The Media Revolution, Powered by Search Networks, Part 1: Google

A media revolution is underway, powered by the search networks. Google may even lead the charge. According to several reports, Google has been testing marketers’ willingness to purchase print advertising with Google acting as the broker, trafficker, and, with the test ads, the production agency putting together the layouts.

For the test, Google purchased one-page ads in Ziff Davis’ “PC Magazine” and Future Network’s “Maximum PC” and “MacAddict.” More “Ads by Google” advertising sections may show up over the coming months. Time will tell. The most important thing about this test, however, is the strategy shift: Google is expanding beyond online media and advertising.

Would you buy ad types other than search from Google? Chances are, you already do. Google has a huge contextual network running on Blogger, Gmail, and thousands of sites, large and small. You can buy both textual and graphical inventory in Google by opting to have your ads placed more broadly.

It’s a major stretch from an online contextual ad network to print advertising for Google, but that’s the point of the test. How well does the Google brand translates into other media? At least some marketers will buy offline advertising through Google, and that should be enough for now. A few adopters in each industry vertical can generate significant revenues.

Google didn’t auction off spaces within the ad to advertisers for the test. Instead, it purchased the ad pages, then talked to several of its 200,000 current advertisers to see if there were any takers. Once an entity such as Google has relationships with several hundred thousand advertisers, revenue opportunities are huge.

Pay-per-call platforms are taking off due to VXML’s (define) flexibility, providing Google with yet another way to charge for advertising should it wish to do the math. Google can calculate which method of advertising makes it and its publisher partners the highest yield. One thing we know: Google is all about doing the math. It is very good at it and is getting better as it learns.

The question is whether Google can truly become a portal through which advertisers buy a diversity of media, all in auction format. Let’s look at the types of ad media and current spending levels within each, according to TNS Media Intelligence:

Media Jan.-June, 2005
Jan.-June, 2004
Local newspapers 12,238.30 12,029.00
Network TV 11,692.80 11,214.10
Consumer magazines 10,500.60 9,621.80
Cable TV 7,935.80 6,881.50
Spot TV 7,339.30 7,819.10
Internet 3,961.80 3,621.90
Local radio 3,589.90 3,537.30
B2B magazines 2,523.70 2,461.50
National syndication 1,994.60 1,924.90
Hispanic media 1,953.40 1,889.60
Outdoor 1,693.90 1,550.10
National newspapers 1,688.80 1,642.10
National spot radio 1,243.30 1,214.30
Free-standing inserts 778.70 744.20
Sunday magazines 752.80 698.80
Network radio 486.90 503.60
Local magazines 200.00 160.80
Source: TNS Media Intelligence, 2005

Let’s assume ad creative is subject to the same review processes that currently exist within that medium, regardless of whether the ad spaces are auctioned to the highest bidder based on a CPM (define), cost-per-call, or other billing scheme. Also, let’s assume an auction system could be written to accommodate typical advertiser requests, such as a reasonable competitive separation. The math required to run sophisticated multiplacement media auctions isn’t trivial, but it’s manageable. Publishers, the companies that own the eyeballs and attention of consumers across media, are always interested in making as much money on advertising as possible, as long as the advertising is of reasonable quality and won’t turn audiences off.

With automation and auctions comes targeting, and ad targeting is great for both consumers and marketers. Marketers don’t want to pay to reach people who aren’t in their target markets, and consumers don’t want to see irrelevant advertising. One can even argue poorly targeted advertising, both on- and offline, is an advertising burnout driver. For instance, I don’t want to see a denture ad; exposure to one only helps me strengthen my ad tune-out skills.

MSN has already announced its new AdCenter will allow ads to be targeted better in the online search environment. It’s only a matter of time before the targeting options extend into the offline space as well.

In part two, I’ll look at ways search network platforms might evolve to help all three constituents in the wonderful world of marketing: advertiser, publisher, and consumer. I’ll also touch on each media’s suitability for automation via a digital auction marketplace and the inertial factors that keep the market status quo.

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