iGoogle, Personalization and the iAdvertising Revolution

Google today rechristened its personalized homepage iGoogle. As part of the relaunch, they added a number of personalization features. Google Blogoscoped has an excellent run-down of all of the new goodies. This is the second round of personalized services that the company has launched in the last few weeks. If you want to, you can also now track your entire surfing history on Google's servers.

According to Marissa Mayer, tens of millions of users have personalized their iGoogle pages. How many of them are registered users remains unclear. This compares favorably with Yahoo's 50 million My Yahoo users, which is a significantly more mature platform. Further, iGoogle is one of the company's fastest growing services.

A personalized online experience is definitely advantageous. However, studies have shown that few actually want it. A Forrester analysis released last October found that 29% of users put a high priority on personalization. The same study found that only half of users who have a customized page actually use it. Further, only 21% feel relevant ads are part of a good online experience (see charts below).

What this means is that for all of the hype around personalization and ad targeting, the reality is that it only is attractive to a certain type of consumer - usually a power user. I suspect that many of you are part of this group, as am I. For years I was a My Yahoo user. Now I make tremendous use of these two Google features. Lots of people I talk to also seem to becoming fans of personalized start pages.

Further, I also like when the ads match what I am looking for. I find the ads in Gmail and search engines to be quite valuable. Still, if you believe the data (as I do), my habits clearly reflect the minority.

The march toward sophisticated personalized services that can tailor content (including ads) to one's needs will not be stopped. However, this creates a massive culture chasm. One one side we have users that will want personalized advertising/content and on the other we have people who will stop at nothing to avoid it. There are lots of shades of grey in between too.

Where this all leads is that Google will eventually create two tiers of services. They will create the means to allow power-users, should they wish, to sell (yes, I said sell) access to select cuts or all of their clickstream and personalization data. The information will get aggregated with those of others. This will create a superior personalized experience for those who want it and one-to-one advertising relevancy that goes far beyond anything we have today. People who opt-in to such a program will be rewarded based on how much data they generate and the return they deliver to Google's advertisers.

The vast majority of users will steer clear of such Big Brotherhood. In fact, such a concept is so controversial that if Google were to introduce it they might need to set up another brand to make it work.

Whether I am right or wrong remains to be seen. However, the trends are unmistakable. Google and other publishers desperately want you to personalize your experience so they can serve you the right mix of relevant content/ads. However, only a small few want it. That's a direct clash in interests. To meet this bifurcated audience and the advertisers who are desperate to reach them in an increasingly cluttered world, we will need multiple tiers of services. Watch for this to pop up in the next few years.