Google CEO to Advertisers: Stop Scaring Users

NEW YORK — Like many Internet users, Google Chairman and Chief Executive Eric Schmidt is not a big fan of pop-up and pop-under ads. But as the head of an ad-supported company, he also thinks they are symptomatic of Internet advertising’s continued inability to harness the connective power of the Internet to improve the user’s online experience.

“My view of the world starts with the end user,” Schmidt said in the keynote address opening the Jupiter/IAB Ad Forum on Tuesday. “It’s important the advertising model doesn’t scare the user.”

Instead of rich media ads, Google, the fourth most-visited site by U.S. Internet users last week according to Nielsen/NetRatings , uses keyword-targeted AdWords, set off to the right side of a page of search results. The key, Schmidt said, is that the ads connected advertisers to users interested in their product’s area.

“Our commitment is the ad business we’re in does not in any way affect our search,” he said.

To do this, Schmidt said the Mountain View, Calif.-based company focuses more on the user’s needs, instead of the client’s, since keeping users happy builds the scale advertisers want. This means ensuring that ads are simple and highly relevant — based as they are on users’ self-selected keywords.

Advertisers, meanwhile, are attracted by the prospect — and benefit from easily-tracked units.

“The Internet will transform advertising because of its trackability, not its beauty,” Schmidt said.

This trend is likely to continue. According to Jupiter Research Analyst Patrick Keane, pay-for-performance advertising accounts for 25 percent of online ad spending. This is forecast to grow to 34 percent in 2007.

Schmidt said the key to Google serving its advertisers well is to serve its users well. Google puts great emphasis on quickly answering user queries, listing the number of seconds each search takes. With speed as a sine qua non, Schmidt said that rules out fancy, Flash-enabled ads that would slow page-loading.

Thanks to this approach, Google has attracted a loyal following. According to research released this summer by consultancy Brand Keys, Google was the online brand garnering the highest customer loyalty for the second year in a row.

The company has branched out by providing paid-search services to other sites, putting it in direct competition with Overture. Google has replaced Overture as the paid-search provider on Earthlink, AOL, and AskJeeves.

While its unobtrusive advertising approach has paid dividends, Schmidt would not rule out moving to different ad formats in the future, since his two decades of experience in the tech industry at companies like Sun Microsystems and Novell taught him that adaptability is the key to future success.

“The mistake we always make is we assume the success in the next 10 years will be the same as the success in the last 10 years,” he said. “The dominant players always get it wrong.”

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