GoogleClick: Death of the Third-Party Ad Server?

With Google’s completion of the DoubleClick deal this week, the concept of the third-party ad server becomes a quaint invention of the ’90s.

Or does it?

It’s no coincidence that recently Tim Armstrong, Google’s president of advertising and commerce in North America, has been talking up both a unified media dashboard and an impending push to monetize YouTube display inventory more effectively. The DoubleClick acquisition closed shortly thereafter. Google’s clearly planning to integrate Dart into AdWords, to create its own media and advertising dashboard.

And Google isn’t the only one trying to apply the simplicity of keyword-targeting (at least conceptually) to larger markets beyond search. Yahoo and Microsoft have also made deliberate moves in that direction. Atlas, for instance, is being folded into the next generation of Microsoft’s unified dashboard. The church and state separation of publisher/network and tracking technology is becoming a fuzzy divide, indeed.

I talk to a lot of agencies and advertisers, usually at the senior level, and it’s interesting that so few advertisers are concerned by this. Concern usually increases with media budget size. The $1 million and up spenders are worried. Those with large on- and offline budgets have a far greater concern with conversion data being used to influence both pricing and future changes to the auction marketplaces. It seems like most everyone with small budgets is less concerned.

Those with concerns plan to abandon the suspect technologies for newer ad-serving technologies with which they have little or no familiarity. The field of alternative ad servers is fairly narrow, particularly if one wants an ad server that’s been certified by the Interactive Advertising Bureau (which tends to be a requirement for most publishers to reconcile impressions and clicks). Without a common set of standards and definitions, ad opportunities and advertising served with newer technology won’t gain larger brand advertisers’ confidence, which is critical to digital advertising media’s continued growth.

A separate cadre of marketers is concerned with DoubleClick’s Performics division being part of Google. Not only does it track conversion, but it also makes budget allocation decisions for marketers, another area for potential conflict of interest, even if that conflict is inadvertent because a media buyer allocated an incremental dollar to one engine/media provider over another.

The remaining landscape of third-party ad servers could be fodder for another column, particularly since an entrant in that category this week filed to go public. In the meantime, let’s delve more deeply into the unified dashboards and the promise that an integrated campaign holds.

Search behavior is driven by consumers’ exposure to ad messages, both online and off-. Parties across the SEM (define) and display media agency space have been learning to act on the media interaction effect data to deliver a more balanced overall campaign. For instance, Microsoft is developing its own method of conversion attribution that would assign credit to other media sources that influenced the sale. On a more personal note, the continued evidence about media interaction effects caused a major shift in my own firm’s search technology. I asked my teams to find out about client’s media plans and direct response campaigns, even if we had nothing to do with them. Then I had my team create a unified dashboard to allow us to track online media and search simultaneously.

But it’s still critical to realize that simply knowing other media’s attribution doesn’t help unless you have a strategic plan. Put differently, it’s not enough to know which media are driving traffic to your business. You must understand how each channel fits in to the marketing mix. For example, let’s say you believe you are overvaluing the search click, and you choose to reduce bids. By passing up an opportunity to exert final influence on the last stage of the purchase process, you will lose revenue on both the immediate conversion and any later conversions. Opportunity cost must be part of the decision-making process, and search may be undervalued with respect to measured influence based on the cookie but may exert significant influence that’s not currently measured.

Beyond a unified media dashboard, the exciting thing about the Google-DoubleClick merger is the promise of the media exchange, particularly when combined with some more recent announcements by DoubleClick regarding a vertical ad network feature available to Dart for Publishers’s customers later this year.

All the major search engines have significant new developments in the works, as well as incredibly complex integration challenges. As search engine marketers, we must watch the evolution of automated media marketplaces that use keyword targeting as the basis for ad serving. Our next media opportunity may lie beyond what we think of as search.

Meet Kevin at SES New York March 17-20.

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