with Google Voice.  (It would be very disturbing if Google made that information available to advertisers and I really doubt that they ever would, but that doesn’t mean that they can’t use it internally.)  You might be shocked to discover what can be inferred about a person, just from their past searches.  I’ll quote from Wikipedia’s description of the most notable example of this:

On August 4, 2006, AOL Research, headed by Dr. Abdur Chowdhury, released a compressed text file on one of its websites containing twenty million search keywords for over 650,000 users over a 3-month period, intended for research purposes.  AOL pulled the file from public access by the 7th, but not before it h ad been mirrored and distributed on the Internet.

While none of the records on the file are personally identifiable per se, certain keywords contain personally identifiable information by means of the user typing in their own name (ego-searching), as well as their address, social security number or by other means.  Each user is identified on this list by a unique sequential key, which enables the compilation of a user's search history.  The New York Times was able to locate an individual from the released and anonymized search records by cross referencing them with phonebook listings.  Consequently, the ethical implications of using this data for research are under debate.

AOL acknowledged it was a mistake and removed the data, although the files can still be downloaded from mirror sites.  Additionally, several searchable databases of the report also exist on the internet.

All things considered, I’m glad that the AOL experiment happened, because very few people were able to see how someone could “connect the dots” before then.  Just imagine what would have happened if Google released this type of data.  (Again, I believe that Google understands that it would doom it’s business if it did something like this.)  Here are three really good sources for more information about all of this:

A Face Is Exposed for AOL Searcher No. 4417749
http://www.nytimes.com/2006/08/09/technology/09aol.html

AOL search data scandal
http://en.wikipedia.org/wiki/AOL_search_data_scandal

Google Tests Using Your Search Data to Tailor Ads to You
http://bits.blogs.nytimes.com/2008/06/26/google-tests-using-your-search-data-to-tailor-ads-to-you/

Back to the original question – What’s in it for Google?  Simply put, if they can do a better job of what ads you personally are more likely to click on and weight their ad display algorithm accordingly, they will earn more money each day.  The reality is is that Google has the potential of selling a lot more ads each day that they actually do.  As an advertising business, their goal is to sell 100% of their ad inventory every day.  I think most of us are okay with the small column of “sponsored links” on the right-hand side of our Google Search results screen and occasionally even find those “sponsored links” more desirable than some of the “organic results” that Google is presenting us with.  Imagine a time when the “sponsored links” are actually what we want 25% of the time?

One way that Google can to a better job of making these “sponsored links” more relevant to us is by looking at our past history as well as the keywords that we were searching for.  Even if we don’t in any way “log in” to Google, they still are able to correlate repeated requests from the same machine and/or IP address.  For public machines at the library or an internet café, this isn’t really helping them.  On the other hand, for our personal machines at home and at work, this can help them out quite a bit.  Many of us have security programs that delete tracking cookies periodically and have IP addresses that change occasionally, so Google might see our machine as “new” every week or so.  The real answer for Google is to get us each to log into Google whenever we are on the internet.  They give us a large number of wonderful incentives to do so:  an iGoogle customized start page, free GMail, free Google Docs, a very useful toolbar that will even let you use all of your own bookmarks on any machine that you are on and now Google Voice.  (Like most people, I love some of these and don’t use most of the others.)  From a revenue point-of-view, one of the major goals of all of these free services is the same:  getting you to log in each time that you are on the internet so that Google knows that it’s you and can build up a multi-year profile of you.  (A milder piece of information for them to track would be how much more (or less) likely are you to click on ads with certain keywords in them.  Free, Baseball, Republican, Democrat, Cleaning, Automobile, etc.  Multiplying this factor by the general click-through rate of the ads that it can display on a given page will help Google sell more ads.  (It also means that we are more likely to see ads that are appealing to us which, if truthful and accurate, is better than seeing ads for things that I just don’t care about.))

Google Voice is one more way that Google can get us to log in everywhere, every time.  Before Google Voice, I made a point of NOT logging into Google.  With Google Voice, they got me.

What does this article lead into?

1 – Why Google really, really, really wants us to just have one Google Voice account.

2 – An article about how one Google Voice account can work for most people.

3 – An article about many legitimate reasons for having multiple Google Voice accounts (and how Google can still profitably do this and achieve their advertising goals).

4 – When The Bit Hits The Fan – Some of the horror stories that I have heard from people who became too dependent Google services, who then ended up locked out of their accounts.  (This was probably because of anti-spam filtering in GMail.  This is not a Big Brother article.)

5 – Alternatives to Google Voice.  (Microsoft (Bing) could offer a similar service for free, for the same reasons that Google can offer Google Voice for free.  I believe that anyone else will need to charge for it.)

6 – Some wonderful articles about the power of cross-referencing information, that are probably better off written by someone with better writing skills.  (I think that we should all be aware of what could be done with this sort of information, but we should also all be aware that almost everyone has occasional oddities in their history and Big Brother doesn’t have the resources to round up everyone who ever searched for information on poisons, illegal drugs, prostitution, tax loopholes, how to beat a speeding ticket, etc.)

7 – At some point, time permitting, I’ll be looking into Google Voice competitors like My1Voice and Toktumi.  I’d also like to do some compare and contrast articles that cover other VOIP and telephony services like Skype, MagicJack, Gizmo, Jangl (if they are still around), Bueno, etc. and how these services can work with Google Voice to give us more functionality.

As always, please feel strongly encouraged to comment on any of the articles, as well as eMailing me any new stand-alone articles that you’d like published here.  I really do want this site to eventually have a dozen main contributors that can post articles without going through me.  You could be one of them!

Steven (at) GoogleVoiceSecrets.com

Here’s a bit of History:

Years Ago…  (around 2005-2006) GrandCentral was started.  It has since been bought by Google and has evolved into Google Voice.  Originally, Invitations were hard to come by.  Sometimes there were open sign-up periods.  At least once in 2007, each existing GrandCentral subscriber received the option to invite 10 more people to GrandCentral.

Back then, many of us phone fanatics might have signed up for more than one account, BUT we always were aware that abusing this loophole might be enough to cause GrandCentral to run out of cash and go under before it became a real, financially viable product.  For similar reasons, we tended to only push accounts on friends and relatives that were going to actually use them.

I kept an early invitation from 2006 and would periodically check to see if there were any new phone numbers available right up until the time that the invitation stopped working in early 2009.  I never saw any new phone numbers – just a slowly draining pool of the numbers that were available when I got my first account.

In 2009, Google relaunched GrandCentral as Google Voice.  In June, 2009 Google acquired a million new phone numbers for Google Voice.  In July and August Google Voice finally opened up and invitations started going out to people who had signed up for one.  At one point, there was only a 24 hour delay between the time that a person requested an invitation and the time that it came through.  (Request your own invitation here:  https://services.google.com/fb/forms/googlevoiceinvite/)

A trailing indicator of all of this is the price that these invitations sell for on eBay.  Early on in 2009, when many of us wanted to be the first to have a Google Voice Account, they were selling for as high as a few hundred dollars apiece.  Usually these accounts were already locked to specific phone numbers and Google Accounts.  Once everything opened up, unused invitations sold for between 30 cents and 3 dollars.  (I’m still not sure how these people managed to get blocks of 100 invitations that they were able to see off so cheaply.  I suppose if everything was completely automated on Google’s side and they weren’t trying to filter out abuse, someone could register a domain name and then write a little script that requested an invitation for A0001@MyNewDomainName.com, A0002@MyNewDomainName.com, A0003@MyNewDomainName.com, etc.  (For the record – I have only requested invitations for friends and have NEVER bought or sold them.))

So how many people were on Google Voice at that point?

Well, in late August, 2009 the flow of invitations slowed down tremendously.  (They were back up to around $6 on eBay, unless you bought a block of them.)  Google and iPrint offered sets of 25 free business cards with your new Google Voice phone number on them to the first 50,000 people who requested them.  That offer lasted for around a week, so I assuming that that means that there were about 100,000 subscribers in late August, 2009.  (Not everyone has a business card fetish and they were only giving each account 25 cards.)

That was probably a good number for Google voice at the time.  Back then, Google Voice was living up to the adjective “Beta” – there were some kinks, many of which were changing every day.  I think that most of us “Early Adopters” are happy to have Google Voice and understand that these kinks are the only real way that a system like this is able to grow and get better.

There did not appear to be any new invitations coming out of Google Voice in September.  Even more disturbing for a control freak like me, many of the “good numbers” were being taken.  (This should have been a separate article…)  Once it became clear that the system (aka GrandCentral/Google Voice) was financially solvent enough to handle infrequent users, I began to push Google Voice on around a dozen friends, family members and co-workers.  Generally speaking, the “ideal” phone number that I found for them back in May was still available in August.  Unfortunately, by September and October , I was seeing many of my favorite phone numbers being snapped up days before I was able to walk my friends through the sign-up process.  I believe that this is a sign that there are a lot more people signing up Google Voice Accounts.  I am frustrated to report that at least three of the accounts that I have set up in the past few weeks for friends missed out on the number that I really wanted for them by less than a week.

(I’m going to save What’s a Good Phone Number for another article.  Around 25% of the time there’s a personal connection (i.e. it spells your name, business or hobby), but usually it’s simply local and has easy to remember digits.)

Back to the title of this article – In the first half of October I was seeing all of the backlog of invitation requests being fulfilled.  Today, October 14^th, 2009, many of us with Google Voice Accounts have noticed that we can now directly invite three friends, so I am expected another big expansion of actual people using Google Voice.  (i.e. If you’ve been eyeing a particular phone number for yourself or a friend, you better get it now.)

One other thought – I am not in any way affiliated with Google, but as an enthusiastic Google Voice user, I want it to succeed and remain free.  As such, I am really glad to see the “invite three friends” option.  I think that that is the best way for Google Voice to spread in these early days.  In some cases I have friends asking me for invitations and in many others I am telling friends that they need Google Voice and they need to trust me and sign up now and understand it later.  In those cases, if I can just show them how one or two of the features will suddenly make a huge difference in their life, it will get them using the system and wanting to learn about what else it can do for them.  (Isn’t that most people’s history with personal computers – they were initially bought to do one really important thing, but over time, they become the tool of choice for many things.)

Google needs this sort of direct-contact marketing for Google Voice.  When GMail came along, it was easy enough for many of us to see that it did everything that our old eMail provider did, plus some other things that we really wanted, all for free.  If we saw that, we switched.  If not, we didn’t.  If we did switch, we didn’t have to learn a lot of new stuff – basically, it was just a matter of the old stuff getting better.  If we have a question about how GMail works, then our two options are to try to find an answer on-line or to ask a geek.

The initial roll-out of Google Voice will require a lot more hand-holding.  Ideally, a person should set up their new account (including all of the forwarding and grouping options) with the help of an experienced friend.  Likewise, when questions come up, it will be a lot more effective to call an experienced friend than just a generic geek.  The more you use Google Voice, the more that you know and the more questions that you have.  (This is like any real area of math or science – maybe eventually it will be a fifth part of the ACT exam?)  There is no customer service number that we can call where we can expect a well-informed person on the other end to spend an hour teaching us how to use Google Voice for free.  This is really going to need to be a word-of-mouth thing.  It is going to take a while for many Google Voice users to “get it”.  (If you’re as old as I am, you will remember all of the questions from friends thirty years ago about “how to get their VCR to record a program ’off of their TV’ ”.)

Another good article that I’d like to see in the future would be many of us sharing our stories of these sorts of “referral accounts” that we have set up.  Who did we set them up for?  What was the initial compelling feature that triggered you setting up this account?  Is your friend using that feature?  Have they expanded on to other features yet?

I am very happy to see Google Voice now directly enabling us to invite friends, relatives and co-workers into the system.

As always, please feel strongly encouraged to comment on any of the articles, as well as eMailing me any new stand-alone articles that you’d like published here.  I really do want this site to eventually have a dozen main contributors that can post articles without going through me.  You could be one of them!

Steven (at) GoogleVoiceSecrets.com