Failure of Pixel 2 exposed a larger problem: Google's ads don't work

Posted:
in iPhone edited February 21
Across 2017, Google heavily promoted its Pixel phone brand. Despite being lauded as being "the world's most valuable brand" and its status as the world's largest purveyor of advertising, all of Google's global efforts, including DoubleClick and YouTube, resulted in inconsequential Pixel sales. Worse than its failure to sell hardware is the fact that Google has proven that its advertising simply isn't very effective.

Pixel 2
Pixel 2 and 2 XL were premium priced, poor sellers

The embarrassing performance of the micro-Pixel

Last fall, Google released two second-generation "Pixel 2" phones, one it created in partnership with HTC and a larger 2 XL it produced with LG. However, across all of 2017--including the critical holiday launch quarter--Google's total annual sales of Pixel phones amounted to just 3.9 million units worldwide, according to research director Francisco Jeronimo of IDC.

That's fewer phones than Apple sells in a week, but nobody expected Google to outsell iPhones. A better comparison would be Microsoft's ill-fated Windows Mobile initiative, which struggled along for years trying to establish a market. However, by 2015 it was clear that Microsoft's phone sales were dead. That year, it sold just over 4 million "Windows Phones" in the fourth quarter, down from just over 10 million phones in Q4 2014.

Across the full year of its collapsing sales of Windows phones in 2015, Microsoft sold just over 26 million Windows Phone devices, or 666% more than Google's total sales of Pixel phones last year. Google's best-ever sales of Pixel branded hardware is far worse than the performance that caused the termination of Microsoft's dead-end efforts in smartphone hardware.


Pixel and Pixel 2 sold worse last year than one quarter of 2015 Windows Phones

But wait, it's growing not showing

Some of Google's fan blogs attempted spin 3.9 million in annual sales as a cause for optimism. 9to5 Google tried to turn the frown upside-down with a cheery comparison, noting that "the company is quickly picking up ground with its Pixel lineup, with sales in the past year doubling," adding that "it shows great growth for the company's lineup."

It then had to acknowledge that "the 'double' is slightly misleading."

That's because Google Pixel sales in 2016 only included the original launch quarter of the original Pixel and Pixel XL. The "increase" referred to all sales of Pixel phones in 2017, including the original Pixel 1 models that sold across the first three quarters of the year and continued to sell as discounted models when the Pixel 2 models were introduced.

"Regardless of which model these numbers show off the most, this is good news for Google," the site insisted. "3.9 million phones may not be a huge number or portion of the smartphone market, but it's pretty excellent for a new lineup."

That's false. But more importantly: why is Google continuing to invest in Pixel (having acquired HTC's design group) after failing to find significant sales for the new phone--which is currently selling at one-sixth the annual volume that caused Microsoft to give up on its entire phone hardware strategy?

Google isn't happy with Android

Why isn't Google investing in supporting its Android platform in general terms, rather than creating proprietary Pixel hardware and services that are exclusive to a device it sells only under its own brand, and not shared with its manufacturing partners nor its broader licensees? Quite obviously, giving away Android has done very little for Google. Android has been nothing but an expensive failure for Google. If it weren't, Google would still be advertising its Android experience the way it did back in 2010, when it still believed that was a viable strategy

Generic Android is certainly not attracting valuable customers. To reach the demographics that appeal to its real customers (advertisers), Google has to pay Apple billions to remain the search provider for iOS. Expensive Google Pixel phones were supposed to attract the buyers of higher-end Androids (and perhaps some iPhone users), but they did not.

After mocking iPhones for being expensive and having a "dated look" in comparison with the latest bezel-free Androids with curved screens, Google's fans were forced to make excuses for the company's dated-looking Pixel 2 models with the highest prices ever, differentially largely by a portrait camera feature copying the previous year's iPhone 7.

Google was gunning to copy everything about Apple while abandoning everything unique about Android because Android has been nothing but an expensive failure for Google. If it weren't, Google would still be advertising its Android experience the way it did back in 2010, when it still believed that was a viable strategy.

Google can fail in hardware; it can't fail in advertising


Google's inability to make money in hardware isn't perceived as a problem. From Google TV to Google Glass to five years of Nexus phones to its Chrome and Pixel devices, hardware has always remained a money pit for Alphabet. The company dumped billions of dollars to acquire Motorola and Nest, establishing nothing more than two more failures and a series of fire sales. Nobody expects Google to be able to sell hardware.

Advertising is another matter. Google has consistently earned about 90 percent of its revenues from selling the paid placement of advertising. That $95 billion in ad revenue is Google's iPhone, the singular product it relies upon while it attempts to create new markets and products to diversify its business.

However, while Apple's sales of iPhones are growing more profitable at higher prices, Google's sales of advertising is becoming hard to sell and more expensive to offer.

The worst thing for Google right now would be to establish that its advertising simply isn't very effective. Yet that's exactly what the failure of Google Pixel is doing.

Across 2017, a variety of PR firms applauded Google for having the "worlds most valuable brand." Brand Finance was among the chorus, claiming that "the company remains largely unchallenged in its core search business, the mainstay of its advertising income."

David Haigh, the chief executive of Brand Finance, put his own firm's reputation on the line in writing that "Apple has struggled to maintain its technological advantage, with new iterations of the iPhone delivering diminishing returns, while the Chinese market is now crowded with local competitors."

Remember when the Chinese market didn't have local competitors? Such as back in the days of iPods when China didn't have any ability to listen to music at all--or right up into 2009 when Apple's iPhones weren't even officially sold in the country, but somehow the Chinese market still had the world's largest national phone carrier networks? None of Google's advertising had any real effect on consumer behavior. The ads didn't work and Pixel phones did not sell

Using the words "diminishing return," of iPhones is simply asinine, given that Apple has never earned less money, or has ever sold iPhones for more. What's actually diminishing is Google's profit margins on advertising.

And what's worse (for Google) is that no amount of native ads for Pixel phones--placed right on Google's search page, the most valuable property the company has--managed to push any commercially significant slice of potential buyers to go slightly out of their way to acquire one. That's bad.

In addition to its own search page, Google also relentlessly pushed Pixel across its Double Click ad space, forcing the brand into squares and rectangles across blogs and within ad-sponsored apps. It also promoted Pixel relentlessly on YouTube, supposedly reaching the very demographic of buyers who love to open packages. None of Google's advertising had any real effect on consumer behavior. The ads didn't work and Pixel phones did not sell.



Not even Google's ads offering $300 refunds could save Pixel 2

Google sycophants worth as little as Google ads

Google wasn't advertising Android. It wasn't extolling the virtues of its open platform, or promoting how great it is to side-load apps or to download and compile your own operating system kernel. The Pixel branding downplays all of these once-touted ideas to deliver as much of an iPhone-like experience as possible: push-button simplicity where you touch the button and a perfect photo is magically generated for you.

For Pixel, Google promoted one of the most popular features of smartphones: the camera. It promoted the idea that one feature--a version of Apple's Portrait mode background blurring--was so great that it didn't matter that Pixel 2 lacked a zoom lens or a faster processor or a higher quality display.

This might have seemed like an effective advertising campaign strategy. Google got every one of its blogging partners to fall in line, from the Verge to Toms Guide. They all announced that the only thing that mattered in a new phone was the presence of a feature Apple had debuted the previous year.

Despite this lockstep marketing from every major Google advertiser, including breathless praise for a feature even when it was clearly not working properly (Dieter Bohn of the Verge insulted his readers with "it looks good" when posting a terrible portrait example), Pixel 2 sold incredibly poorly over the holidays--worse than Windows Phone in its death throes.

This is what portrait mode looks like on the Pixel 2. It looks good. https://t.co/55fBkRxzyb pic.twitter.com/XzjVkDvigm

-- Dieter Bohn (@backlon)


Clearly, there wasn't really much value in the phoniness of Google fan-bloggers to call a failure "success" and to excitedly award blue ribbons to a middling, rebranded HTC or LG phone with a spectacularly high price.

It wasn't just Google's own ads, its paid-placement homepage and its partner blogs that failed to sell any commercially significant number of Pixel phones. Google also paid others to advertise its brand. It blanketed conventional advertising spaces including the New York subway and roadside billboards. It put ads on conventional TV, on top of the advertising it forced all over the place on YouTube.

This all cost a lot more money than sales of a scant number of phones returned in revenue. However, the biggest, most expensive thing Google demonstrated was that its Paid Placement, DoubleClick and YouTube ads aren't very effective at targeting potential buyers, and that Google itself isn't very good at framing advertisement messages capable of swaying members of the public to make a sale--even when that product is one Google has worked to create itself, and targeted at the very tech-savvy, ready to spend customer that Google thinks it best knows how to reach.

That's all far worse than just flubbing another phone.
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Comments

  • Reply 1 of 94
    SoliSoli Posts: 7,678member
    Wow! That Portrait Mode image is awful. I can't believe Bohn would say that looks good. If you click on the link to his post many people point out how it didn't even do the right side of the image to which he defends by saying it was good, not great.

    If that's the bar then here's a good copy of the Mona Lisa and two great buildings next to a good one.


    edited February 21 Muntzchabigairnerdpakittjbdragonpscooter63lordjohnwhorfinrob53chiawatto_cobra
  • Reply 2 of 94
    Whenever I see a toyingly curious double-meaning heading such as "Failure of Pixel 2 exposed a larger problem: Google's ads don't work" in my AppleInsider RSS feed I know for sure that it's going to be a "DED + crosshairs = very readable piece." Never once been disappointed!
    Muntztmaylkruppairnerdjbdragonbrucemcpropodpscooter63lordjohnwhorfinchia
  • Reply 3 of 94
    What is the purpose of writing a Google bashing article other than it makes some people feel good to knock one of Apple’s competitors? Is there some worry about the iPhone X that AI feels it necessary to trash the Pixel?

    Considering this is an Apple centric site I’d love to see an editorial about, say, Siri and what Apple can and should do to make it better or maybe a discussion on the rumored software changes and how Apple can improve their software processes and quality going forward. Or maybe a piece about what would be good to see software wise in the future for the HomePod. A Siri intent for music and podcasts? The ability to recognize different voices and offer multi user support? These are just a few examples. There are plenty of editorials and pieces about Apple that could generate good discussion. I wish more rumor sites would run  pieces that could generate this kind of discussion. 9to5Mac does on occasion but they seem to be the only one.
    airnerdpakittmuthuk_vanalingamwilliamlondonbig8ceDracarys
  • Reply 4 of 94
    The pixel 2 is only sold in a few countries which are Australia, Canada, Germany, Italy, Puerto Rico, Spain, United Kingdom and United States, so you have to take that into account with the sales numbers.

    At the end of the day the pixel 2 has been rated as a superb phone, and most of those educated in this business seems to carry one and use it as their main driver, stipulating the camera is incredible.

    Also Samsung makes prettier phones at the pixel 2 price range, the uneducated don't take into account software updates or unlimited photo and video backups and no bloat at the point of sale.

    Unless the sales staff advise their customers of this the customer will walk out with a Samsung everytime.
    edited February 21 williamlondonwisey
  • Reply 5 of 94
    saltyzip said:
    The pixel 2 is only sold in a few countries which are Australia, Canada, Germany, Italy, Puerto Rico, Spain, United Kingdom and United States, so you have to take that into account with the sales numbers.

    At the end of the day the pixel 2 has been rated as a superb phone, and most of those educated in this business seems to carry one and use it as their main driver.
    Educated in what business? Shilling? I’ve seen like 3 pixel phones in the wild in NYC.
    mike1airnerdracerhomie3markbyrnlordjohnwhorfinchiarandominternetpersonwatto_cobrajony0lolliver
  • Reply 6 of 94
    tmaytmay Posts: 2,755member
    saltyzip said:
    The pixel 2 is only sold in a few countries which are Australia, Canada, Germany, Italy, Puerto Rico, Spain, United Kingdom and United States, so you have to take that into account with the sales numbers.

    At the end of the day the pixel 2 has been rated as a superb phone, and most of those educated in this business seems to carry one and use it as their main driver, stipulating the camera is incredible.

    Also Samsung makes prettier phones at the pixel 2 price range, the uneducated don't take into account software updates or unlimited photo and video backups and no bloat at the point of sale.

    Unless the sales staff advise their customers of this the customer will walk out with a Samsung everytime.
    "most of those educated in the business"

    Which business would that be?
    mike1airnerdracerhomie3pscooter63chiawatto_cobrajony0lolliver
  • Reply 7 of 94
    Muntz said:
    saltyzip said:
    The pixel 2 is only sold in a few countries which are Australia, Canada, Germany, Italy, Puerto Rico, Spain, United Kingdom and United States, so you have to take that into account with the sales numbers.

    At the end of the day the pixel 2 has been rated as a superb phone, and most of those educated in this business seems to carry one and use it as their main driver.
    Educated in what business? Shilling? I’ve seen like 3 pixel phones in the wild in NYC.
    Everybody in the tech industry knows the Pixel 2 is the best smartphone camera

    I've just read this tweet #shotonpixel


    Be different not the same!
    williamlondon
  • Reply 8 of 94
    Rayz2016Rayz2016 Posts: 3,797member
    Muntz said:
    saltyzip said:
    The pixel 2 is only sold in a few countries which are Australia, Canada, Germany, Italy, Puerto Rico, Spain, United Kingdom and United States, so you have to take that into account with the sales numbers.

    At the end of the day the pixel 2 has been rated as a superb phone, and most of those educated in this business seems to carry one and use it as their main driver.
    Educated in what business? Shilling? I’ve seen like 3 pixel phones in the wild in NYC.
    That’s three more Pixel phones than I’ve ever seen. 
    mike1racerhomie3jbdragonpscooter63lordjohnwhorfinchiarandominternetpersonwatto_cobraanton zuykovjony0
  • Reply 9 of 94
    Rayz2016Rayz2016 Posts: 3,797member

    What is the purpose of writing a Google bashing article other than it makes some people feel good to knock one of Apple’s competitors? Is there some worry about the iPhone X that AI feels it necessary to trash the Pixel?

    Considering this is an Apple centric site I’d love to see an editorial about, say, Siri and what Apple can and should do to make it better or maybe a discussion on the rumored software changes and how Apple can improve their software processes and quality going forward. Or maybe a piece about what would be good to see software wise in the future for the HomePod. A Siri intent for music and podcasts? The ability to recognize different voices and offer multi user support? These are just a few examples. There are plenty of editorials and pieces about Apple that could generate good discussion. I wish more rumor sites would run  pieces that could generate this kind of discussion. 9to5Mac does on occasion but they seem to be the only one.
    Most of the stuff you mentioned is covered by other discussions going back weeks. 
    edited February 21 airnerdracerhomie3williamlondonchiawatto_cobrammatzjony0lollivergilly33
  • Reply 10 of 94
    Rayz2016Rayz2016 Posts: 3,797member

    saltyzip said:
    The pixel 2 is only sold in a few countries which are Australia, Canada, Germany, Italy, Puerto Rico, Spain, United Kingdom and United States, so you have to take that into account with the sales numbers.

    In any one of those countries, Google should have been able to shift that total yearly sales. 

    The problem is simple: most Android buyers are at the bottom end of the market. At the top end, there doesn’t appear to be enough room to support another player, and Samsung make very good phones (when they’re not setting fire to cars). 
    edited February 21 mike1pakittairnerdracerhomie3propodpscooter63lordjohnwhorfinchiawatto_cobrajony0
  • Reply 11 of 94
    gatorguygatorguy Posts: 18,731member
    Heck, I've been saying for years that Google sucks at marketing their products. Just look at the Home Max for example: Barely a whisper of marketing buzz from Google, unlike Apple no "amazings" and "magicals" and trotting out near daily mentions delivered by well-placed 3rd party media friends of Apple to spread their story for them.  Until it began receiving pretty favorable reviews prompted by comparisons to Apple's HomePod (which Apple invited) almost zero media coverage of the HomeMax, and what there was tended to be negative, too much bass and too muddy in the mids being common mentions. Then Apple releases the HomePod, their marketing machine goes into overdrive to shine a bright and focused light on smart-speakers and now the media suddenly takes notice the HomeMax (among some others) is actually pretty good, maybe not so bass-y and muddy afterall.

    Google marketing of Google products is the antithesis to Apple's. They should be thankful there's a marketplace marketing pro like Apple to raise awareness as Google evidently doesn't particularly care about putting the proper team and resources together to do so for themselves. But they want to be taken seriously about hardware. Well OK then, good luck with that. Better pay more attention to Apple showing the right way to promote yourself. Google may know the "what" but they're awful at the "why". 

    Somehow tho the article ends up seriously confused by the difference between online ad placements for companies and brands who can vette the effectiveness of Google-placed ads  for themselves ( and evidently pretty darn satisfied they work considering the $B's they give em) and Google marketing of their own products. The two are hardly one and the same any more than they are for Apple. The article doesn't seem to recognize that.
    edited February 21 muthuk_vanalingam
  • Reply 12 of 94
    SoliSoli Posts: 7,678member
    gatorguy said:
    Heck, I've been saying for years that Google sucks at marketing their products.
    They're not used to not having their products come to them in droves to hand over their personal information. :smiley: 
    chabigairnerdtmaypscooter63Rayz2016macky the mackywatto_cobralolliver
  • Reply 13 of 94
    gatorguygatorguy Posts: 18,731member
    Soli said:
    gatorguy said:
    Heck, I've been saying for years that Google sucks at marketing their products.
    They're not used to not having their products come to them in droves to hand over their personal information. :smiley: 
    LOL. :)
    Touché sir.
    edited February 21
  • Reply 14 of 94
    Great piece, as usual, by DED! Good thing also that one could almost read through this one while holding his breath... DED does get long winded from time to time.

    I’m sure am proud of myself of calling Dieter out on his tweet, so many months ago. I haven’t troubled myself with any of his “material” ever since—in fact, I pretty much abandoned The Verge... too many agendas (conflicted ones, on top of that) in there.
    watto_cobra
  • Reply 14 of 94
    lkrupplkrupp Posts: 6,091member
    saltyzip said:
    The pixel 2 is only sold in a few countries which are Australia, Canada, Germany, Italy, Puerto Rico, Spain, United Kingdom and United States, so you have to take that into account with the sales numbers.

    At the end of the day the pixel 2 has been rated as a superb phone, and most of those educated in this business seems to carry one and use it as their main driver, stipulating the camera is incredible.

    Also Samsung makes prettier phones at the pixel 2 price range, the uneducated don't take into account software updates or unlimited photo and video backups and no bloat at the point of sale.

    Unless the sales staff advise their customers of this the customer will walk out with a Samsung everytime.
    Bottom line? Only stupid people buy iPhones. Can’t you trolls come up with something original instead of the same old tripe?
    tmaywilliamlondonchiarandominternetpersonjony0lolliver
  • Reply 16 of 94
    saltyzip said:
    Muntz said:
    saltyzip said:
    The pixel 2 is only sold in a few countries which are Australia, Canada, Germany, Italy, Puerto Rico, Spain, United Kingdom and United States, so you have to take that into account with the sales numbers.

    At the end of the day the pixel 2 has been rated as a superb phone, and most of those educated in this business seems to carry one and use it as their main driver.
    Educated in what business? Shilling? I’ve seen like 3 pixel phones in the wild in NYC.
    Everybody in the tech industry knows the Pixel 2 is the best smartphone camera

    I've just read this tweet #shotonpixel


    Be different not the same!
    What’s a Pixel?
    watto_cobralolliver
  • Reply 17 of 94
    Note that Apple's original goal for iPhone's first full calendar year was a very modest 10 million units (it sold 13). And that was a few years before iPhone took off like a rocket, and even more years before everybody and their sister absolutely had to have a smartphone in their pocket. The product category is a decade and running, but Google sells 3.9 million units its first calendar year.
    tmaychiawatto_cobralollivergilly33
  • Reply 18 of 94
    gatorguygatorguy Posts: 18,731member
    saltyzip said:
    Muntz said:
    saltyzip said:
    The pixel 2 is only sold in a few countries which are Australia, Canada, Germany, Italy, Puerto Rico, Spain, United Kingdom and United States, so you have to take that into account with the sales numbers.

    At the end of the day the pixel 2 has been rated as a superb phone, and most of those educated in this business seems to carry one and use it as their main driver.
    Educated in what business? Shilling? I’ve seen like 3 pixel phones in the wild in NYC.
    Everybody in the tech industry knows the Pixel 2 is the best smartphone camera

    I've just read this tweet #shotonpixel


    Be different not the same!
    What’s a Pixel?
    It's a very appropriate name...
    Just a tiny dot in the big picture.
    rob55GG1muthuk_vanalingamchiarandominternetpersonjony0darelrex
  • Reply 19 of 94
    mike1mike1 Posts: 1,662member
    saltyzip said:

    Unless the sales staff advise their customers of this the customer will walk out with a Samsung everytime.
    Clearly, the sales figures don't support that statement.
    watto_cobra
  • Reply 20 of 94
    SoliSoli Posts: 7,678member
    saltyzip said:
    Muntz said:
    saltyzip said:
    The pixel 2 is only sold in a few countries which are Australia, Canada, Germany, Italy, Puerto Rico, Spain, United Kingdom and United States, so you have to take that into account with the sales numbers.

    At the end of the day the pixel 2 has been rated as a superb phone, and most of those educated in this business seems to carry one and use it as their main driver.
    Educated in what business? Shilling? I’ve seen like 3 pixel phones in the wild in NYC.
    Everybody in the tech industry knows the Pixel 2 is the best smartphone camera

    I've just read this tweet #shotonpixel
    [tweet]

    Be different not the same!
    What exactly are defining as being different?
    watto_cobralolliver
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