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As the recently appointed head of Google UK, Matt Brittin is faced with deciding the search giant’s role and responsibilities in recession
Matt Brittin became Google’s director of UK operations in March, following the promotion of Dennis Woodside to VP of American operations. Brittin joined Google in January 2007 to run its direct sales arm and worked alongside Mark Howe, Google’s country sales director for agencies, to grow the UK business and consolidate its position as Google’s second largest market.
Since March, Google has been embroiled in the debate on how self-regulation online should be funded, and has received criticism from offline media companies claiming it’s damaging revenues. Brittin talks to new media age about how the recession is affecting the search sector, and Google’s role and responsibilities.
What’s your new role?
My job is to help the UK get the most out of online, whether that’s consumers, publishers or advertisers. I continue to work closely with Mark Howe, as agencies will always be very important to us. I think the UK has been leading the way in working positively with agencies and clients. I’m proud of the progress we’ve made there.
Day to day I spend time with our largest clients and partners to understand the issues they face as they look at the opportunities online, especially as they’re affected by the slowdown. I also work with a lot of the smaller advertisers through our team in Dublin. There are a lot of entrepreneurial businesses that, through the internet, have a real opportunity they’ve never had before to reach wider markets in the UK and internationally.
How do you see the recession affecting online?
If you look at previous slowdowns, the gap between the best-performing companies and their competitors tends to be wider than it does during normal economic growth. You get greater separation, and I see companies trying to use digital opportunities to do that.
Look at a retailer like Littlewoods Shop Direct, for example. It comes from a legacy catalogue business. The proportion of its revenues from ecommerce has grown - about 56% of Christmas revenues last year, up from 30% the previous year, and it’s looking for 70% next year. I think it’ll succeed. Littlewoods invested in online in the slowdown, managed its costs tightly and even secured assets at a knock-down price in the form of the Woolworths brand. It’s an example of a business that’s making good decisions in the slowdown.
Do you feel, because of your position as a leader and pioneer online, that Google has an added responsibility during the recession?
Absolutely and we’re doing a lot. We have a whole bunch of collateral explaining the tools, products and services, almost all of them free, that can help you speed up in the slowdown. For example, Google Insights can give you a really good idea of the changes in demand for products and services, while Google Apps can massively reduce IT costs and increase collaboration in an organisation.
“One thing we should be very clear on is that it’s not Google causing the problems affecting traditional media”
How is the recession affecting media owners and even Google?
The slowdown’s clearly causing problems for the media industry and Google has been affected like everyone else. But there has actually been a long-term structural change in audience behaviour. So you had a proliferation of media even before the internet, with multiple TV and radio stations, and the web came along with an even bigger explosion of choice for audiences. Then you get an economic slowdown that’s so severe that in some cases it’s accelerating consumers’ switch to online.
What’s Google’s role in that?
One thing we should be very clear on is that it’s not Google causing the problems affecting traditional media. It’s the explosion of competition, the availability of free content online - which newspapers choose to make available - and consumers choosing how they’re spending their time.
So do you get frustrated with comments, such as those from Trinity Mirror’s Sly Bailey at the Digital Britain Summit, that online aggregators are devaluing news and taking revenues?
I can understand the emotion that goes with being in the situation Sly and other traditional media CEOs are in. Google partners with almost all of the major media companies in the UK to help them get audience for their content and monetise their websites. That kind of comment can be a little frustrating given we’re partnering with them, but I understand the emotion.
From our perspective, the issue is the way consumers are choosing to spend their time and the way advertisers are choosing to spend their money. We send something like 1bn clicks a month to newspaper and publisher sites through our search products and Google News, and in 2008 we paid $5bn [£3.33bn] to partners on whose websites we serve advertising. So we’re helping them monetise the opportunities online and helping consumers find great content online.
The challenge for traditional media is to produce distinctive content in a world where there’s an explosion of content to look at. I totally understand their challenges and emotions, but the fact is Google is part of the solution and in most cases we’re working closely with these companies to help them solve these problems.
The issue is that we’re at the early stages of the internet and no one has figured out how consumer behaviour is really going to change, yet we’re all trying to figure out monetisation models. We have some reasonably successful ones but they’re not yet powerful enough to replace the profit and revenues lost from the traditional publishing industry.
How involved has Google been with Digital Britain?
We’ve had conversations with the Digital Britain review group about how we can help businesses online, as well as technical conversations. One of the key focuses of the Digital Britain report is broadband for everyone and how that can be made affordable. We’ve tried to make our expertise available where relevant.
We believe the internet is an engine for economic growth. We’re working with small businesses to help them reach a bigger audience, get more bang for their marketing buck and grow their profits. Now we’re really looking at how we can help people grow internationally.
What’s your response to calls from the industry that you should collect the advertiser levy to help fund the self-regulation system for digital media?
What you’re referring to is the extension of the remit of the standards association. That remit we support; it’s a good move for that to be extended. Then there’s the question of how that should be funded. We support an extension of funding on search marketing and the collection of that through agencies. But if you look at complaints about search marketing, there’s a tiny number and the amount of money collected through search is significantly higher than the cost of those complaints. We suggest a review of what the right funding methods are.
But in search Google is the narrowest collection point.
We must be very careful in asserting that Google is the internet. Complaints about Google advertising are very low and the funding through existing search marketing levies more than covers that. So if you’re extending the scope of the ASA, you should look at extending the scope of funding in a number of different ways. While it might seem obvious to companies to say Google should be collecting all of this, that’s not the case. The way in which the money is currently collected works very well.
So does the industry expect too much of Google?
We’re a new kid on the block and relatively successful. In the downturn we’re doing well in comparison to other media. What we want to do is find the right way to be part of this, but that doesn’t mean the easy answer is Google should fund stuff. We need to work on industry solutions.We support the idea there should be better protection for consumers online, and we support the extension of funding of that, but it’s not for us to fund the whole thing.
What consumer trends is the recession driving?
Before we hit the slowdown, 80% of people were going online to research major purchases. However, we’re now in a world where they’re more concerned about their budgets than ever, so they’re using the internet more to find the right product and services.
It was really interesting to see the results for the last quarter of last year from retailers that were clearly struggling on the high street but were growing at 20% or more in their ecommerce channels. They’re benefiting from that shift to online as a key source for research and purchasing. People are using the internet more for entertainment purchases too. You see that in Sky’s subscriber numbers.
So consumer behaviour online will be accelerated by the slowdown in those respects; they know the internet is a good place to find the right product at the right price, and use it more when worried about household budgets and spending wisely.