Google: the dream of a universal advertising network

By Fidji SIMO, June 6, 2007

Message from Jeremy: To all Tech IT Easy readers, who could obviously not necessarily remember the initial announcement, I have invited Fidji Simo to write about web strategies and provide you with insights on how to manage and develop small & medium businesses. Fidji’s mission statement is that there’s no mission statement: what matters most is to start nice conversations and have fun.

Google king

This article will probably complete the excellent article from Kari a few weeks ago, concerning the portfolio of Google’s products.

I know that many authors and readers of this blog already know a lot about Google, and it becomes quite difficult to write something original on the Mountain View company.

However, I have the impression that people focus a lot on all the new tools Google provides to users, but sometimes do not really realize the tools Google provides to advertisers.

What is the dream of an advertiser? I guess that it is to have a unique interlocutor to coordinate his Internet campaign (SEM, display ads, price comparators, video, rich media, blogs), TV campaign, radio campaign, mobile campaign… Not a single player in the advertising market, not a single advertising network is able today to provide such a universal service.

A few years ago, everyone would have bet that, if such a concept had to exist, it would be launched by offline advertising network, having already access to big brands and a large database of clients.

But with paid search becoming unavoidable for every advertiser, Google has rapidly built an even better database, and was in a better position than anyone else to consider grasping a huge share of the advertising market.

However (and perhaps I am a little bit slow) I have the impression that the concrete realization of this strategy has started not so long ago, probably with the acquisition of Youtube.

We often see some news about Google’s acquisitions but without taking the time to aggregate them, it is hard to realize that Google is absolutely everywhere:

- Online…

  • Leader on search marketing with Adwords
  • Leader in distributed advertising with Adsense
  • One of the leader in Internet Display advertising with the acquisition of Doubleclick
  • Building a strong position in online video advertising through Youtube
  • Product search / comparison advertising through Google Product Search (ex Froogle)
  • Blog advertising through Blogger and with the acquisition of Feedburner
  • Widgets advertising via Google Gadgets Ads
  • Local advertising with Google Maps

- …and offline

I am sure that most of you are aware of all of those deals and moves, but put together, we really see that the question is not whether or not Google / Doubleclick is a monopoly but just to wonder if Google has not already won the battle to address all the advertising needs.

It would mean that, at some point, everyone, from you and me to the Fortune 500 company, will be able to advertise everywhere, without real advertising knowledge.

It will also be really interesting to see how Google will combine all the advertising monetization models: CPC, CPM, CPA, broadcasting time, space…

Correct me if I am wrong, but I do not see a single big advertising market where Google has not already taken positions. Do you see any other?

The real threat for Google is that users are starting to realize how much the knowledge of their behaviour is worth, and will probably be willing to start monetizing by themselves this information, instead of letting Google do it. Some “myware” (you spy on yourself, instead on spyware) are already tackling this need: Attention Trust (non profit organization) tracks your clickstream information for you and help you manage it the way you want.

In a word, Google is the perfect example of a company which has managed to extend its core competencies while focusing on a very precise goal.

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categories Business strategy, Consulting, Economics, Globalization, Google, Internet, SME, innovation

  • You lazy girl (about the chart we spoke over dinner) ;-)



    Just 2 small remarks though:



    1) that's right, Google does a great job at covering all aspects of on- and off-line advertising and I agree with you on the fact that Google has managed to execute one strategy using many different channels.



    2) Google hasn't suffered since it started monetizing its search capabilities any economic downturn (introduction of AdWords = 2001; bubble burst in 2001 as well - so crisis corresponds to testing the new model really). It would be interesting to see how the business model faces tough economic times. I think Google dominates so much its markets that a crisis wouldn't have such a big impact. What do you think?



    PS: in terms of pricing, it looks to me as if Cost per Transaction is the new model on the blocks. But I might be wrong on this.
  • Didn't know how to make an efficient chart, a BCG matrix perhaps? ;-)



    I think it is not only the fact that Google dominates its markets which prevents it from a downturn, but also the diversification of the portfolio in all ad markets. Even if the ad market experiences a downturn as a whole, some formats will keep on booming without a doubt (rich media / video).



    In terms on pricing, you are perfectly right (it is also called Cost per Action to include all non transactional models ) as CPA allows advertisers to manage perfectly their ROI, which is not at all the case with CPC. It is particularly right in shopping comparison advertising: Twenga (new big entrant in price comparison) is grasping market shares by proposing CPA to merchants (while most of other leaders stick to CPC).
  • Btw, did you check:

    Silverlight? (Rich Media framework by MS allowing graphic designers to build innovative websites & software developers to move on to the web) I believe Silverlight open s new horizons in the eCommerce industry

    Zorgloob (in French)? an excellent blog dedicated to Google

    What’s the address of the blog dedicated to eBay’s strategy again?
  • Of course I checked, the blog on Google is gold, and Silverlight seems to be an amazing way to be positionned on such a growing market, I will go deeper in this discovery tomorrow ;-)

    The blog on eBay strategies is: http://ebaystrategies.blogs.com/ebay_strategies/

    I also advise you the book written by its author (eBay strategies), it is definitely really good (and so is his book on shopping comparators, you know I love this market)
  • A book on eBay: I recommend "The Perfect Store" - a lesson of customer care and low-cost retail humility.



    Thanks for the blog & the book (will purchase on eBay).



    But..Fidji, don't you ever sleep? :)
  • To get back to GOOG, I think your post will remain unclear unless your provide a graphic vision of Google's advertising coverage perimeter.



    I love provocative comments.
  • "The Perfect Store" is an amazing book, especially concerning entrepreneurship and how to launch a successful company...



    And apparently you don't even sleep either! But I will go sleep as I don't have the courage to add a graphic vision now, even if I take your comment into consideration! I will try to do it tomorrow.



    Despite that, I think that seeing such a long list of advertising segments is pretty amazing, I really admire Google's rapidity in positionning on so many ad markets.
  • I found this news article quite interesting, http://www.theregister.co.uk/2007/06/05/comscor...



    What I find interesting, is the small differences between US and Europe. I mean, I always thought Google was more popular in US... Then again, Yahoo!'s front page is rather US-centric, while Google is quite neutral. Another thing that might explain this could be better penetration of Firefox, but this is just a guess.



    Anyway, what I wanted to ask, what do you think is Google's plan for Europe? I believe the ad-market (as usual) is more scattered here than in the US, so do you think that Google will start to acquire companies also here?
  • It's hard to give an answer on this, but personnally I tend to think that they want to acquire the advertising knowledge in the US and then use it for the rest of the world without major acquisitions (but with some agreements which will be mandatory, especially for offline ads).



    But the contrary would be possible if there is a real particularity of a market which justifies a specific focus: for example, they have started mobile ad tests in Japan first.



    They also buy global companies with a strong European activity: it is the case of Doubleclick, which gives them access to advertisers and understanding of a specific market.
  • Interesting blogpost! Here are some possible acquisition-targets in the video-advertising market.



    While, I'm all for taking over the world one acquisition at a time, doesn't this type of strategy also risk antitrust-regulation in a big way?
  • Apparenty Google is lucky as the acquisition of Doubleclick will be approvd once again (the same antitrust polemic appeared in the case of Youtube and was finally nipped in the bud), except that in this case Google must come clear with the exact use of personal data. And I don't doubt for a minute that they have a strong case about that, and will keep on having one for the acquisitions to come.
  • For the moment nobody has put a comment answering my question: do you see any advertising market in which Google is not present yet?



    There must be something!
  • Offline, the market is still wide open, but it has to make sense cost-wise and for Google. Advertising relevant to emerging economies could be interesting as well as partnerships with retail-outlets.



    On the digital plane, they seem to have it pretty closed off. The biggest growth-markets seem to me to be the video-arena and in-games/virtual worlds-advertising.



    So far they are mostly a infrastructure-provider for other companies to advertise. They could also move into the creative side, though I seem to remember reading that Google is not in the content-creation business.
  • I completely agree with you, creation would be the next step if Google really wants to offer advertisers a one stop point for all their advertising needs. And even if apparently it does not want to do that right now, it would be completely consistent with its strategy, and for me it would be a smart move.
  • To complete what I said to Kari, I just remenbered a recent Google's acquisition (Panoramio) in Europe (Spain): both photo and local advertising



    http://googleblog.blogspot.com/2007/05/pictures...
  • There's one question that nags me about Google's offline presence. I know I consider Google as an advertising company, but what are Google's strengths in offline media?

    I mean, how can they "googlify" or "adsense" offline advertising? What's their unique offering?
  • Their only strenght in offline media is that they are also online! What I mean is that their unique offering is being a unique interlocutor for all advertising needs, which is why I think that their next best move should be entering the ad creation market.
  • @Kari: Well, I suppose they already have a lot of data at their disposal that they can use to provide a fairly targeted ad-offering. With acquisitions they also buy in more competencies. And I suppose that they are working on building up USPs that exploit off-line media.



    At the same time, more and more off-line stuff is becoming digital, meaning that it can be scanned for content and provide with suitable ads.



    All this of course assumes that Google is already doing a good job in the online world... which if you look at some of the more ridiculous adsense-content out there, they are not. But I suppose revenue is what really matters...
  • You are right Vincent, but the problem with the data is that they can't transfer it so easily from online to offline to provide a better targetting, and it will be their major problem to leverage synergies. Just take a look at this open letter from Privacy International sent yesterday: http://www.privacyinternational.org/article.sht...
  • I'm sorry, but I fail to see the relevance of privacy-concerns? These have been in play, ever since Gmail scanned our emails and now Google-maps scans our streets, but so far Google has done a fine job responding to both privacy-concerns expressed by citizens and keeping our data away from governments (I assume).



    The challenge is indeed synergies, but that is why they are acquiring companies that already have talents from those respective field, so that at least from that side they are somewhat covered. Technology is certainly an issue, but it's not like they are entirely new in the field of audio (Google talk and Goog-411), video, text, or images.
  • The problem with data is just that even if Google has the right to collect and use the data for specific things (adapting adsense ads to target for ex), it does not mean that it can use the data for other purposes; at least they are so scrutinized that it won't be the case anymore.

    Concerning technology, I would go even further: not only they are probably at the same level of existing players in all field, but they will also propose better tools, notably to monitor real time ROI on TV ads which is not the case yet with traditional networks. A better explanation here
  • I think the question regarding Google isn't about privacy, but anonymity. I think people mix these things, maybe intentionally. There was a good reply to PI's concerns here. http://www.mattcutts.com/blog/privacy-internati...



    While Google is under the spotlight and scrutinized about all its moves, all the smaller playeres get away with much less fuss about privacy.
  • I totally agree Kari, I highlighted the risk for Google but it does not mean that I agree with that of course. Which is why I say in my article that Google has probably already won a monopolistic position which is now really hard to attack. Even if there will be more and more complaints around this subject of privacy, it will just be an excuse to tackle Google monopoly, but it will in the worst case deteriorate a bit brand image but not threaten Google's position. It will just probably slow down the execution of synergies a little bit.
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