Google's Grab for the Display Ad Market

For all its success selling text ads alongside search results, Google (GOOG) can't seem to make a go of it anywhere else in the ad world. In January, it shut down a two-year-old operation that sold print ads in newspapers. A few weeks later it abandoned an effort to buy and sell radio spots. And a TV ad project has been slow-going. To make matters worse, the economy has hit Google's mainstay search ads: First-quarter revenue growth of 6%, though better than many companies in the recession, is far below its high double-digit gains of years past.

In its hunt for new growth, the search giant is redoubling efforts to grab a bigger piece of the largest online ad market it doesn't control: display ads, the pictorial banners and videos that account for more than a third of the $40 billion online ad market. "Google has won the search battle, so its whole future is display," says Jay Sears, executive vice-president for strategic products and business development with online ad firm ContextWeb.

Google faces a tough challenge. Yahoo! and Microsoft's MSN have a huge lead in display ads, largely because they can put ads on their own pages of content, like Yahoo Finance and MSN Money. Google hopes to place more display ads on its YouTube site as well as on thousands of partner sites, from small blogs to The New York Times.
MATCHING ADS TO BUYERS

But it aims to do more than simply help BMW, say, plaster brand ads on car videos or car sites. The fastest-growing kind of display ads, called performance ads, work more like search. They allow advertisers to use data analysis and user-tracking technologies to match ads more closely to likely buyers and measure mouse clicks and other actions so advertisers pay only when ads deliver. Google spies an opportunity to apply its mathematical wizardry to make those ads even more effective. The idea is to make display ads useful knowledge instead of visual clutter. "It's like search—matching people with information they want," says Sergey Brin, Google's co-founder and president of technology. "It just happens to be promotional."

This summer, Google will begin demonstrating what may be its most potent weapon in this emerging battle: an overhauled version of the advertising exchange that it picked up in the $3.2 billion acquisition of DoubleClick last year. Ad exchanges are sort of like stock exchanges for online ads. Web sites put ad space up for auction, and ad agencies, armed with demographic and behavioral data about the people who visit those sites, bid to place ads for their clients' campaigns. Yahoo, Microsoft, and others also run exchanges.

Until now, Google's and DoubleClick's ad-placement systems used different software, so ad agencies had to cobble together programs to place, monitor, and measure ads. In the revamped exchange, they'll be able to use the two systems seamlessly, making ad buys simpler. At the same time, Google is pushing Web publishers, which have been wary of putting prime ad space on the exchange for fear of turning it into a low-value commodity, to pony up more space. In return, Google is expected to give Web publishers more control over pricing and who can bid on the space.

Google will also help advertisers and agencies buy ads more easily and quickly: When ad space with price and audience demographics matches those advertisers set for a particular ad, the spot runs instantly. "The exchange will allow Google to make a go of it in display," says Michael Hayes, executive vice-president and managing director of digital for ad agency Initiative. "It really turns the business model on its head."

The exchange is part of Google's overriding goal to make display ads, which can be expensive to create and complex to manage, so easy that even the smallest businesses can use them. "Google's vision is to grow the pie for everybody," says Neal Mohan, Google's director of display products. For instance, Google introduced a free Display Ad Builder last fall that lets anyone use simple building blocks to create an ad.

(you could read more at http://www.businessweek.com/magazine/content/09_25/b4136052151611.htm)

NEWS -Digital Download

If Microsoft wants out of the online ad business, it has a strange way of showing it. As rumors swirl that talks between Microsoft and Yahoo over a potential search ad deal could also result in Microsoft handing over its display ad business, the software giant last week threw an upfront-esque shindig in New York.

The company formally introduced Robin Domeniconi, the Time Inc. vet who was hired to lead digital sales in January, and then unveiled half a dozen original series concepts while touting its strength in video.

Such enthusiastic salesmanship and long-term positioning seemed to fly in the face of the rumored abandonment of display sales—leaving buyers puzzled. “That would surprise me if they were willing to drop MSN,” said Michelle Lawrence, group media director, Horizon Media. “That’s such a massive site.” Indeed, MSN still reaches 100 million users each month, per comScore. Lawrence also found it ironic that Microsoft—in pursuit of Google in search—“might eliminate something that they’ve got an advantage in.”

Others suspect that Microsoft’s Google envy may be leading to ill-conceived sacrifices. “It doesn’t make sense to split up display and search for either party at a time when marketers want integration,” said Bryan Wiener, CEO of 360i.

Wiener fears Microsoft may fundamentally see Web advertising as an engineering endeavor. “Microsoft has to decide if they want to be in the ad sales business altogether,” he said. Dropping display would be “indicative of a fundamental misunderstanding of where the advertising business is going.”

Based on last week’s presentation, Microsoft’s programming and ad sales executives believe the business is going toward video, particularly entertainment. “That is an area that I’m absolutely leaning into in the next year,” said Scott Moore, executive producer & general manager, MSN. “The entertainment category has no dominant leader online. It’s an area we believe is ripe.”

In the works are comedy projects featuring The Office’s Rainn Wilson and The Kids in the Hall’s Dave Foley. Microsoft also is planning to launch Cinemash, a show in which comedic stars act out favorite dramatic roles; and Last Night on TV, a daily review of prime-time TV hosted by the comic duo Frangela.

Moore said each show will be developed in conjunction with advertisers, while keeping MSN’s existing user base in mind. “I’m not a fan of doing original, standalone stuff that you have to promote an inordinate amount,” he said. “I’m more interested in doing stuff that is organic to the experience we’re already programming.

We know we have an audience [for entertainment]. Why not give them more in video, which advertisers want and we can sell at a higher CPM?”

Unless, of course, if Yahoo ends up doing the selling.

[the article was originallu published at http://www.mediaweek.com/mw/content_display/news/digital-downloads/broadband/e3ida99bf36787f149a541a1a5694447cb3]