Brad Burnham, partner at Union Square with Fred Wilson, blogs about the impact of Google’s data driven services. In discussions over dinner last week with Dan Gertsacov from GoogleTV, we got onto the topic of data as differentiator in advertising. Brad nails the same point in this post (which is about the impact of marginal data collection on services)
“Each incremental point of data adds value to the ones you all ready have. It is easy to see this in the context of an advertising network. If the ad network knows that a user is female it can show more relevant ads. But, If the ad network knows that femaleâ€™s age, it can do even better, and data about location, household income, and recent web sites visited all add value to the existing data points, making it possible to show more and more relevant ads. Googleâ€™s services all benefit from additional data albeit in different ways.
“So what does all this mean about the market for web services. It means that we all need to begin to think about the degree to which Googleâ€™s enormous data asset will allow it to dominate this important sector.” [emphasis mine]
The hot buttons in the last paragraph are “think” and “dominate.” Data driven ad services (or cloud computing) are squarely in the sights of the privacy stewards and the federal government. Anyone who had to answer reader mail in 1995 when a web user freaked out about a cookie being placed on their harddrive knows never to underestimate the public and government’s paranoia about data.
As an advertiser, Google’s data store and processing capability is extremely valuable in transforming next-marketing-dollar allocation. The other networks don’t possess the same analytical and data driven rigor. It could, if I take Brad’s post to the paranoid extreme, be a harbinger of Google’s future focus on persuading the world that a) their data is anonymous and b) safe with Google.