marketing

On Technology Advancements in the Grocery Store

readingbyeugene Leave a comment

The Los Angeles Times reports how Ralphs, a grocery store chain, is using technology to speed up checkout times for customers:

Known as QueVision, the system uses hidden infrared cameras with body heat trackers to figure out how many customers are shopping at any given time. Managers use that information to redeploy workers to the cash registers when things get busy.

It’s already paying off. QueVision has trimmed the average time it takes to get to the front of the line to roughly 30 seconds from the national average of four minutes, a Ralphs spokeswoman said.

The checkout system is part of a long-overdue effort by traditional grocery chains to evolve and stay competitive through the use of technology.

I remember reading about this on Tesco’s virtual store:

In 2011, Tesco launched its futuristic Homeplus market at a Seoul subway stop. There’s no food in this virtual grocery store, only interactive walls around the station that display photos of fruit, vegetables, milk and other grocery staples. Using their smartphones, commuters can buy these products by photographing QR codes printed on the images and paying through their phones. Tesco delivers the purchases to customers’ homes the same day.

The article cites something else worth pondering: the grocery store industry is a $518 billion business in the United States.

 

On Etsy’s Crumbling Economy

readingbyeugene 1 Comment

Kevin Morris summarizes the crumbling Etsy marketplace — whereby Chinese manufacturers are infiltrating the handmade moniker of Etsy by flooding Etsy with cheaply manufactured, mass-produced items. I had no idea it was this bad.

Take a look at the “Infinity Ring,” a delicate brass loop coated with a silver sheen and topped with rhinestones and crystal. In pictures of the factory where it’s made, you can see rows of workers in surgical masks bent over dusty tables, not far from bulky industrial machines. From ports in Ningbo and Shanghai, the Yiwu Daihe Jewelry Corp. exports the ring to anywhere in the world at 50 cents a piece.

You can buy it on Etsy’s most popular jewelry store for $15.

How? To most Etsy users, the obvious answer is that Laonato, the store, is buying the rings wholesale from the factory, then pawning them off as handmade goods, reaping a monstrous 2,900 percent profit. That practice is known as “reselling,” and it’s a subject of intense controversy on the site. But like with a lot of things on Etsy—where the entire economy operates behind the shroud of the Internet—easily drawn assumptions and reality rarely align as neatly as you’d expect.

Continuing:

Laonato’s story might seem hard to believe, but there are actually a lot of Etsy stores getting ripped off by Chinese manufacturers—a second front in what seems like an uncoordinated war on the site’s hobbyists and single-person shops.

Trish Hadden’s bags are definitely handmade. The 53-year-old flight attendant from Albuquerque, N.M., sews her personalized label into each one, which she sells for anywhere between $12 for smaller purses to $60 for a handbag.

But like with Laonato’s jewelry, you can find Hadden’s bags on Alibaba—the commerce site that connects Chinese manufacturers to wholesale purchasers around the world and claims to be as big as Amazon and eBay confined—where they’re offered by the Hangzhou Dawnjoint Business and Trading Company for $3 to $4 apiece. The company, based out of the capital city of Zhejiang province, didn’t respond to a Daily Dot request for comment. It’s been plundering more than Hadden’s designs. The firm has stolen her photographs—which included images of her hand-sewn, personalized tag—and superimposed their own store’s logo on top.

As usual, caveat emptor, and all that.

On Selling and Storytelling

readingbyeugene 1 Comment

What is the one of the most important elements in selling a particular commodity? Sure, usefulness/practicality matters. But what’s even more important is the story behind the product. The emotional connection that people make to stories cannot be discounted. Ty Montague reminds us of this narrative in The Harvard Business Review:

Back in the summer of 2006, New York Times Magazine columnist Rob Walker was mulling the question of what makes one object more valuable than another. What makes one pair of shoes more valuable than another pair if they both deliver on the functional basics of comfort, durability, and protection? Why does one piece of art cost $8,000,000 and another, $100? What makes one toasterworth $20 and another worth nearly $400 if they both make toast? As Walker turned these questions over in his mind he concluded that it is not the objects themselves, but the context, the provenance of the objects, that generates value. In other words, the value isn’t contained in the objects themselves, but in the story or the meaning that the objects represent to the owner.

Walker decided to test this conclusion in a simple and direct way. With the help of a friend, he began buying random, worthless, or low-value objects at tag sales and thrift shops. The cost of the objects ranged from one to four dollars. An old wooden mallet. A lost hotel room key. A plastic banana. These were true castoffs with little or no intrinsic worth.

Next, Walker asked some unknown writers to each write a short story that contained one of the objects. The stories weren’t about the objects, per se; but they helped to place them in a human context, to give them new meaning.

When Walker put the objects, along with their accompanying stories, up for sale on eBay, the results were astonishing. On average, the value of the objects rose 2,700%. That’s not a typo: 2,700%. A miniature jar of mayonnaise he had purchased for less than a dollar sold for $51.00. A cracked ceramic horse head purchased for $1.29 sold for $46.00. The value of these formerly abandoned or forsaken objects suddenly and mysteriously skyrocketed when they were accompanied by a story.

You can see the results of that fascinating project here. It is time that we all learn to tell better stories.

Comment Less, Contribute More, Retweet None

readingbyeugene Leave a comment

From Seth Godin’s brief take on why businesses fail:

What marketing mistake do most small businesses make? 

They believe in the mass market instead of obsessing about a micro market. They seek the mass market because it feels harder to fail–there’s always one more stranger left to bother. It’s the small, the weird, and the eager that will make or break you.

###

(via @swissmiss)

Ken Segall on the New Apple Genius Ads

readingbyeugene Leave a comment

Ken Segall, former Apple ad guy, doesn’t like the new Apple “Genius” ads that aired during the Olympics. I’m with him. They are cheesy, of poor quality, and don’t portray Apple and its users in good light. In a blog post “New Mac Ads: Landing with a Serious Thud,” Ken decided to “talk with himself” to rationalize the ads:

“Ken, you’re missing the obvious. Clearly these ads are targeted at first-timers, not for you.”

That’s a seemingly logical defense. It’s also a horrible one. How many great campaigns have you seen that appeal to one target group, but turn off everyone else? There’s no excuse for a campaign like that. Apple’s momentum is fueled by the enthusiasm of its core customers. The last thing it wants is to win new customers at the cost of looking ridiculous to its enthusiastic supporters.

“But how can one campaign appeal to both crowds?”

How soon we forget. If it pleases the court, I present Exhibit A: the now-legendary Mac vs. PC campaign, which delivered 66 fantastic ads over a period of four years. Like the new campaign, Mac vs. PC was also aimed at switchers, but guess what — it was a massive hit with every level of Mac owner, from novice to pro. Those ads actually galvanized the Mac crowd to heavy up on the preaching. And look at the iPad ads. They’re hugely attractive to people who never got the technology bug. But they’re also alluring to those who have been using computers for years. Hmm. Maybe it can be done? To defend the new Mac ads by saying “Hey, they’re not aimed at you” is just a naive view of advertising.

“The Apple Genius idea is really rich. What’s your problem?”

Actually, I agree. The “idea” is pretty good. I’m not convinced it’s worthy of an ongoing campaign, but there is some good comedy in the basic concept. The problem is, a good idea is only half of the winning formula in advertising. The other half is execution — and that’s where this campaign went south.

“Be honest now. That Genius guy is perfectly cast.”

You’re kidding, right? He does an excellent job of fitting the stereotype of an Apple Store Genius, but that’s not necessarily a good thing. These spots are actually cast as if they’re sitcoms — with exaggerated characters like the father-to-be in Labor Day, or the passenger in Mayday, or the sleezy PC store owner in Basically. The spots try to make their points through comedy alone, with little sense of authenticity in characters or situations.

“I laughed out loud more than once.”

I did think that concept of Mayday was funny. But the smiles were mighty hard to come by after that. If you’re going to go the sitcom route — and that’s a very big “if” — you’ll need some writers who are up to the task. The script for Basically just makes me squirm. It’s like going to open mike night at the local comedy club.

“I did wonder if it was a good idea to make customers seem so clueless.”

Therein lies another problem with this campaign. In the effort to show that the Genius is the most helpful guy in the world, Apple has created customers who, shall we say, are on the dim side. In past ads, Apple has shown “ordinary people doing extraordinary things,” simply because Apple products are so easy to use. Now we have thick people who want to be better, but need a Genius to help. Not exactly flattering.

“These ads are very unexpected. Isn’t that what Apple’s all about?”

It’s great to be unexpected. But if you’re not true to the brand, being unexpected just makes you look silly. The Mac vs. PC campaign was unexpected, but its cleverness was in sync with the Apple brand. Absolutely, these ads are very unexpected for Apple — just not of the quality we’re used to.

It’s the best takedown of the ads I’ve read yet, and from a guy who knows what’s he talking about.

Is Everything For Sale?

readingbyeugene Leave a comment

Michael J. Sandel, a political philosopher at Harvard, is the author of What Money Can’t Buy: The Moral Limits of Markets. Ahead of the book launch, in a post adapted for The Atlantic, he cites examples of things that are for sale around the world:

• A prison-cell upgrade: $90 a night. In Santa Ana, California, and some other cities, nonviolent offenders can pay for a clean, quiet jail cell, without any non-paying prisoners to disturb them.

• Access to the carpool lane while driving solo: $8. Minneapolis, San Diego, Houston, Seattle, and other cities have sought to ease traffic congestion by letting solo drivers pay to drive in carpool lanes, at rates that vary according to traffic.

• The services of an Indian surrogate mother: $8,000. Western couples seeking surrogates increasingly outsource the job to India, and the price is less than one-third the going rate in the United States.

• The right to shoot an endangered black rhino: $250,000. South Africa has begun letting some ranchers sell hunters the right to kill a limited number of rhinos, to give the ranchers an incentive to raise and protect the endangered species.

• Your doctor’s cellphone number: $1,500 and up per year. A growing number of “concierge” doctors offer cellphone access and same-day appointments for patients willing to pay annual fees ranging from $1,500 to $25,000.

• The right to emit a metric ton of carbon dioxide into the atmosphere: $10.50. The European Union runs a carbon-dioxide-emissions market that enables companies to buy and sell the right to pollute.

• The right to immigrate to the United States: $500,000. Foreigners who invest $500,000 and create at least 10 full-time jobs in an area of high unemployment are eligible for a green card that entitles them to permanent residency.

Also interesting is this list of (strange) things people do to make money:

• Sell space on your forehead to display commercial advertising: $10,000. A single mother in Utah who needed money for her son’s education was paid $10,000 by an online casino to install a permanent tattoo of the casino’s Web address on her forehead. Temporary tattoo ads earn less.

• Serve as a human guinea pig in a drug-safety trial for a pharmaceutical company: $7,500. The pay can be higher or lower, depending on the invasiveness of the procedure used to test the drug’s effect and the discomfort involved.

• Fight in Somalia or Afghanistan for a private military contractor: up to $1,000 a day. The pay varies according to qualifications, experience, and nationality.

• Stand in line overnight on Capitol Hill to hold a place for a lobbyist who wants to attend a congressional hearing: $15–$20 an hour. Lobbyists pay line-standing companies, who hire homeless people and others to queue up.

• If you are a second-grader in an underachieving Dallas school, read a book: $2. To encourage reading, schools pay kids for each book they read.

So is there a market for everything?

In its own way, market reasoning also empties public life of moral argument. Part of the appeal of markets is that they don’t pass judgment on the preferences they satisfy. They don’t ask whether some ways of valuing goods are higher, or worthier, than others. If someone is willing to pay for sex, or a kidney, and a consenting adult is willing to sell, the only question the economist asks is “How much?” Markets don’t wag fingers. They don’t discriminate between worthy preferences and unworthy ones. Each party to a deal decides for him- or herself what value to place on the things being exchanged.

###

Related:  One of the best pieces I’ve read on the black market for organs is this investigative piece in Bloomberg. Chilling.

How Companies Learn Your Secrets

readingbyeugene Leave a comment

As the ability to analyze data has grown more and more fine-grained, the push to understand how daily habits influence our decisions has become one of the most exciting topics in clinical research, even though most of us are hardly aware those patterns exist…

This is a fascinating New York Times piece that explores how stores monitor shoppers’ behavior and then market to them accordingly, with the hope they come back to the store and spend more money. The NYT piece focuses on Target, and in particular, pregnant shoppers… The central question: how could they get their advertisements into expectant mothers’ hands without making it appear they were spying on them? How do you take advantage of someone’s habits without letting them know you’re studying their lives?

First, the background of how Target monitors shoppers in stores using a unique Guest ID:

Also linked to your Guest ID is demographic information like your age, whether you are married and have kids, which part of town you live in, how long it takes you to drive to the store, your estimated salary, whether you’ve moved recently, what credit cards you carry in your wallet and what Web sites you visit. Target can buy data about your ethnicity, job history, the magazines you read, if you’ve ever declared bankruptcy or got divorced, the year you bought (or lost) your house, where you went to college, what kinds of topics you talk about online, whether you prefer certain brands of coffee, paper towels, cereal or applesauce, your political leanings, reading habits, charitable giving and the number of cars you own.

Much of the piece focuses on human behaviors, and how these behaviors become habits if they’re consistently repeated:

The process within our brains that creates habits is a three-step loop. First, there is a cue, a trigger that tells your brain to go into automatic mode and which habit to use. Then there is the routine, which can be physical or mental or emotional. Finally, there is a reward, which helps your brain figure out if this particular loop is worth remembering for the future. Over time, this loop — cue, routine, reward; cue, routine, reward — becomes more and more automatic. The cue and reward become neurologically intertwined until a sense of craving emerges. What’s unique about cues and rewards, however, is how subtle they can be.

My favorite part of the piece is about Febreze, a product that P&G initially marketed to combat orders. Unfortunately, it was a dud. Turns out, P&G was marketing Febreze as a *way* to remove odors, but what made it more effective was convincing people to use the product as a reward after the routine of cleaning (i.e., it was re-marketed as a reward):

And so Febreze, a product originally conceived as a revolutionary way to destroy odors, became an air freshener used once things are already clean. The Febreze revamp occurred in the summer of 1998. Within two months, sales doubled. A year later, the product brought in $230 million. Since then Febreze has spawned dozens of spinoffs — air fresheners, candles and laundry detergents — that now account for sales of more than $1 billion a year. Eventually, P.& G. began mentioning to customers that, in addition to smelling sweet, Febreze can actually kill bad odors. Today it’s one of the top-selling products in the world.

A note on how Target sent ads and coupons to expectant mothers without making them upset:

“We have the capacity to send every customer an ad booklet, specifically designed for them, that says, ‘Here’s everything you bought last week and a coupon for it,’ ” one Target executive told me. “We do that for grocery products all the time.” But for pregnant women, Target’s goal was selling them baby items they didn’t even know they needed yet.

“With the pregnancy products, though, we learned that some women react badly,” the executive said. “Then we started mixing in all these ads for things we knew pregnant women would never buy, so the baby ads looked random. We’d put an ad for a lawn mower next to diapers. We’d put a coupon for wineglasses next to infant clothes. That way, it looked like all the products were chosen by chance.

The conclusion is startling: your favorite department store will be (if it isn’t already) sending you coupons for products you desire before you even know you want them…

Profile of Manoj Bhargava, Creator of 5-Hour Energy

readingbyeugene 2 Comments

Fortune has a profile of Manoj Bhargava, the creator of the 5-Hour Energy drink. At $3 a bottle, creating this concoction has made Bhargava billions (he claims that he’s the wealthiest Indian in America). The energy drink is sold under the company Living Essentials, which doesn’t report revenue or profits (but a source with knowledge of its financials says the company grossed above $600 million last year on that $1 billion at retail).

Early on he realized he didn’t much care what sort of business he was in as long as he was winning at it. At 17 Bhargava noticed that blocks of low-­income homes in the roughest North Philly neighborhoods were being razed and cleared. Bhargava bought a 1.5-ton 1953 Chevy dump truck for $400 and started clearing out debris from the demolition. He’d find rats bigger than cats among the garbage and rubble. “The stench was mind-bending,” he says. He remembers hearing gunshots outside a crumbling house on crime-ridden Girard Avenue and learning an old man had been killed for $5. Still, Bhargava made $600 that summer—and resold the Chevy for $400. He didn’t care if the work was unglamorous. It was profitable.

He won a full scholarship to the Ivy League feeder Hill School before heading to college at Princeton in 1972. Bhargava lasted a year. The pretentious eating-club culture wasn’t really for him, and he didn’t find his math classes particularly challenging. “‘Annoyed’ would be a mild word for my parents’ reaction,” he says. He returned to Fort Wayne, Ind., where his parents had settled and his father owned a plastics company. “There were no jobs; it was a disaster,” he says. “It was right before the oil embargo, the stagflation era.” He started reading books about a Hindu saint who’d spent his life on a spiritual quest. That, he thought, was something worthwhile. In 1974 he moved to India.

Bhargava says he spent his 20s traveling between monasteries owned and tended by an ashram called Hanslok. He and his fellow disciples weren’t monks, exactly. “It’s the closest Western word,” he says. “We didn’t have bowler haircuts or robes or bells.” It was more like a commune, he says, but without the drugs. He did his share of chores, helped run a printing press and worked construction for the ashram. Bhargava claims he spent those 12 years trying to master one technique: the stilling of the mind, often through meditation. He still considers himself a member of the Hanslok order and spends an hour a day in his Farmington Hills basement in contemplative silence.

Bhargava would return to the U.S. periodically during his ashram years, working odd jobs before returning to India. For a few months he drove a yellow cab in New York. When he moved back from India for good, it was to help with the family plastics business at his parents’ urging. He spent the next decade dabbling in RV armrests and beachchair parts. He had no interest in plastics whatsoever but devoted himself to buying small, struggling regional outfits and turning them around. By 2001 Bhargava had expanded his Indiana PVC manufacturer from zero sales to $25 million (he eventually sold it to a private equity firm for $20 million in 2006). He decided to retire and moved to Michigan to be near his wife’s family. “Nobody moves on purpose to Detroit,” he says. His retirement lasted two months. He knew from his plastics success that the chemicals industry was ripe for exploiting. “Chemicals are really simple,” he says. “You mix a couple things together and sell it for more than the materials cost.”

Aside from this feature on him, you won’t really find Bhargava on the internet:

His paper trail is thin, consisting primarily of more than 90 lawsuits. This is his first press interview. “I’m killing it right now,” he says, adjusting a black zip-up cardigan from behind the table of a soulless conference room in a beige low-rise building in a suburban business park in Farmington Hills, Mich. “But you’ll Google me and find, like, some lawyer in Singapore.”

What’s most interesting to me is that Bhargava’s idea for 5-Hour Energy wasn’t new (he went to a trade show where he tasted an energy drink and copied its ingredients in 5-Hour Energy). What was novel was his idea of incorporating energy drink ingredients in a tiny package and effectively selling the product (having it on Wal-Mart store shelves certainly helped).

How a Con Artist Cost Google $500 Million

readingbyeugene Leave a comment

The Wall Street Journal has a remarkable story on Mr. Whitaker, a federal prisoner and convicted con artist, who was the lead actor in a government sting targeting Google that yielded one of the largest business forfeitures in U.S. history. For four months, Whitaker posed as an agent for online drug dealers in dozens of recorded phone calls and email exchanges with Google sales executives, spending $200,000 in government money for ads selling narcotics, steroids, and other controlled substances. In a stunning turn of events, Google agreed to pay a $500 million fine in 2011 to avoid prosecution. The story is behind a paywall, but you can read the major part below:

Mr. Whitaker’s path to undercover operative began in 2005, when he took millions of dollars in orders for Apple iPods and other electronics at below market prices and skipped town without filling the orders, according to his account and court documents. He hopscotched around the U.S. in a private jet, evading arrest and protected by a private security detail. He briefly rented a Miami mansion for $200,000 a month.

He fled to Mexico in 2006 and started an Internet pharmacy, selling steroids and human growth hormone to U.S. consumers through Google ads, he said. The two substances—sold in the U.S. by prescription only—are sought by body builders to add muscle and by older consumers seeking to slow the signs of aging; they aren’t approved in the U.S. for such uses. Google’s policy prohibited advertising their sale online.

“It was very obvious to Google that my website was not a licensed pharmacy,” Mr. Whitaker wrote to the Journal. “Understanding this, Google provided me with a very generous credit line and allowed me to set my target advertising directly to American consumers.”

Mr. Whitaker was arrested in Mexico in March 2008 for entering that country illegally and returned to the U.S. to face charges of wire fraud, conspiracy and commercial bribery in the iPod case. Mr. Whitaker told U.S. authorities about the alleged role Google played in helping his Mexico-based pharmacy.

Federal prosecutors, seeking to test the allegation, set up a task force in early 2009 with Mr. Whitaker’s help. On weekdays, he was escorted from the Wyatt Detention Facility in Central Falls, R.I., to a former school department building in North Providence, R.I. There, under the watch of federal agents, he set a snare for Google.

Posing as the fictitious Jason Corriente, an agent for advertisers with lots of money to spend, Mr. Whitaker bypassed Google’s automated advertising system to reach flesh-and-blood ad executives. Federal agents created http://www.SportsDrugs.net, designed to look “as if a Mexican drug lord had built a website to sell HGH and steroids,” Mr. Whitaker said in his account of the sting.

Google first rejected it, along with an anti-aging website called http://www.NotGrowingOldEasy.com. But the company’s ad executives worked with Mr. Whitaker to find a way around Google rules, according to prosecutors and Mr. Whitaker’s account.

The undercover team removed a link to buy the drugs directly—instead requiring customers to submit an online request form—and Google approved it. “The site generated a flood of email traffic from customers wanting to buy HGH and steroids,” Mr. Whitaker said.

To pay Google’s fees for the growing online traffic, undercover agents made payments every two or three days with a government-backed credit card.

Federal agents grew more brazen. They created a site selling weight-loss medications without a prescription, according to Mr. Whitaker and people familiar with the matter. They also added another site selling the abortion pill RU-486, which in the U.S. can only be taken in a doctor’s office.

Google’s ad team in Mexico approved the site, so U.S. consumers searching for “RU 486” would see an ad for the site. Google ad executives allowed the agents to add the phrase “no prescription needed.”

Days later, federal agents added links to buy the drugs directly. Such sales broke U.S. laws prohibiting the sale of drugs from outside the country and without a prescription. “There were photos of the drugs, descriptions, labels that clearly printed out that we were shipping without a prescription and it was from Mexico,” Mr. Whitaker said.

By the end of the operation in mid-2009, agents were buying Google ads for sites purportedly selling such prescription-only narcotics as oxycodone and hydrocodone. Agents also got Google’s sales office in China to approve a site selling Prozac and Valium to U.S. customers without a prescription.

“Google’s employees were instrumental in bypassing policy regarding pharmacy verification,” Mr. Whitaker told the Journal. “The websites were blatantly illegal.”

At the agents’ direction, Mr. Whitaker said he signaled his illegal intent to Google ad executives, including Google’s top manager in Mexico. As a tape recorder ran, he walked Google executives through the illegal parts of the websites. He said he told ad executives that U.S. Customs had seized shipments, for example, and that one client wanted to be “the biggest steroid dealer in the United States.”

Agents at first ignored the flood of orders. But as the ersatz sites morphed into full-fledged Internet pharmacies, they worried that clients, some sick, would be expecting medication.

So customers were told they had to become members by filling out an online form and to receive a “membership kit.” The kits never arrived, but it stopped users from placing orders, Mr. Whitaker said.

In the summer of 2009, U.S. agents visited Google’s headquarters in Mountain View, Calif., to tell corporate executives about the evidence they had collected. Prosecutors served grand jury subpoenas and eventually collected four million pages of internal emails and documents, as well as witness testimony.

The federal task force, which also included the Food and Drug Administration’s Office of Criminal Investigation, was preparing criminal charges against the company and its executives for aiding and abetting criminal activity online, prosecutors said.

Google hired attorney Jamie Gorelick, the former deputy U.S. Attorney General under President Bill Clinton. Two years later, the company reached a settlement with the government, a decision that stopped the likely introduction of emails to top Google executives had the case gone to trial.

“Suffice to say this was not two or three rogue employees at the customer service level doing this on their own,” said Mr. Neronha, the U.S. attorney. “This was corporate decision to engage in this conduct.”

Six private shareholder lawsuits have so far been filed against Google’s executives and board members, alleging they damaged the company by not taking earlier action against the illegal pharmacy ads.

Google has other potential legal exposure. Record companies and movie studios say Google willfully profits from illegal Internet piracy—an issue raised last week, when Congress dropped antipiracy legislation after opposition from Internet companies, including Google.

A 2011 study commissioned by NBC Universal estimated that nearly a quarter of all Internet traffic relates to pirated movies, TV shows and games. “There’s big business in being agnostic about what sites you place your ads on,” said Jay Roth, national executive director of Directors Guild of America, which backed antipiracy legislation.

Online scams pose another potential legal threat. Searches relating to mortgage refinancing have been among the most popular on Google, Eric Schmidt said in 2009 when he was chief executive. An investigation by Consumer Watchdog, a consumer advocacy group, found that a large number of companies selling “mortgage modification” on Google bore the hallmarks of fraud.

The special inspector general’s office for the Troubled Asset Relief Program in November said it had shut down 85 alleged online loan modification schemes that defrauded homeowners through Google ads.

“Google has a natural long-term financial incentive to make sure that the advertisements we serve are trustworthy so that users continue to use our services, and we aren’t afraid to take aggressive action to achieve that goal,” the company said.

To end the sting, federal agents killed off Mr. Whitaker’s fictional character. They sent the Google employees a final email, allegedly from Jason Corriente’s brother, saying the online entrepreneur died in a car crash.

Mr. Whitaker, who pleaded guilty and faced a maximum 65-year prison term, was sentenced in December to six years, following what federal prosecutors called “rather extraordinary” cooperation. He is due for release in two years.