Thursday, June 28, 2012

Zagatisation, by Google


The restaurant industry has been a difficult animal for the internet, most specifically Google, to monetize. Still driven by an old-fashioned consensus formed by a wide range of guides, review sites, discount deal sites and other more traditional forms of marketing, no single force has managed to really control the market in any real form. Until perhaps now.
Google has long realised that the restaurants industry does not spend on its traditional sources of income - banners, adwords etc simply don’t work well. Google needs to control the monetization of the result of a search. They think like this. You search, I give you the result, the information, and in the process, I make money by monetizing the result I’ve given you.
It’s the same with social media. Facebook pages for restaurants aren’t really working. (To test this survey, we spent $2000 dollars on Facebook advertising for a restaurant in 2010, got 6000 ‘likes’, with pages views through the roof etc. Conversion into bookings? Zero.)
So Google has been wondering for a long time ‘how do we capitalise on restaurants, or eating out, in the same way as in other industries? How do we tap into this market?
The entry, I believe, is the restaurant review business.
Sites like Tripadvisor have been the leading force for many years now - people trust user-generated consensus style reviews. Simply put, Google needed a user-generated restaurant guide to give them a back-door ticket into this potentially lucrative but difficult market.
So, in September 2011, Google acquired Zagat, probably the biggest restaurant review guide in the world. 
Why Zagat? For switched-on Americans, Zagat has been the de-rigeur restaurant guide for many years now. 
Reflecting the freedom and empowerment of post war America as a refreshingly democratic alternative to the more snooty, exclusive and overall more European Michelin guide, since the 80s Zagat is the one you are not ashamed to be seen using, think Patrick Bateman in his Manhattan apartment, listening to Genesis, desperately trying to book a table at Dorsia. 
Zagat has also been imitated in various forms across the world, famously in London with a similar guide by two brothers.
Zagat was perfect for Google. The right image, and as all reviews ‘constructed’ by a spread consensus of public voters, exactly the right approach: let them do it themselves. People trust each other.
When you used to search for a restaurant on Google, a typical search would be ‘Italian restaurants Mayfair’. What you would get would be (apart from the paid for chain ad listings, which everyone ignores) a list of various review/booking sites, typicallyToptableSquare Meal etc each pointing to one of their recommendations, and then a sprinkle of websites belonging to restaurants who have made an effort to implement some kind of SEO.
Now, things are different. Do a search now you get a direct map driven list of restaurant websites straight away, and a ‘score’, which if Zagat have reviewed them will be a ‘ZAGAT rating’ actually underneath each search result. Click on the highlighted ‘score’ link and it takes you to a pre-formed Google+ page, with a list of Google user reviews. Zagat will power these reviews if applicable.
Lower down is a list of ‘more reviews’, which looks basically a little sad, by this time you’ve probably made up your mind. The other review sites simply don’t get a look in.
So what does this mean? Well ever since the publication of John Battelle’s 2006 book on Google ‘The Search’, we’ve all known about Google and how they gather data, act on and essentially monetize searching.
But they have come a long way since then. No longer do they rely on cleverly placing ads for flour and sugar based on the content of an email from your mother about an apple pie recipe. Google plan to use your activity online in a much more sophisticated way.
Harnessing the ‘eating out’ culture via Zagat gives Google the opportunity to tap into people’s social lives much more accurately. Many more intricate choices in your life will be recorded.
What we probably don’t know is that Google has already decided to make the next step, which is to control the booking activity of the online restaurant industry. It will mean investing in another specialist, and it will surely be another gargantuan North American company, a leader in its field, already working in cities influenced by Zagat such as Opentable. Surely it is just a matter of a signature on the contract!
And the day we start hearing about it is the day they buy an integrated point of sale operation system already working hand in hand with Opentable.
It’s also the moment when Google ‘close the loop’ as it were. 
From the moment I start thinking about eating out, Google will know
1. What you search for (including how you search for it, the key words and phrases that lead you to your result)
2. When you search for it.
3. Where you are when you search for a restaurant.
4. What time of day you book a restaurant.
5. What kind of booking you usually make.
6. Your special requests/personal dietary requirements.
7. What kind of food you order.
8. What kind of wine you order.
9. How much you spend.
10. How you pay for it (and of course your bank details).
11. What you thought of the experience.
12. Who you told about the experience.
Probably lots more. And the possibilities of what Google can do with this information are simply astonishing. For instance, from a restaurant’s point of view, being able to target customers directly reflecting their search terms, previous purchases, tastes, etc will be invaluable. And one thing is for sure, Google will monetize this knowledge.
Now you’re probably thinking you’re immune to this kind of big brother style monitoring. You’re thinking “Well, I’m different, I’m not influenced by others, I make my own decisions”. Well think again.
The Google+ social network angle is one of the most crucial parts of the whole operation, as it is this transparency of your ‘digital DNA’ that will be so valuable. The very thing that hinders Tripadvisor and its like - the suspicion of fraud, foul play and false descriptions - will be virtually impossible because Google+ is far too clever for that, it will use your constantly enriching profile to underwrite everything you do digitally, and fish out potential fraudulent activity by means of its well-known and highly sophisticated algorithms and even use this to its advantage.
And the genius of the whole thing is they don’t even have to convince you to sign up. Have a Gmail or Youtube account? Use Google maps? Most people are using Google+ and building its knowledge without even knowing it. Chances are, unless you’re reading this on a printed piece of paper, you are already in it!