It's Rishi

Read transcript of call

Some interesting tidbits:

on Google Checkout and the topic of CPA which came up several times

Brin: “Studies show that about 63% of users abandon their shopping cart before they complete the buying process.”

Schmidt: “We did Checkout to solve the problem that Sergey described, which is we simply want to make the whole process of buying just quicker, more foolproof, more likely to conclude. We think that that ultimately will translate into higher value for the advertiser, which should ultimately be reflected in our overall revenue.”

Schmidt: “all of our testing indicates that people are much more likely to purchase from our advertisers if they have enabled Google Checkout”
Kamangar: “Our goal is long-term to increase the amount of searches and commercial searches on Google, increase the click-through rates to our advertisers, and increase the conversion rates that these customers get because of increased convenience.”

Page: “I know there’s a lot of talk about the CPA, or paying per purchase. One of the issues with that is people look around a lot before they buy something. So it’s probably not the only information you want to look at when you’re paying for advertising. But we’re also excited about using more data like that in our models.”

Kamangar: “That [conversion] information sits in the hands of the advertisers, and they can adjust their bids if they like. Conversion rate signals are not affecting the ranking.”

So I guess the official partyline about Checkout is to increase conversion for advertisers by making the checkout process more convenient. However Checkout isn’t a revolutionary improvement in convenience. Services like (the now defunct) MS Passport, Y! Stores, and even many browser toolbars offer the ability to automatically recall a user’s relevant information (addresses, cc info, etc.). I’m surprised that their touting this functionality so much.

It was emphasized that through Analytics and improvements to the AdWords tool, advertisers can efficiently monitor conversion themselves and adjust their bidding appropriately. I’m not sure how realistic that is. It seems like it would require the advertiser to be fairly sophisticated or pay a SEM optimization firm to regularly analyze the conversion vs. bidding ROI data and adjust correspondingly.

Ultimately, Schmidt says that the idea that Checkout is the first-step in a move to CPA is “a very interesting idea” although Kamangar says “we don’t have any plans right now to use Checkout information for anything outside of Checkout”. Eh, who knows…

On ad quality

Kalamangar: “beginning in last year, we began incorporating signals from the landing page into the ranking method and the final quality score…It has produced a small number of advertisers that were engaging in arbitrage and other methods that resulted in lower-quality ads, and as a result, has allowed us to show more ads from higher-quality customers.”

I had read here and there about Google’s initiative to weed out advertisers who are essentially arbitrage plays, but never any official confirmation that Google was actually doing the landing page analysis and booting certain advertisers from the system.

On net neutrality

Brin: “we really care about net neutrality, not for Google as a company, but rather for all the small Internet companies out there”

Page: “I’d also point out that it’s largely been driven in countries like the U.S., where we have very poor last-mile connections for users, much slower than in countries like South Korea, which has spent less money and has much better connections, and haven’t been pushing for elimination of net neutrality.”

Even though what Brin is saying is true, let there be no doubt that losing net neutrality will cost Google money. It may not have a material impact on the business, particularly because of their existing relationships with ISP and Google’s significant leverage because of their huge brand/presence, but it will hurt the bottom line.