Amr Awadallah Blog

Recently I saw a number of analysts claiming that the Google/Adwords is analogous to eBay, and that positive network externalities will prevent competitors from ever dethroning Google, same way that eBay is protected today, i.e. the advertisers will always advertise on Google [only], in same way that the auctioneers only list their items with eBay.

That is simply not true, here is why:

1. eBay auctions are for a limited inventory of items, it is wrong for the auctioneer to list their item on more than one exchange since what will they do if it gets sold in all the auctions?

   This is not true for sponsored clicks, it is the opposite actually, the advertisers want to get as many [good] clicks from as many exchanges as they can.

2. Competitors were not able to dethrone eBay since they did indeed exhibit a strong positive feedback loop: the more buyers bidding on a product, the higher the auction closing price of that product, thus de-incentivizing the sellers from listing in the other marketplaces even if they had extra inventory (since the items would sell for less).

   The opposite effect happens for Adwords, the more the advertisers on Adwords, the higher the price they have to pay for each click, the more the incentive for them to look some where else to buy that click for cheaper (this is why Advertisers want Yahoo and MSN to survive).

Cheers,

— amr

I have “strict” privacy turned on for Google on my 9-year old daughter’s computer. However, today she bumped into the Google video homepage (by accident, of course 🙂 ) and on the right side she saw some rather mature suggestions in the “Movers and Shakers” module.

You might see something different when you visit the Google video site, but this is a screen shot of what she got.

Gives a new meaning to Movers and “Shakers”, shame on you Google,

— amr

Web 1.0: Companies publish content that people consume (e.g. CNN)

Web 2.0: People publish content that other people can consume, companies build platforms that let people publish content for other people (e.g. Flickr, YouTube, Adsense, Wikipedia, Blogger, MySpace, RSS, Digg)

Web 3.0: People build applications that other people can interact with, companies build platforms that let people publish services by leveraging the associations between people or special content (e.g. FaceBook, Google Maps, My Yahoo!)

— amr