This is an important thing to consider – Google Voice isn’t a charitable project. As consumers, it’s important for us to know what Google is getting out of all of this and, if we are okay with those reasons, do our best to support them.
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