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Flip the Switch Episode 25: Google Blocks Ads

March 2, 2018
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SOPHIA: Today on Flip the Switch. Fashion is changing and it’s not surprise that Amazon is at the forefront. Snapchat continues to get bashed for their new interface which they say is here to say. Netflix continues to dominate, and a lot of it tis thanks to digital marketing. 
Our main discussion revolves around ad platforms pushing for a better user experiences and how your business needs to pay attention to ad blockers. We close the show with a new segment called “A Minute with Musk.” Which is about alleged long-time listener Elon musk. 
Let’s get into it.
00:59 AUSTIN: Welcome to Flip the Switch presented by Power Digital Marketing. This is our quarter century episode. Number 25.
01:07 PAT: Number 25. We were going to try to come up with an athlete. The only I could think of was Barry Bonds, and for obvious reasons, we don’t…
01:12 AUSTIN: Yeah. As someone who is not a fan of steroids, we’re going to stay away from him.
01:17 PAT: Yeah, but we do have a great episode nonetheless. We have some great business news and trends to go through with you guys. A good main topic discussion on a very timely event that went down at the end of last week. Chrome rolling out ad blockers and what that means for the user experience as a whole. Along with a “Minute with Musk,” a new segment that we are going to be rolling out. 
Btu first, let’s jump into some business news and trends.01:35 AUSTIN: All righty. So we’re going to be starting things off with a company that you know very well. They’re getting into the fashion retail… I should say they’re already in the fashion retail space. They’re currently taking it over and pushing out competitors. We’re talking of course, about Amazon and their e-commerce platform. Everything that they do from their Prime to the way that they ship. The way that you buy. Is completely taking over the whole, entire space.
02:00 PAT: Yeah, exactly. So news came out on Quartz last week that Amazon is pretty much going to be pushing forward in a more aggressive fashion into the fashion world. Taking a look at some of the insights that the decision was driven by, Amazon’s clothing business is just getting bigger and bigger. So we’ve talked about this before–Amazon is privy to a lot of e-commerce search data specifically. Which is a huge advantage over other platforms, because of the fact that the user intent is much higher. It’s more transactional.
So they can take a look at what people are looking for, and if no solution exists already in the marketplace, or they don’t see a lot of purchases coming through, they have the capital to go try to command the supply chain and create that product for their customers under a private label.
02:47 AUSTIN: So different from some of their other product offerings. What they’re doing lately is they’re not necessarily creating the clothing, but they just have it at a lower price point. So if you go to Nike’s website and you go to buy Nike, it’ll probably be cheaper on Amazon. There’s a lot of reasons why. A big one for them is the way that they ship, so these large companies like Nike, they don’t have the same option that a subscription based model–like Amazon does with Prime. So when you already have a Prime membership, whatever you order on Amazon will be cheaper because you’re not paying that shipping cost when you buy. That’s the big difference here. 
03:20 PAT: Yeah, exactly. 
03:22 AUSTIN: Why they can have that more competitive price point.
03:24 PAT: And it ties back into something that we were talking about last week. They have local logistics rolling out nation-wide after a successful shipping test during the holiday season on the West coast. 
Which mitigates their costs. They don’t have to ship through FedEx or USPS or UPS anymore if they don’t want to. Which is… if you’re shipping nation-wide that ads a lot to the overall cost of goods, right? 
So if they’re able to mitigate that, they can sell at a more competitive price point for higher margins. Which is what we’re seeing here. And there’s basically a survey that was conducted by Core sight, which is a huge market research company and they found that in 2017 the only company in the world that more people said that they bought they’re footwear and apparel from was Walmart. Where 41.8% of survey respondents said that they purchased from there. 2nd was Amazon. And then if you look at the rest of the names in this article that we will share with you, you have the biggest names in retail and fashion. Target, Kohl’s, TJ Max, Macy’s, JC Penny, Old Navy. I think the bigger question here is if you’re a competitor of Amazon… or not even a competitor of Amazon… if you’re a fashion retailer, what does this mean for you moving forward?
04:31 AUSTIN: It means that brick and mortar locations are really going to start struggling more than what we already see. So the change hasn’t totally occurred yet, right? A lot of people are still shopping… we saw numbers just the first time in the past year. E-commerce numbers are equating to more revenue generated for a company besides their brick and mortar locations. 
So what we’re going to see now is a bigger shift. As people are taking their money away from Target, Walmart, Kohl’s a Macy’s and putting it into Amazon, that’s going to put the squeeze on those brick and mortar locations. What that can equate to is possibly closing locations. The overhead cost becomes too much as they’re not generating enough revenue to keep those stores open. 
Which means jobs could suffer. We’ve seen that starting to happen with other locations such as with what Walmart had to do in closing their stores in their other difficult chains…
05:19 PAT: Sam’s Club. Or was it Price Club?
05:22 AUSITN: Sam’s Club, yes. And then same with Toys R Us. Which we’ve talked about on here too. Is they just can’t compete with these online giants in other stores that are doing so well and bringing so much revenue with their e-commerce that they just simply cannot pay for individuals to stay at their store. 
05:35 PAT: And I think the most concerning thing for retailers in the fashion space is two-fold. There’s that piece of it. Having to potentially foreclose or to close down retail locations which are their major points of distribution. They don’t have a great online presence, a lot of them. Aside from Walmart and Target.
But aside from that, it’s the growth that Amazon has seen. There were about something like 30% growth in the last 3 years of people buying within this vertical specifically. While each of the competitors that were surveyed are showing a decrease during that time. 
So it’s not just that more people are choosing to than before, but it’s growing at a rapid enough rate that if I’m a competitor, I’m worried that I’m going to get squeezed out of a market that I’ve heavily commanded over the last decade. 
And this is something that we see with Amazon all the time. And we talk about it time and time again. Their strategy is to obtain market share and worry about profits later. Because they have the capital to do so.
06:30 AUSTIN: Right. And I think next steps here for if you’re a company is you need to start thinking about what you’re doing online and how you can compete with what Amazon is doing. So as we see Amazon start to really create their own supply chain, we talked about. And specifically with logistics. I think it’s time for these bigger brands to start wondering how they can do that too. 
So we look at FedEx and UPS which is the 2 largest shipping companies in the world. And we start to look at them and go, “How can we create a subscription based model to maybe go against what Amazon is doing?”
07:02 PAT: Yeah, kind of mimic that best practice.
07:04 AUSTIN: Because it seems to me and the numbers say this, is individuals want that more than ever. They want to know that the second they’re buying something, the cost of shipping, the time they spend waiting for it is gone. You no longer have to worry about that. And they’ll pay whatever they need to pay. Even if it’s the same price or maybe a little bit more expensive on Amazon, which it’s never really… it’s usually below. They’ll pay whatever that is of course, because they know that the shipping is taken out of the equation. 
So if you’re a smart retailer, you look and you say, “How can I make the shipping experience more simple? Because I know people aren’t going to go to the store anymore. I know they wanna buy on Amazon. So we need to come up with a way to get them back on our website.”
07:41 PAT: Exactly. And I think there’s another decision that people need to think about too. Do I just try to bolster my sales on Amazon because of that convenience factor to try to recoup some of that lost revenue?
07:53 AUSITN: Yeah, maybe you jump on that. Because as we talked about, it’s not necessarily that Amazon has their own clothing line. It’s that they’re taking their competitors clothing and selling it on their site generating revenue for them. 
08:04 PAT: You know, I wouldn’t be so quick to say that though. This article right here that we’re reading right now says that Amazon private fashion labels is working really, really well. When combined, Amazon private labels including Essentials, Lark & Ro, Good threads, Rebel, Canyon and more came in well ahead of Adidas, Calvin Klein… The only ones that beat it out were Nike, Under Armour and Hanes. 
So that’s again why I think that this decision is more imminent than before. It’s not just, you know, am I going to be able to compete with Amazon, anymore. It’s like, “How can I keep my company relevant con Amazon before they push me off of their convenient and user friendly marketplace?”
08:44 AUSTIN: Gotcha, gotcha. So yeah, sounds like a double-edged sword here. Not only are they selling your product and people are going to buy your product on their website. They also have their own product that people are going to buy as well. So 2 things to worry about here. Definitely going to be interesting to see what happens as we transition into our next article. What do we have in store Patrick?
09:03 PAT: Yeah, so transitioning from a good user experience to a bad one. The Snapchat CEO came out recently and said that the new user experience, the new UX, is here to stay. So for those of you who don’t know, Snapchat underwent a kind of a facelift, makeover recently. They changed what the user interface looks like. And to I’m sure, their disappointment, the overwhelming response by people online and just in conversation around the watercooler at offices around the country is that it’s awful. 
And I think there’s a couple reasons for that. So they put all of the individual stories and snaps on the same section of the UI now, right?
09:47 AUSTIN: Right. So they try to take out anybody swiping or trying to look around. It’s you’ll get your individual snaps in the same location that you can look at stories. So each person that sends you a message will also have… their icon will be illuminated with the story. So it’s less time looking around, so they think. It’s less time people going other places.
But all it’s done is create mass confusion. Because people want to swipe left it turns out.
10:12 PAT: Yeah, exactly. Well, I think that it’s for a couple of reasons. One, best practice when it comes to enhancing the user interface for any product–you have to keep the basic functionality of it fairly similar. So that people don’t have to relearn the platform. And don’t get frustrated in trying to do so. 
What Snapchat has done by eliminating what they think is a step, is actually cause confusion and frustration with their consumers. Because they don’t know how to navigate it anymore. 
10:39 AUSTIN: Right. And you know what? This reminds me very quickly about a first mover into a space, social media space. Myspace. So if you look at Myspace now and you were to go on it, yes it’s still a website. Their platform and interface is completely different than when you started. I think that Myspace actually looked more like Facebook when they first started. Pretty similar. 
If you look at Facebook today, versus in 2007 when it was just getting popular–pretty similar. Same layout. It’s a scroll-down vertical right. You’re looking top to bottom on the page. Everyone’s page still looks the same. They’re very simple. People don’t want change. 
And with Snapchat, they’re making a very big mistake by incorporating a very extreme change. They completely overhauled their entire interface. 
11:19 PAT: Yeah, exactly. And I think the issue too becomes there was no means of education or forewarning about it. I remember I opened my Snapchat one day, and it was just different and there was no little icon, no little helper to tell me where things were. No notification about it. It just kind of changed.
And I think another thing that isn’t resonating super-well with people is their muscle memory. They’re used to swiping that screen off to the left to get to the right side. To get to their friends stories, to see what people are doing. But what is on that tab now are just pieces of influencer content. Business pushed content and people are really not responding well to that.
11:58 AUSTIN: But here’s the funny thing about this, is the 4th quarter for Snapchat was really good. It was the first quarter that they’ve had that they’ve done pretty well and their share price absolutely shot up. It was about 13, 12 bucks around the 4th of February, and then it shot all the way up to over 20 bucks fairly quickly. In the same week. Because of posting those good numbers. From the 4th quarter.
So what I’m wondering is when this is all happening, they know from a revenue standpoint that they’re doing better. Clearly the ads are equating to more revenue. Their daily user activity must be going up, because that’s a big indicator for an app. If the share price is going to go up.
So why would you go and make such a big change if things are finally working? If the game plan was to, of course, make money. And now you’re starting to make money. Why would you now change what you’re doing?
12:47 PAT: Exactly. I think it kind of goes against any best practice that we’ve seen with any type of technology platform. And the only reason that I can conceive for why they would be trying to do that is because they’re trying to differentiate themselves more from Instagram stories. They’re hearing too many similarities drawn between them and Instagram–and if you look at the comparisons on paper– a to b–Instagram is better. It has higher quality, it’s usually faster. It doesn’t slow your phone down. There’s a bunch of reasons as to why.
So I think that they’re trying to come up with a way to make it unique. And to serve a different purpose than Instagram stories. But in my personal opinion, and in the opinion that looks to be widely shared across social media and the web, this is the wrong call. I think that–hot take, here–I think they’re going to see their DAU really go down this year;
13:37 ‘AUSTIN: Yeah, when the first quarter numbers come out, I think that they’re going to look really different. I expect them to go backwards. Down to the 3rd quarter which was pretty horrid.
13:42 PAT: It was awful….
13:44 AUSTIN: Yeah. Pretty significant drop in Daily User Activity. I think, maybe, a hundred millionish dropped off from second quarter to third quarter which could occur again. 
13:53 PAT: Yeah, exactly. And it’s just like my thing too is everybody was raving about the Q4 earnings report f=with Snapchat. They said, “Oh, you know, Snapchat shares are going up 21% after hours. They outperformed last quarter by X amount.”
Well, hold on. If you look at any financial news source, you can see that they still fell well short of Wall Street’s expectations for them. If you looked at their 5 year plan this time way back when–people really saw them going to the moon. They saw share prices really increasing. They saw DAU count increasing exponentially. 
Which has not been the case. It has trended downward. So I personally think that all the hype around Snapchat doing well is a little bit poorly informed, and I think that this change really is going to push a lot of people off the platform permanently.
Transitioning now into a company that has actually seen subscriptions and usership increase. It was reported on Entrepreneur late last week that in the last 5 years, the share of households with a Netflix subscription has increased by 92%.
14:51 AUSTIN: Right, Pat. And the big reason for this, of course, is because of digital marketers. I say that kind of as a joke since we are digital marketers. 
14:58 PAT: Take the credit.
14:59 AUSTIN: Right. Actually, diving into this a little bit… This Entrepreneur article is quite interesting cause it breaks into what they’re doing differently than companies like Hulu. And the biggest thing right now for them, and why they’ve been able to stay on top is personalized content. 
So personalized content has become pretty important, and you’re seeing this a lot with other companies. But their algorithm has done such a good job at putting… there’s certain types of content that you want right in front of you. So my screen and your screen are going to look completely different.
They figured that out the very beginning. And that’s been a big reason why they’ve had such a good thing. 
They seem to do that a lot with their marketing as well. And that’s kind of where that ties into with their multi-channel campaign. So what I mean by that is not just only their advertising but things such as email. Just getting an email out and focusing on what they’re going to say. 
Where they’ve seen a lot of success is actually with their email marketing. And contrary to what people may think about email is that it’s a very early 21st century. It’s something that may not be as important now. 
It’s actually made quite the comeback. And we utilize that a lot in our agency. But Netflix has done an incredible job of taking that and using it to be something where they can get very intimate with the individual. Where they might be discussing about if their subscription is ending. Or if they want to do some sort of campaign where they’ve segmented the market and they now know that these people are right on the hinge of potentially getting a subscription, but they need that extra push. They’ll put in that personalized message, they’ll put in that personalized content to really close them down and get that subscription.
16:26 PAT: I think it’s so interesting to see how they’ve leveraged that. Because I am seeing a ton of principles that we frequently use in digital marketing across the board. And in websites and the content that we produce online. Mimicked by Netflix. 
Personalized user content. If you’re showing people things–whether that be ads or actual content–in the advertising world that are inherently more relevant to people, there’s going to be a higher likelihood of engagement. 
And like we just talked about with Snapchat, DAU count is really, really important for a company like Netflix in terms of their overall valuation and financial success. So there’s that component of it.
Then you take into account the email marketing side of it. I think that’s genius. Because you have such… you have a really granular look at exactly what the interest targeting is for each subset of your usership. You can say, “All these people like horror or sci-fi.” Not because you had to do a ton of insightful data to segment that, but because you know they clicked on genres that say “horror” or “sci-fi” right?
17:25 AUSTIN: And the great thing about this and they have a massive leg up is because they have such a large audience already that is segmented. They do a lot of their own research, of course. Cause they can see what we’re watching. So they have all these individuals bucketed into the type of content they enjoy. That gives them a leg up on their marketing, right?
Where we have to look for, as marketers, potentially to Google and whatever information we get from them. Facebook and their information. Netflix ifs proprietarily gaining all this information because they have a product that’s constantly being consumed. So they use that in their marketing efforts in a way that other companies can’t. 
And it seems like companies such as Hulu haven’t had the ability to do that. They offer, of course, the same product. It’s a subscription based, watching app. But they really don’t do a good job of being personalized with not only their interface but their marketing.
18:10 PAT: Yeah, and I think it’s a delicate balance. You want to personalize the user experience to an extent. But you can’t miss the mark when you say you’re trying to do that.
So for example, if I go into my recommendations for Patrick. Or “Recommended for Patrick” section on Netflix. If I see a ton of shows that do not have anything to do with my interests, I’ll probably disengage a little bit. I might, inherently, watch less content. 
So they have to be really, really refined and really smart about how they’re going about implementing those kinds of algorithmic changes to constantly and dynamically update that. So that’s definitely something that I think they’ve done extremely well.
You look at a company like Hulu. On paper, they should be doing just as well. If you look at the number of Hulu original shows like the exclusive partnerships they have with channels like FX or ABC. They have a lot of premium content that they could be pushing in a more methodical manner. But since they aren’t using digital marketing tactics to try to get better consumer insights, to try to onboard–not just re-engage old customers–but onboard new customers based on the user patterns of old customers.
19:13 AUSTIN: And I think the original content is the big one here, because you think about that. That’s also a marketing tactic. The fact that they’re putting out a show such as “Stranger Things,” that a lot of people really like. Associates all those feelings of “Stranger Things,” with Netflix. Cause Netflix is the one that produced it. They’re the one that made it happen. So individuals are associating these great feelings of enjoyment from a TV show with the production company and the company that’s allowing them to watch whenever they want. So this is a subscription-based model we’re talking about. So you can watch this as much as you want. So they’ve utilized that a lot better than Amazon Prime video and Hulu, which don’t seem to produce the quality of show that Netflix does. Which hurts their brand. And hurts their marketing campaign.
19:55 PAT: I saw something in an article pretty recently that I thought was really interesting. I’ll try to dig it up for us. Btu basically Netflix dictates the new content that it’s going to make based on the most popular categories and consumer trends of people who are already on the platform.
So not only are you dynamically going to be served new recommendations for existing shows…. Netflix actually has the ability to curate new premium content based on what they know is the most popular and what people like the most.
20:24 AUSTIN: And on that too, Netflix also knows that the shows that people watch the most are actually the classics. Maybe the shows that might pull you in such as Friends or The Office. Ones that are really big. They get a lot of views. 
But what they do is they use the new shows–the original shows–to gain the new users. And that’s why it’s such an important part of their marketing efforts. 
20:45 JOE: I can actually thank Netflix for watching The Office for the first time ever in my life. I’m going through it right now. 
20:53 PAT: I still can’t believe you’ve never seen that before. How much funnier is that now that you work in an office? 
20:57 JOE: I would just say that if that show came out today, they wouldn’t get past 2 seasons. 
21:02 AUSTIN: I think so. And I think that they’re trying to make a come-back with Michael Scott. So it’s probably going to be a pretty different Michael Scott than it was 10 years ago. But that right there, what we’re talking about with Joe is pretty incredible. So he’s been on Netflix probably for a while, but he’s just now getting into a show that was offered because of the platform. And it’s what it offers to every person, due to the subscription based model.
21:25 JOE: They’ve also been attributed for the big comeback of comedy too. Where comedy specials and comedians are now becoming a lot more famous. A lot more active. And a lot more successful because of the Netflix specials. 
They’ve been able to get pretty much pushed out that HBO, Comedy Central…
21:42 PAT: Which I find that astounding, because I used to associate premium, pay-per-view content with HBO. And you think about the big fight or a new stand-up by somewhat edgy comedian. That was usually going to be on HBO. And now they’re doing Netflix specials. 
If I’m HBO, Hulu, Amazon really… any of these companies… I’m pretty worried about just the abilities that Netflix has been able to flex on people. I just don’t think that there’s going to be a really long-term play for some of these other providers in the space if they don’t step their game up and start personalizing content the way that Netflix has, using some of digital marketing’s tactics.
22:20 AUSTIN: Main discussion for today. We’re discussing online ad platforms. And what they’re doing to change user experience. So what we mean by that is what you see and what you do when you go to a website is being affected by ad platforms such as Google. And the reason why they want to do this is because they want to have their ads be in a place where people associate good feelings with them. 
So when you’re an advertising company, and ads are in a negative place. Or it’s a negative ad. That can lead to a lot of bad business. 
So Google might take your revenue hit now, but they’re going to really work on getting ads on good websites.
22:56 PAT: Right. And kind of what prompted this discussion was a big development in the online advertising space last week. Chrome recently rolled out a new ad blocker through the end of last week. That is already in effect right now.
So just a little bit of a back story on this. We actually covered it on this show I believe a little while ago, but Safari came out with the ability to disable 3rd party cookie-ing after a 1 day window. 
23:21 AUSITN: I think that was back around October or so. 
23:23 PAT: Yeah. TBT. But….
23:25 AUSTIN: So they’re not the first one to roll out this ad-blocker, but this is much more important. 
23:29 PAT: Exactly. And this is actually in response to things like that happening. So the reason that Safari did that is because display advertising and retargeting a lot of users found to be a little bit intrusive. They didn’t like the spammy way that the ads would populate on their devices. 
So you have desktop ads… there’s 3 different types that are going to be under some scrutiny with the new ad-blocker being rolled out by Chrome. And then on mobile, there’s even more… There’s 4 on desktop, 8 on mobile. And if you look at them, they’re kind of spammy ads by nature. It’s like the pop-up ads. Ones that play audio automatically. Countdown ads. Full page interstitials. The works. Whatever you associate with spammy online advertising, that’s what it’s trying to mitigate.
But the reason that Google rolled this out is because they know that most users on the Internet come from their browser and they don’t want people getting so pissed off about the way ads are behaving on their devices that they go to 3rd party services or go to another browser like Safari.
So really what this is, is not so much a revenue play for Google. But it’s a customer retention play. And a way to try to enrich the user experience. So that when they do see ads, users are way more inherently likely to click on it. Which drives to Google’s bottom line. 
24:43 AUSTIN: And this is a competition play. So just like in every other industry that we discuss with Amazon trying to take over a new space. Trying to keep up with their competitor. 
This is the same thing, but just with an ad-blocker. So everything for a browser… everything from a tech company like this is considered part of what drives revenue for them. And an ad-blocker–as it may seem just like a plug-in, right? It’s a pretty big component of this. So they saw that Safari rolled it out. And they’re doing the same thing. 
They say, “Hey, we’re getting rid of bad ads.” People will probably automatically think of a Google ad, because Google controls such a large share of the amount of ads that you see on the Internet. So Google knows that you’re associating now that their ad is being blocked. 
So what do they need to do? They need to come out and say, “Hey, we’re going to do the same thing, and here’s why. It’s actually a good thing for our business, and it’s a good thing for our ads, because you’re going to have a better experience”
25:33 PAT: Yeah, and I think that this is such good timing by Google to roll this out. From a business perspective. Because like you touched on–yeah, it’s a competitor play. But it’s also a brand reputation play. We just covered last week that Facebook is under scrutiny for manipulating the content that people see on a frequent basis. YouTube recently rolled out a bunch of new ad updates, where they’re going to downgrade the discoverability of channels on YouTube that post offensive or disgruntling content. Trying to curate that user experience a little bit more. 
And then Google followed suit with this ad-blocker. And there’s a lot that we can talk about with this. I think that it makes some sense on paper, but…
Well, first of all. The first concern that a lot of people especially inn advertising are going to have is, “How is this going to limit my abilities and my reach?”
So first of all, this isn’t going to affect things hardly at all. The ad types that Google is blocking with this ad-blocker roll-out are all the ones that have the lowest amounts of engagement and the ones that people have been surveyed and voted on saying, “This is an annoying ad.” or “I am not interested in this content.”
26:41 AUSTIN: So pretty much the only people that are going to pissed off and notice this are the people that advertise…
26:44 PAT: No. it’s the people that advertise poorly. The people that just spam users with irrelevant content. 
26:52 AUSTIN: Yeah. The people that advertise poorly.
26:53 PAT: Exactly. And the thing is too, a lot of people are like, “Oh, for Google, doesn’t that just limit how much money they can make?”
No. This is actually a really smart play. Because if you’re serving, like I said, more relevant ads. People are going to click on it more often, which means that Google’s going to make more money. And the ads that are being blocked now are the ones that no one was clicking on. Which Google doesn’t make any money on, for the most part.
27:17 AUSTIN: And for revenue, for Google–around 80% of their revenue is generated from advertising. So you can look at this right off the bat and go… “If it’s all their revenue this is bad, because it’s going to cut into that.”
Well, Google knows that they need to protect this long-term. So it’s not just about making that much money today and why they may see a little bit of a drop. Maybe a couple percent. I’m not totally sure. In this quarter’s revenue or something. 
They’ve just built themselves the ability to have quality associated with their advertising platform for a long period of time. Which will equate to more revenue as the year progresses as people know that they are safe advertising there. And that the user that sees their ad will associate positive effects and emotions with that ad. 
28:02 PAT: Yeah, and I think too another concern has just been like is advertising spend going to drop? If you’re Google, that should be your concern. But Google’s product manager, for Chrome Web Platforms. Ryan Showen said that 42% of ad publishers that were in violation of those types of ads, have already moved their money to other ad types that are more relevant. 
So they’re still seeing the same amount of spend. They just… they’re going to probably be more likely to click. If anything, Google is going to end up making some more money on this. But what I want to actually open the discussion up to a little bit more is what does this mean on a bigger scale? 
We’re seeing companies that are consistently trying to curate the user experience to be more relevant. More effective. But at the same time, there’s that subjective nature that comes into it. Who is really to say whether something is spammy or unrelated? Who’s making those decisions? We can trust the algorithm all we want, but we saw with Facebook that it was just a bunch of engineers up in Seattle that were deciding that. 
29:03 JOE: I think this isn’t surprising. I think it’s a bold move. When you see the news come out that they’re blocking certain types of ads. I mean, you’re saying, “Google has control over certain things that are being displayed.” But this isn’t a new thing. I think this one is just a little bit more apparent because it’s aesthetic to you.
But site speed has been a thing that Google rolls out their guidelines on. Mobile has been a thing that they roll out their guidelines on with the AMP pages. So this to me, isn’t very surprising and isn’t that big of a change from the things that they’ve been putting in place. 
29:41 AUSTIN: And for a platform that no one owns, talking about the Internet, Google really is the deciding factor on what websites look like…
29:47 JOHN: They’re flexing pretty hard. But this isn’t… I’m just saying this is probably about the 4th or 5th item that they’ve rolled out where we can sit and talk about how much control this is. But they have that control freely, because of how much their network…
30:01 AUSTIN: Cause of their Search Engine, of course…
30:03 PAT: It’s because of their innovation. It’s because of what they offer to the consumer. And that’s what they… I do applaud Google for this move in a sense, because they’re understanding that at the core of this success, and why they have this kind of say is because users willingly decide to use their platform. And engage with their content. 
And pretty much as long as you’re practicing respect for your audience as an advertiser. You’re not trying to annihilate them with 17 of the same ad every single day that’s, like, a banner ad, you’re fine.
 30:35 JOHN: this just seems like they’re more abiding by that mission statement of making the Internet a better place. Even though it may seem like, “Oh, they’re controlling us. I don’t want any control.”
This is still making it a better place for the majority of users, because I don’t know anybody that likes the ads that they’re blocking. 
30:58 AUSTIN: Of course not. And this also brings up another point… I think you’ve got to look at it from organic search as well. And then the individual website, not just the ad. Google takes a pretty firm stance on what a website looks like as well. So they want the user experience to be good with an ad and a website. So that’s a big ranking factor here. So I think that there’s some tangibility and correlation between the algorithm for the ads, and the algorithm for organic search here. And you can bet that you need to have a great website for them to advertise on as well. 
31:30 PAT: That’s so true. Like, from the advertising side of things, if the website doesn’t match the content that is in your ad, which matches the user intent. You get basically penalized. You have to pay a higher cost per click for the same average position. 
And the reason why that is–and this is something that people always forget, but it’s the core reason why that’s the case is because Google is trying to protect the consumer and direct them to the place that’s gonna actually help them enjoy their experience.
31:59 JOHN: Right. They’ve never been on the side of the advertiser with some of the roll-outs that they’ve made. Like, with mobile, I could very easily make a mobile site and then roll that out any way that I wanted to. But that may go against common trends in what the consumer data is saying.
32:16 AUSTIN: Since we have John in the room to talk about dev and user experience, I’m curious–could you describe possibly a little bit best practices for user experience on a website? Or what does Google really mean when they say that you will be rewarded for good user experience? 
32:31 JOHN: Yeah, I guess it’s worth breaking it out into 2 different sections of user experience. From one side, you can think of it on the psychological level and how you’re designing something to influence somebody to move in a certain way.
Which is what I do. 
But then you also have the user experience that user is flexing. Where they’re taking in data from consumers and what they like. Which is then influencing what my side has to do in terms to be compliant with them. Which then leads more into the marketing side. 
32:59 AUSTIN: Right. Metric side of course. And what you’re talking about when Google says they have the data to know what people do and don’t like, they can see that from a couple different ways.
Bounce rate is one way. So that’s how quickly someone leaves the page. If they don’t interact with an element in the first 10 seconds, that’s called a bounce. They’re off the page. Google knows that people don’t like that even though they clicked on it for a relevant search result. 
Another way is time on site, and pages per session. So they can see how long someone stays on the website. That must mean they like it. They have something there that the user wants. Google knows that they should reward them with more search results. 
And then of course, there’s a couple other behavior metrics that we’re talking about. To understand if a user experience is good.
33:40 PAT: Yeah, but I… and again, all this comes down to the user experience. But I think the more pressing question for us in this discussion is this is a new update, what can an advertiser do today to try to maintain their relevancy if they were pushing these kinds of ads. 
It’s not all… and that’s a misconception. It’s not like spammy ads come from bad companies. A lot of times it’s whoever’s running their advertising…they just might not be as savvy, they might not be as in tune with the metrics. They may be an in-house guy that doesn’t have a ton of time to look at that every single day, and see how people are interacting with their content. 
So from an advertising standpoint, I think that the number one thing that you need to do if you’re looking at this and potentially thinking, “Oh man. I’m going to lose my reach.” Evaluate your ad types. See which ones have the best click-through rate, because that’s an engagement metric. That shows how many people cared to click on your ad and learn more. Versus how many saw it populate. 
You also need to opt out of spammy ad placements if you’re running display. Like mobile apps… I’ve never seen someone convert from a mobile app ad placement. It’s always on accident. So you need to account for that too, because that’s disrupting their user experience. 
And the 3rd thing that I would do is look in your consumer demographics. Make sure that you’re showing your ads to the right people. And if you’re doing those things, you’re going to be fine. And if you or your advertiser currently are not doing that, then that’s a discussion that you’re going to need to have. 
You gotta sit down with them and say, “Hey, we need to be more relevant. WE can’t let this affect our reach.” And if you do see reach being affected by this update, it’s because you were serving irrelevant or bad content.
35:30 AUSTIN: And lookit… you talk to your agency or whoever’s running your ads. If you’re running them yourself… Google is being compliant with the better ads standards as it’s called. So that is the fine print or the black and white of what you can and cannot do. 
Of course, when you’re doing your advertising, you will get it approved or not approved. So Google will let you know, and you will see if your ad is not being seen by others. If you’re not getting any impressions. And, of course, they will let you know. They do do that for advertisers. They’re a bit more transparent with you about what’s wrong because you’re paying them.
36:01 PAT: Exactly. So just to wrap up a little bit here, what I would say is maintain that relevancy, know you’re users, know where they are and make sure you’re curating great content for them. And then make sure that you are not running a poor desktop web experience. Or, as we have seen to be even more important and potentially impacted by this–your mobile web experience as well.
36:28 AUSTIN: Final segment today covering a topic we really like about a good friend of ours–okay, maybe not a good friend–but a very interesting man. This is “A Minute with Musk.” Joe take it away.
36:38 JOE: Yeah, so later today Elon Musk is launching another Falcon Heavy rocket into space…
36:45 AUSTIN: Oooh. With the Boring Company? No, that’s not the Boring Company.
36:47 JOE: This was Space X. And so he’s dropping something for one of the Spanish broadcast companies. And also dropping 2 test satellites for this new global broadband that he’s trying to introduce to the world–called Starlink–where he’s going to drop around 10,000 mini-satellites at a low orbit in the Earth. And give access to high speed, broadband Internet for free. Close to nothing. To everyone in the world. For free. 
37:24 AUSTIN: Wow. This is huge. This is better than fiber-optics, right?
37:28 PAT: Yeah, like Google Fiber did like something similar where they took… they wanted to basically expand Internet offerings to places that may not be privy to that…
37:35 JOE: Yeah, and so he announced this is 2014 that it was going to be a goal of his. And so did Google at the same time. But he just beat them to the punch. And I don’t… Okay, you can’t quote me on saying that it’s going to be free, but it’s basically going to be free. If it’s not people paying for it, the governments–local governments–will be able to subsidize and pay for it. 
37:54 PAT: Heard it here first. Joe said it’s free. 
37:55 AUSTIN: Yeah. It’s too late now. 
37:57 JOE: So Elon Musk, giving the world free fast high speed Internet. 
38:00 AUSTIN: What can’t this man do? The underground…
38:05 PAT: He’s doing like an underground subway. He launched a flamethrower company. He launched the 2 most powerful rockets in the history of the world. He’s giving the world free Internet…
38:12 AUSTIN: Electric semi-trucks. 
38:14 PAT: He also said that he thinks Tesla is going to quote-unquote “school” Toyota in lean manufacturing…
38:22 JOE: Yeah, but can he bench press 250 pounds?
38:24 PAT: That’s a question that we will be covering…
38:27 JOHN: My only question is what’s the Wi-Fi password going to be?
38:31 JOE: It’s going to be “Musky Man.”
38:33 PAT: “muskyman.” one word, no caps.
38:34 AUSTIN: I was going to say “musk martian.” But I think “muskyman” works as well. 38:37 PAT: I’m so interested too. This needs to be a recurring segment because he’s doing something new every other week. And we’re looking forward to being able to bring all that content back to you guys. Cause we find it super-interesting.
38:47 JOE: It’s going to be called Starlink, and he said that it’s inspired by the movie “A Fault in Our Stars.”
38:53 AUSTIN: I don’t know that. 
38:55 PAT: I saw that… it was like an academy awards sweetheart a couple of years ago. 
39:01 AUSTIN: Oh yeah, right. 
39:03 JOHN: I think this is the year of the Elon. 
39:04 PAT: It is. 
39:05 AUSTIN: If anybody listening right now has seen that movie, please go on our forum and hit us up and just post a thing, “Hey @ whoever.” You can say to Joe. “Hey Joe. I watched it.” Please let us know. 
And if any… also, if anybody knows Elon Musk please tell him that we have a segment about him. A recurring segment. 
39:22 PAT: Yeah, cause we made up that thing even knowing who we are let alone listening to the show. 
39:26 JOE: I have a friend who used to intern at Space X. So maybe I could see if maybe I could hook us up. 
39:28 PAT: We’ll get that introduction going and we will also be wrapping up today’s episode. Thank you guys so much for joining us for episode 25 of Flip the Switch presented by Power Digital Marketing. We’ll be back again next week with a bunch of great content for you guys. But until that time it’s been Patrick Kriedler, Austin Mahaffy, John Saunders and Joe Hollerup, signing off.

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