Google's Excellent Adventure

Like many people in the industry, I'm now resigned to the fact that every utterance from Google headquarters in Mountain View is going to take on the mystical significance of the Dead Sea Scrolls( Let's face it: When your market cap is bigger than China's gross national project, you've earned that kind of pulpit. Also like many in our industry, I look at Google with a measure of ambivalence. I'm amazed and delighted by what they've accomplished and by the brand and consumer relationship they've engineered. But at the same time, I don't see them as the arbiter of the marketing future, as some do.

Case in point was Monday's announcement that Google was stepping beyond search and would sell brand-oriented display advertising on its Adsense network ("Google to Sell Ads Not Related to Searches," New York Times, April 25, 2005 This may seem like a really logical step to the folks in Mountain View, and a relatively painless one at that. As I read the releases, Google would maintain its purer-than-thou approach to user interface and search quality on and its other owned-and-operated sites, while using its far-flung and less visible "network" of publishing partners to sell targeted display advertising to the highest CPM bidder. So the company can quietly abandon its "only ads that people want to see" mantra on the network - arguably getting them into the 90% of the ad market that's not about search and directory - while also keeping its brand image intact. Interesting plan, and perhaps one that will give the financial markets the comfort they need. But as a strategy for dominating the advertising market, I don't think it washes. (Note of full disclosure: Upstream Group works very closely with Yahoo! in its display advertising business, but we've not been engaged in any discussion of the extended Yahoo! site network reference in the New York Times article.) Some thoughts:

  • THE LONG MARCH: Part of what has made Google a darling in the financial markets is its rapid climb. The company built a better mousetrap and rewrote the book on "intention-based advertising" (my own term). Direct response and directory advertisers jumped all over the pay-for-performance, guaranteed-outcome model and spiked Google's numbers big time. But relative to the great big advertising world, this was like Napoleon conquering Belgium, Spain and Italy: good terrain, but fairly close with similar language patterns. But in order to get a significant share of the 90% of the total advertising market that's "persuasion-based" (again, my term) - some call it brand advertising - Google needs to make the long march across the steppes to Moscow. There's a whole new set of challenges in this, and they can't all be solved by technology. Perhaps Google is totally prepared for this. Perhaps.
  • THE EMPIRE MODEL: While I understand Google wanting to simultaneously cash in on the brand advertising market while keeping its own sites "clean," I just don't see how it can really be done. It's hard enough for a company to live and breathe one core identity. In this model, there would be two: one for the mother country and one for the colonies. A big selling point for Google has been its focus: It's a company that is centered on a couple of core principles. Anyone who doesn't see this move diluting those principles - Google's identity - is underestimating the scope of the change.
  • HUMAN INTERVENTION: Conceding that there is interest in Google's network offerings among blue chip advertisers, I still believe those advertisers are going to demand expensive humans to hold their hands and steward their business. As I understand it, Google's approach remains based on automation and auctions, in which technology is still the prime intermediary. There are obvious reasons to go this way in a market where millions of small businesses will buy keywords with credit cards. But will Madison Avenue accept the model?
  • LOCATION, LOCATION, LOCATION: I've long maintained that major advertisers are not interested in "the whole Internet," but rather in a relatively small portion of it; the clean, well-lighted places where brands can thrive and connect with well-defined audiences. With Adsense, Google has been able to place pay-per-click ads on some terrific sites on a blind-basis. But given that advertisers will now be able to say where they want to appear, how quickly do those sites opt out of the network? Without premium sites, Google may still become the biggest and most lucrative aggregator on the web, but it doesn't grab the brass ring with Madison Avenue.

This is not about bashing Google: they are and will remain an immensely powerful force in our world. The message is more to the rest of the industry, and to advertisers. What makes headlines or makes the stock jump doesn't necessarily change the market. There is a thriving online advertising business out there today that's driven by human beings and content and audiences. If that weren't the case, why would Google want to go there?

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