Google and Ice: A Service Story

CNN Money

Google reached out to a vocal critic and turned a possible PR shadow into a shiny customer service story; hope for other e-tailers?

By Parija B. Kavilanz, CNNMoney.com senior writer
May 14 2007: 1:50 PM EDT

NEW YORK (CNNMoney.com) — The squeaky wheel gets the grease or just good customer service?
Either way, it’s turning into a happy ending for Ice.com, a relatively small online jewelry retailer that had issues with the search giant.

And that, say industry experts, is a good strategic move for Google (Charts, Fortune 500).
“Google can’t meet one-on-one with every unhappy client. But the one thing that Google has to be guarded against is the perception that it’s become an arrogant company that’s indifferent to its customers, especially as it gets greater market power,” Greg Sterling, principal of Sterling Market Intelligence, said.

Ice.com’s gripe was that its business through Google AdWords wasn’t as profitable as it once was. AdWords is the name of Google’s text-based advertising system used on its Web site and partners’ sites. Industry analysts tout it as one of the most efficient and cost-effective forms of online direct marketing.

Google’s halo dims for some e-tailers

Indeed, the system was at first very effective for Ice.com. But after a precipitous drop in holiday sales, Ice.com’s chief executive officer, Shmuel Gniwisch, was wondering if his $1 million advertising budget wasn’t better spent elsewhere. And he wasn’t shy about sharing his concerns with other online re-tailers and the media.

Google made $3.1 billion in profits last year. It could easily go without Ice.com. But instead of ignoring Gniwisch’s rants, Google dispatched a five-member “crack team” to work with Ice.com to address its concerns and win back the e-tailer’s business.
“It’s definitely good business practice for Google,” said Sterling. “Ice.com has been very vocal with its criticism. It’s a classic case of a dissatisfied customer. So from a PR dimension this was a problem for Google.”

And it makes more sense – both business-wise and image-wise for the company – when you consider that Google’s rivals are fighting hard – even exploring a possible merger between Microsoft (Charts, Fortune 500) and Yahoo (Charts, Fortune 500) – to bolster their share of the $30 billion online ad market and effectively end Google’s dominance.

Google’s effort worked. Gniwisch has changed his tune.

“We got a call from Google in February asking us what they could do to help us,” Gniwisch said. He said Google put together a team of people who flew to Ice.com’s headquarters in Montreal.
“We were also on the phone with them two to three times a week for the first three weeks,” he said. “These folks put a lot of time into fully rebuilding our philosophy about AdWords from the ground up.”

MSN-Yahoo? Watch out Google

“Google got the message that mid-sized companies weren’t being successful with AdWords. I think they learned from us as well,” Gniwisch added. “If I can see my return on investment begin to improve, I will write a blank check to Google.”

“Nothing unique was done,” said Richard Holden, head of products for Google AdWords, noting that Google simply made Gniwisch and his team aware of the variety of tools that it offers through its Google Analytics service that allows advertisers to optimize their AdWord usage.

“The wonderful thing about AdWords is that we keep adding more capabilities and tools to help advertisers better track ad performance,” Holden said. “Ice.com knew much of what’s already on Analytics. So we just took another look at their ad campaign on Google and how to restructure it.”

Regarding the so-called “crack team,” Holden said higher-paying customers usually have their own account management team at Google. “We typically communicate with these customers over the phone or via email.” However, Holden said it’s up to the customer support teams to decide if they want to meet with clients in person.

What about the other e-tailers?

Besides Ice.com, eBags.com, Babyage.com, and BareNecessities.com are a few other e-tailers who said they too were reallocating their Google ad money into other marketing channels, namely personalized newsletters, banner ads and online video advertising.
All four of these e-tailers have considerable brand recognition among consumers and appear on trade publication Internet Retailer’s 2006 ranking of the Top 500 e-tailers based on sales Peter Cobbs, co-founder of eBags.com, said the company has regular quarterly meetings with Google. “We’re always pushing them on things,” Cobbs said.

In 2006, the company spent about $6 million advertising on Google and used about 70,000 keywords on the Web site.
Going forward, Cobbs said the company would select other advertising options from Google’s menu list and not be so focused on AdWords but other assets like video advertising.

How to scale Mt. Google

However, Jack Keifer, CEO of Babyage.com and Dan Sackrowitz, vice president of marketing and business development for BareNecessities.com, both said they have yet to hear from Google about their concerns.

“We’ve significantly cut our Google ad budget by 45 to 50 percent for this year,” said Keifer. In 2006, the company spent about $500,000 on AdWords.

“Unfortunately the online ad model dominated by Google, Yahoo and MSN have become too expensive for us,” Keifer said.
For his part, Sackrowitz said he would be very curious to learn more about Google’s meeting with Ice.com. “We’d love that kind of interaction with them,” Sackrowitz said. “Google has so many ad tools and it would be great to have someone from Google help us understand them too.”

Holden’s response?

“I’m shocked if we don’t already have an ongoing dialogue with these companies,” he said. “I don’t have the particular details but we’ll look into it.”

http://money.cnn.com/2007/05/14/news/companies/google_etailersissues/