Google economics
Meet Google's Chief Economist and discover why he hates HIPPOs.
Professor Hal Varian is Google's Chief Economist. He designed the auction system behind Google's pay-per-click AdWords advertising that made US$ 20.7 billion last year.
This makes economics more interesting than those boring graphs....
He was in Christchurch delivering the Condliffe Memorial Lecture on the subject of "computer-mediated transactions".
Part of his message was how these can:
- Enforce new contracts
- Better align incentives
- Enable for data extraction and analysis
- Enable controlled experimentation
- Enable personalization and customization
Hal is a good speaker - and the whole event was packed with information and insights.
Controlled experimentation
Just one example of this is how Google experimented with hundreds of different background colours for the "sponsored links" at the top of their results pages.
The pale yellow they use was the front-runner in their tests. More people clicked on the sponsored links with pale yellow background than clicked with the other colours they tried.
With the huge numbers involved, even fractions of a percent are worth millions of dollars.
Hal explained how the alternative to measured experiments was HIPPOS.
HiPPOs
The other way to run your business is to listen to HiPPOs:
Highly Paid Persons' Opinions.
If you want to read a different take on this subject, then read Google's former Chief HiPPO Designer, Douglas Bowman.
Hal on video - and mp3
Listen up and you can hear my Guide Dog Holly bark during the very last question...
