I have to confess an addiction to the presidential campaign. I follow it obsessively, every twist, every turn, every gaffe, every SNL skit. I am in awe of the sums of money being raised and spent.

But despite all the campaign spin and rhetoric, and even with the bailout story reaching fever pitch, we all know that the true balance of power lies elsewhere: in the halls of little company based out of Mountain View, California.

Think about it. 144.7 million Americans used Google last month — more than the number of people who voted in the 2004 Presidential election. The company has just under 20,000 people on the payroll, more than triple the number employed by the White House. Thousands upon thousands thrive in the Google economic ecosystem. 300 million shares? 300 million Americans? coincidence? I think not.

They’ve got an environmental policy. They’ve got a Chief Economist. They’ve got a market cap roughly equal to the entire GDP of New Zealand.

What they do, matters.

The only bummer about this situation is that, even though the Big G has as much or more of an impact on our daily lives as the guy in Washington, we still can’t vote for its President. Well, we can, but let us face the matter squarely: thanks to Google’s dual-class share structure, our votes won’t make any difference.

Then again, we probably shouldn’t vote. Our democratic process has led us to meltdowns on Wall Street; Google’s benevolent dictatorship has produced the fastest growing company in history. In the past year alone, they’ve added thousands of new jobs and stepped up their sustainability efforts. No, it’s probably best that we surrender to the wiser governance of Schmidt, Page and Brin.

Sure, every now and then they’ll get it wrong. United Airlines will lose 76% of its market cap because Google News mixed up its dates. Some poor guy who hits the lottery with an all-Google business model will learn that he shouldn’t sink a foundation in shifting sands. Sergey Brin will be forced to admit that censorship ain’t cool.

For the most part, however, Google treats its citizens (that is to say, all of us) well. It’s certainly had a greater impact on our efficiency than anyone in the White House ever did, except maybe that guy who invented the Internet itself. On the other hand, a lot of that efficiency is wiped out by the productivity drains from YouTube, so maybe the company’s contribution is a net wash.

In closing, when you’re thinking about your choices this election year and feeling the pressure to choose the perfect candidate, be grateful. The decisions that matter most have already been made. The triumvirate in charge isn’t going anywhere. And if our nation were run as well as that little company based out of Mountain View, we’d probably be in a lot better shape right now.

Steve Baldwin (who has the totally amazing Brooklyn Parrot blog) left following comment today on an article by Dave Morgan, Privacy: Self-Regulate or Be Regulated:

…We need a major paradigm shift (sorry for the cliche) when we think about privacy or this industry is toast. Let?s start by stipulating that the data that you generate as you travel through the infosphere belongs to YOU, not some shadowy marketing organization. Unless you give explicit consent that someone else can have this data, it?s YOURS. Nobody (except the government pursuant to a lawful request) can view it, trade it, or sell it. And any data given as a result of an express consent can?t live forever: it must be destroyed within a short time…

I replied:

I have to say I struggle a bit with the concept of personal data ?ownership?… Data has never belonged to the individual in the past. Certain institutions have had limitations because of the nature of the specific data they deal with, but even banks have never been required to destroy records and everything can be subpoenaed.

People who see you going into a porn shop or an AA meeting have always been capable of spreading the word, with no limitations or repercussions. I know where you work ? I tell somebody else ? have I just breached your proprietary data?

The big difference is the spike in ?creepiness factor? that comes with the volume of information available, combined with the ease of its distribution. The big difference is how much money can be made on the backs of our personal data.

I think this phenomenon — that this information used to be available, and now we’re demanding that it be treated as sacrosanct — is one of the key challenges in identifying and implementing universal principles of privacy.

Behavior is nearly always visible, and any transactive behavior (including getting on the Internet) is always visible, if only by the entity on the other end of the transaction. So the privacy question is this: how much responsibility is assigned to the person engaging in the behavior, and how much to the guys on the other end?

Should that depend on the type of data and how visible it would be even without special access? For example, if I buy a car, everyone can see it and know that I own that car. What they can’t see is whether I paid cash or borrowed money or bought it out of my family trust. So should the fact that I own the car be considered ‘my’ data? It’s kind of out in the public domain, isn’t it? What about how I paid for it?

What if we’re talking about something else, like renovation supplies I bought at Home Depot? (We don’t have Home Depot in New Zealand, and boy do I miss it.) It’s possible that the person next to me at the register could see not only what I’m buying, but how I’m paying for it, and put that information on his or her blog. So is it the data that should be private, or is the problem with its systematic collection or its dissemination?

I want to be clear here that VortexDNA doesn’t store any behavioral data at all. Nonetheless, these questions are vitally important to our industry if we’re hoping for self-regulation. Personally, I think the self-regulation thing is an uphill battle. Even though there are lots of us who treat the issue seriously and welcome high-quality standards, there are still too many players who are hoping to make money with unsavory privacy practices, too many who are hoping Congress will drop the issue, too many who benefit from the status quo.

I’m interested in your views on privacy, data ownership and self-regulation. What do you think?

Technorati has just come out with its State of the Blogosphere report for 2008, and the results are either promising or disturbing, depending on your viewpoint.

As Andy Beal’s Marketing Pilgrim points out, the key statistic is that, while the number of blogs in the world has nearly doubled in the past year and a half, post frequency has plummeted in absolute terms, from 1.3 million posts per day to 900,000 per day. This means that the drop in relative terms is even greater.

In short, starting a blog is still trendy, but maintaining a blog is less so. It’s like reservations. Taking them is easy; holding them, less so.

It’s obvious why a drop in blog posts is disturbing. We’re afraid they’re losing their cool, that our vibrant blogosphere will fade into a shriveled husk to match the newspaper industry.

What Andy Beal doesn’t mention, though, is the upside: pretenders come and go, but contenders persist.

We all know the best attribute of the blogosphere is also its biggest weakness: anyone can start one, and anyone can write anything. Even I can write stuff. But, as Andrew Keen so elegantly rants in The Cult of the Amateur, the bulk of what gets written is garbage (except my stuff).

So all of the people who thought blogging was an easy way to fame and fortune have realized the sobering truth: as in every other endeavor, there’s no magic pill. You won’t become an instant superstar. You have to work at it, invest in it, contribute to the community.

Which means that the people who aren’t ready, able and willing to give blogging the attention it needs find their blogs withering on the vine, while the people who put in the requisite effort reap the rewards. Long term benefit to the readers/writers/webbers: less material, but higher quality.

Incidentally, this expansion-contraction is utterly normal and should be totally unsurprising. It’s in economies and governments. It’s in design, as my friend Dorenda points out. It is, essentially, universal.

Management guru Peter Drucker said that you can’t legislate morality, meaning that you can’t force someone, for example, to care about her job. All you can do is manage symptoms. I agree with him, but I’ve also noticed that success or failure is more dependent on ‘morality’ than on symptoms. Starting a blog is a symptom. Maintaining a blog is morality.

What say you?

Well, Phorm got the go-ahead from regulators, for one…

Wendy Davis from Online Media Daily is reporting that the U.K.’s Department for Business, Enterprise and Regulatory Reform gave the stamp of legality to Phorm this week. Phorm, which hasn’t officially launched yet, has arrangements with three British ISPs.

The move is a big thumbs-up, given the troubles faced by others in the ISP-based behavioral targeting market. NebuAd, in particular, has gotten serious pushback from all sides, including Congress, end users, and — once they realized they were on a sinking ship — the ISPs themselves.

To be clear, NebuAd’s technology was NOT determined to be illegal. In fact, no determination has been made one way or another. Nonetheless, the U.S. company faced so much pressure that they had to withdraw their ISP-based offering.

Which means that Phorm may still face a parallel uphill battle. It doesn’t much matter that the government says you’re good to go, if your customers and their customers don’t want your product.

Interestingly, Wendy says the critical criterion for Phorm’s legal acceptability was opt-in consent. Effectively, this is saying it’s not a question of how personal the data is or how intimately you’re followed, it’s whether you’re made aware that it’s being collected and consciously choose to agree.

Personally, I think the type of data they store is also relevant. From the Phorm’s privacy statement

…the technology doesn’t gather personally identifiable information, doesn’t store IP addresses, search terms or browsing histories, and only sees users as a unique, random number.

This is actually similar to the way VortexDNA works — a number compared with a number, that can never be disaggregated to reveal an individual’s activities. Where we differ is in the algorithm that generates the number and in the mathematical principles behind that algorithm. Nonetheless, it is gratifying to see that the privacy embedded into their conceptual model is endorsed by a variety of authorities.

Once again, the tipping point comes down to choice, and it remains to be seen how many people will choose to opt in to the program.

Are any of you familiar with Phorm? What do you think of their technology?

Summary: In this post, I cover two monetization options that have been suggested for Facebook, one from Bob Garfield at Advertising Age and one from Adam at Seer Interactive.

I was gratified to read two pieces today that actually proffered feasible ideas for how Facebook can live up to its own hype.

The first, Your Data with Destiny by Advertising Age’s Bob Garfield, is long—and worth it. En route to his suggestion to Zuckerberg, Garfield travels through the decline of traditional media and how the advertising value proposition has transitioned:

• away from exchanging attention to ad messages in return for access to free or subsidized media
• towards exchanging consumer data in return for entertainment, information, discount or utility.

Of course, the new marketing paradigm doesn’t stop at data provision. Mining and analyzing the data, and using it to extrapolate a consumer’s likes and dislikes—that’s where the future is. More specifically, it’s in finding out the true indicators of purchase intent, because they sure aren’t obvious:

In 2006 Tacoda did a project for Panasonic in which it scrutinized the online behavior of millions of internet users — not a sample of 1,200 subjects to project a result against the whole population within a statistical margin of error; this was actual millions. Then it broke down that population’s surfing behavior according to 400-some criteria: media choices, last site visited, search terms, etc. It then ranked all of those behaviors according to correlation with flat-screen-TV purchase.

In that list, “shopping online for flat-panel TVs” ranked 22nd — 18 places below “consumed ‘Miami travel’ content.” Miami travel?

“Not Chicago travel,” Morgan says. “Not Europe travel. Not business travel. Don’t ask me why. But here’s the incredible thing: No. 1 — and significantly above the others — was people looking at military content. It made no sense. Then I talked to a friend of mine who had been an officer in the first Iraq war. I said, ‘What’s going on?’ He said, ‘That’s easy. The kids in the military are huge video-gamers. They get big, fat signing bonuses, and their housing is free. They don’t need cars. So they buy big TVs.’”

Garfield’s extensive exploration of the history and progress of marketing (and there’s a lot more in said exploration, including a trip to Israel) ultimately led to his plea to Zuckerberg:

Dude, blessed as you are with the megaphenomenon called Facebook, why are you just another popular utility in search of a business model? Could it be that you’re fixated on the notion that your revenue must come from typical advertising? Haven’t we agreed that advertising is problematic, because users are suspicious of it, resent it and employ every means to avoid it? Yes, we have. Yet the same people 1) love goods and services; 2) crave information; and 3) are so fabulously self-involved that they display every last detail about themselves, their tastes, their preferences, their favorites, their hobbies, their embarrassing drunken photos, their damn near everything right on your site.

So why in the world do you not have a big honking box on the bottom of every Facebook page titled “What You’ll Like” or “YouStuff” or “The Mirror” with a category-by-category selection of books, music, films, videos, news articles, websites, tennis gear, shoes, power tools, specialty foods, flea and tick protection, you name it?

Not advertising. Capitalizing on the unlimited collaborative filtering made possible by Facebook’s oceans of data. I like it.

The other post, Facebook is Stealing Your Hard-Earned Rankings by Adam at Seer Interactive, is along similar lines: FB has the opportunity to become the Web’s ultimate affiliate marketer, thanks to its amazing progression through the SERP ranks:

Searches for Victoria?s Secret, Nike Shoes, Vodka, and Coldplay bring back Facebook as the 28th, 30th, 51st, and 28th result respectively. While ankings 30th isn?t impressive, the fact remains that Facebook isn?t trying and they were also not ranking AT ALL a few days ago. It?s hard to know when Google started indexing because these weren?t on anyone?s radar at position #452, but being at #28 definitely raises a brow to how far these could move.

Savvy Adam spots the business opportunity:

A few businesses have been able to capitalize like Rhapsody, iTunes and Amazon. They are taking advantage of iLike pages that are beginning to show up (System of a Down ranks 53) by having favorite songs downloadable through the band homepage… So if you?re able to download songs, buy shoes, and purchase lingerie from links on these pages, what is stopping Facebook from becoming the largest affiliate marketer on the web?

Both of these articles have something in common, and it’s something that I’ve been seeing for some time as core to future success on the Web. If your offering doesn’t work in with what your customer is already doing, they will resent you. If your offering enhances what your customer is already doing, they will love you. This is why text ads work better on Google than anywhere else—because they enhance what the customer is already doing.

What is your customer doing? How can your product or service enhance it?

Earlier this week, the LA Times ran an interview with Google’s Marissa Mayer on the momentousness of the company’s tenth birthday and where the big G is headed. Here’s what she had to say about where they’re headed in the next ten years.

I think there will be a continued focus on innovation, particularly in search. Search is an unsolved problem. We have a good 90 to 95% of the solution, but there is a lot to go in the remaining 10%. How do we monetize new forms of content as they come online such as video, maps and books. How do we help content providers transition their businesses online and build healthy businesses.

Mayer later clarified the comment:

We?re all familiar with 80-20 problems, where the last 20% of the solution is 80% of the work. Search is a 90-10 problem. Today, we have a 90% solution: I could answer all of my unanswered Saturday questions, not ideally or easily, but I could get it done with today?s search tool. (If you?re curious, the answers are below.) However, that remaining 10% of the problem really represents 90% (in fact, more than 90%) of the work. Coming up with elegant, fitting and relevant solutions to meet the challenges of mobility, modes, media, personalization, location, socialization, and language will take decades. Search is a science that will develop and advance over hundreds of years. Think of it like biology and physics in the 1500s or 1600s: it?s a new science where we make big and exciting breakthroughs all the time. However, it could be a hundred years or more before we have microscopes and an understanding of the proverbial molecules and atoms of search. Just like biology and physics several hundred years ago, the biggest advances are yet to come. That?s what makes the field of Internet search so exciting.

This description makes me think that we’re using the wrong metaphor. “Search” is not a single problem to be solved, any more than biology or physics is a single problem. It is an evolving field of study, deeply integrated with and dependent on the behavior of evolving human beings.

In cycling, we say you can never beat a mountain, only yourself. The mountain is there, immovable and immutable; it doesn’t care how fast you ascend it. All you can do is try to climb it faster than you did the last time.

I believe search is like that. How will we ever be able to say it’s solved? Surely it will ALWAYS be improvable, challenging, and changing. It’s like saying, “The marriage has been 90 to 95 percent solved.”

When asked which new initiative is most promising in terms of another source of revenue, Mayer responded:

We will certainly remain centered on ads. We are also looking at new ways to deploy ads: YouTube advertising for a better way to monetize video content, scanning content with book search for advertising that monetizes better. We are also exploring paid services, such as paying for Picasa storage or additional storage in Gmail. These are small businesses that are just getting started and this is a new business model for us. But it is one thing we are experimenting with.

Right now, there are a lot of companies out there that are hoping to stumble on a way to monetize their big ideas, and it may comfort them to know that Google has the same hope. It will be great when Google (or somebody) comes up with a better way to monetize video content. I’m surprised to hear her talk about paid storage as a future source of revenue, given that $0.00 is the future of business.

Monetization is a problem that is textads% solved, but the remaining videostorageandsocialnetworking% will take decades.

I really admire Mayer for what she’s accomplished, and, although I sometimes take Google to task on this blog, I really admire Google as well. That doesn’t mean the company’s perfect, and they clearly don’t have all the answers — which will guarantee that the second ten years will be as fascinating as the first.

Where do you see Google going over the next decade?

Hat tip: ZDNet