E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
The new online ad policy goes live next month.
Google Inc. will feature users’ names, photos and comments in ads across the Internet in a new program it calls “Shared Endorsements.”
While Google declines to specify how it will use the endorsements in ads or what the ads will look like, its approach appears similar to Facebook’s Sponsored Stories ad unit. Sponsored Stories let brands pay to highlight consumers’ interactions with the brand, such as a consumer’s friend Liking the brand’s page.
Google gathers users’ feedback or endorsements in several ways, including posts they make on the Google Plus social network, as well as ratings and reviews they leave on Google services such as YouTube and the Google Play digital marketplace.
Google’s update, posted today, says that its revised ad policy will go live Nov. 11.
“We want to give you—and your friends and connections—the most useful information,” Google writes in its update to its terms of service. “Recommendations from people you know can really help. So your friends, family and others may see your profile name and photo, and content like the reviews you share or the ads you +1’d. This only happens when you take an action (things like +1’ing, commenting or following)—and the only people who see it are the people you’ve chosen to share that content with.” Consumers can click the Google’s +1 button, which appears on the social network and across the web, to endorse content, such as a post, photo, product or company on Google Plus.
For example, if a consumer comments on a post on ThinkGeek’s Google Plus page, that post, including a consumer’s photo and image, could appear in ads the retailer buys on Google’s display advertising network.
Google says users can opt out from having their information included via the Shared Endorsements setting in their Google user profiles. Google also says it will exclude consumers under the age of 18 based on the information consumers share in their Google profiles.
While word-of-mouth marketing can serve as a powerful tool for marketers, Google should carefully roll out the program, says Rebecca Lieb, an analyst at the business research and advisory firm Altimeter Group.
“Using information that people are sharing in ads is an approach fraught with potential pitfalls,” she says. For instance, when Facebook began highlighting consumers’ actions in ads it faced scrutiny from federal regulators and privacy groups, as well as a class-action lawsuit. But Facebook’s efforts were worthwhile because “endorsements from people you know have tremendous value,” she says.
Google faces the same challenge that confronts Facebook when using such endorsements—not all social connections—often called the social graph—are created equal, she says. For instance, while a consumer named Jim might value his friend Bob’s opinion on restaurants, Bob might have a different fashion style than Jim and might not care about what he has to say about an apparel retailer. “I’m not sure anyone has figured out a way for users’ social graphs to figure that out,” Lieb says.
The other issue Google faces is whether its users have shared enough relevant data to make Shared Endorsements valuable for advertisers, says Zach Reiss-Davis, a Forrester Research Inc. analyst. “The question is whether Google has a big enough body of users that it doesn’t make the people whose information it does use feel used.”
That’s an issue for Google, agrees Lieb, because Google Plus is a social network with a user base that isn’t particularly engaged. For instance, Google says it had 235 million active users of Google products in December 2012, but only 135 million, about 57%, had used the social network at least once that month. For the sake of comparison, Facebook says it had 1.15 billion users login to the social network last month and that 665 million of those, about 58% did so daily.