Google’s decision to use search data to target YouTube ads could foreshadown the search giant providing access to more data, even if cautiously.

Andreas Reiffen, Crealytics CEO

Andreas Reiffen, Crealytics CEO

Google’s search data is its crown jewel, and the company guards it that way. And beyond keyword and query data, there is a host of additional data sets that Google mines but has been reticent to share widely. Google knows the price and promotions of every product a retailer sells via Google Shopping, and its competitor’s prices. And if the retailer has Google Analytics or uses Doubleclick, they may even know the company’s margins, customer value, and sell-through rates.

While Google is likely to remain very conservative and strategic in how it meters access to this data, its move earlier this year to allow marketers to leverage search data to target YouTube ads presents grounds for speculation. Marketers and retailers are asking: what other doors might Google open to marketers, and how could they impact marketing strategy?

Intent Signals for Targeting

Google could extend what has made possible with ad targeting on YouTube. Keyword queries are still the most powerful signal of purchase intent. Google could allow advertisers to target people on any sort of publisher website based on previous searches and their intent. This would immediately boost their advertisers’ ROI, leading to higher budgets and more Google revenue.

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With the flip of a switch, Google could provide retailers with real-time competitive intelligence on how they can make smarter pricing decisions.

Yet, Google historically has been very cautious. Google must maintain trust with its users. Over-targeting ads based on their search behaviors can raise privacy concerns and erode trust over the long term. This clearly happens today with retargeting, which users perceive as spooky because they don’t understand how it works—or useless in that it doesn’t seem to track to intent or a consumer’s commercial actions (for example, if you are retargeting me but I already bought this item).

With the latest announcement to allow advertisers target users on Youtube based on their searches, Google goes a step further. How much further yet they go from here, depends on what users will permit.

Price Elasticity 

The second area of data application to consider is in price elasticity: Google search data can influence how goods are priced in real time. Google factors competitive price information into search results on Google Shopping, which is a subset of the core search product. Minor price changes on Google Shopping have a huge impact on how many impressions Google gives you, and therefore on the final performance of the Google Shopping ad. Products cheaper than the market average generate 3X more conversions than expensive products, meaning in the end that the only products that really drive performance are the products which are competitively priced.  And if your price is not competitive, Google won’t show you at all.

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With the flip of a switch, Google could provide retailers with real-time competitive intelligence on how they can make smarter pricing decisions. For as long as goods have been sold, marketers have been looking to understand the consequences of price increases and decreases. With Google search data, you could see those effects almost immediately. The outcomes of such a move would be huge and far-reaching; pricing remains the holy grail of retailers and nobody would let Google set prices for them. But in the near term, retailers and their independent tech providers on Google Shopping have access to all the data and can use it to support their own pricing decisions.

Demand Forecasting + Assortment Planning 

Assortment planning is one of the few areas of business in which you have major decisions being made without a bunch of data to back it up. The merchandising guys rule the game; they are recognized as the experts who have the instinct to forecast demand before any signals of that demand have emerged. It’s still an old-school process.

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Think, for example, of a high-fashion luxury company planning for next fall. Those assortment planning decisions have been made by now, given the 12 months it takes from when they decide to buy products until they are finally selling them. Fashion has to set the trend, and it doesn’t have the luxury of responding to it.

But the fast-fashion retailers that buy from the fashion brands? Their lead time is only 5-6 weeks, and the decision of what to buy could be drastically improved by looking at Google search data. They can buy on the basis of real signals of consumer intent, and Google search data is the single best data set for those signals. Making that data available would radically transform e-commerce buying and selling from the ground up.

A Question of Balance

Google’s data is doubtless is one of the richest—if not the richest—bodies of information about user intent in existence. So it makes sense that the company has been extremely cautious about how it exposes this data even within the various properties under Alphabet. It’s not a one-way street, as evidenced by Google’s announcement in June 2017 that it would end the practice of reading Gmail for ad targeting.

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The question for Google, as always, is one of balance. Given the sheer scale and accuracy of this data set, the impact it could have on digital businesses is potentially huge, and the implications for retailers are vast. But the downside risk is also significant: Too much leveraging of this data could lead to ads and practices that users see as violations of their privacy.

Crealytics is a search marketing agency based in Germany.

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