Google Distribution Deals Don't Matter Much to Marketers

  |  August 31, 2006   |  Comments

A string of recent distribution deals for search and contextual ads do not impress marketers, who are mostly concerned with ROI over volume.

Google has recently added several huge distribution partners for its search and contextual ads, which makes for great press, but do these deals impact marketers? According to several polled by ClickZ News, the answer is "not really."

While distribution deals Google has struck with AOL, Dell, Fox Interactive and eBay in recent weeks and months are important from a public relations perspective, sheer volume does not sway search marketers' decisions in most cases.

"Distribution is important for marketers, but it’s not enough," John Ragals, SVP and managing director of 360i, told ClickZ. "For contextual advertising deals through the search engines’ publisher networks, marketers want to ensure their ads appear in front of the right audience, which can involve a combination of context, behavior, and demographics. For search-triggered ads, the inventory itself is what matters -- the volume of queries -- since search ads are inherently targeted to the specific query. Plus, it has to work."

Since most of these announced deals are not live yet, they haven't impacted any media plans as of yet. Once they are live, it's more likely that the increased inventory will see incremental spending instead of movement from one vendor to another, he said.

"Search budgets in general are growing so significantly that it is more likely to be a question of where additional budgets are allocated, rather than pulling budgets from one engine into another," Ragals said.

Increased distribution does have its benefits, like giving marketers more inventory to manage from a single interface, but the effectiveness of that inventory is what really matters, said Kevin Lee, executive chairman of Did-it.

"All the engines get their fair share of clients’ budgets depending on the inventory they deliver and the ROI of each marketplace," Lee said. "The objective is to spread the budget around in the most efficient way regardless of which engine gets the next penny."

Of course, Google's aggressiveness in landing big distribution deals does create market advantages, primarily as a defensive strategy against Microsoft and Yahoo, according to Ellen Siminoff, president and CEO of Efficient Frontier. "Google has locked up a lot of distribution for a long period of time. That gives them an 'option value' to decide whether distribution matters," she said.

Yahoo and Microsoft have sought out distribution partners of their own lately. Yahoo scored eBay's U.S. business in May, before Google picked up the overseas inventory last week. Microsoft made a move with Facebook last week.

"It's all going to depend on how Google, Yahoo and MSN take advantage of monetizing the inventory from these distribution partners. It remains to be seen how some of these sites, like social networks, will convert," said Siminoff.

Most major publishers have aligned with one of these three providers. Amazon is one big Web player that remains unaffiliated with a contextual ad network, since it ended a relationship with Google in May that included search results and ads, replacing the search results with Microsoft's, but not the ads -- at least not yet.

Several social media sites are considered the next likely candidates for small-scale distribution deals with the majors, but the biggest deals will likely involve sites that are not on anyone's radar yet, said Chris Copeland, senior partner and managing director at Outrider.

"All the excitement lately has been over deals like the one Google did with MySpace, and they were nowhere to be seen 24 or 36 months ago," Copeland said. "With every new Flickr or, there's a new opportunity for them to expand and strengthen their offerings."

Another possible area of expansion lies in mobile, where none of the search engines has yet to exert dominance, and ad models are still unproven, he said.

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Kevin Newcomb

Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.

Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.

With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.

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