Google ushers in online advertising fuzziness -- which is not as bad as it may sound.
There's been no shortage of extraordinary industry news over the past two weeks. Not only did Google and Yahoo report enormous quarterly earnings to kick off the year, the Interactive Advertising Bureau (IAB) reported 2004 online ad spending was even bigger than it'd originally projected. AD:TECH San Francisco, something of an industry bellwether, was jammed with over 6,500 people and will move to the Moscone Center next year -- a far cry from the table-top displays at the first AD:TECH back in the late '90s.
In traditional media, the week was full of announcements and pronouncements about the health of the newspaper industry. The Audit Bureau of Circulations released its semi-annual circulation figures... and they were bad. Across the board, and with very few exceptions, newspaper publishers experienced the largest drops in reported circulation in 10 years. The decline appears to be accelerating.
The biggest news (in my mind) was Google's launch of site-based targeting in its ad network. The new offering permits advertisers to deliver graphical ads targeted to particular pages on specific sites. Most important, the ads will be sold on a CPM (define) basis, so advertisers pay not for clicks or conversions but for presenting ads to online audiences.
Can this be true?
In this age of accountability, when sophisticated analytics systems permit us to link ad delivery (impressions) to audience interactions (clicks) to e-commerce sales (conversions), and when CPC (define) search advertising attracts billions of dollars due to its performance-oriented pricing, why would the search advertising leader release a product that prices advertising the old fashioned way: on impressions?
Simply put, Google recognizes impressions count in online advertising.
Online advertisers can track clicks and related online sales with extraordinary precision. Brand advertisers, meanwhile, realize the overwhelming majority of online ad-influenced sales don't occur online. They happen off-.
As impressive as Google's numbers and its reach with advertisers are, the search engine hasn't cracked the large advertisers, particularly national brand advertisers. It owns the online direct sellers. Amazon.com, eBay, and IAC are enormous Google advertisers. What it doesn't own (yet) are advertisers who seek engagement with consumers. Google hasn't had a product to sell to advertisers who want to deliver effective messages to specific consumer types in specific content types. A site network and graphical ads are big steps in that direction.
Google can dramatically change the economics of online brand advertising. Here are some potential results:
Google probably just made the market better. Let's hold on tight and see where this takes us.
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