Thursday, April 19, 2007

It’s all about the ads, by Even Aas-Eng

So Google buys Doubleclick, nobody should be surprised really. The price is steep but again it will pay off for Google. Let’s take a few steps back and look at why.

About a month ago Steve Balmer of Microsoft held a lecture where he described Google as a "one trick Pony". I wasn’t there but I guess he was pointing at the fact that Google only has monetized one product, search ads.

Mr Balmer is right and wrong at the same time. Approximately 94% of Google’s revenues are generated by ad sales. Looking at it like that Google doesn’t have many tricks! But what we need to look at is where the ad revenue is coming from.

Most marketing people only associate Google with text ads in search engines. But the fact is that about 46% of their ad revenue is generated through the adsense system. Don’t know what adsense is? Read up here

Adsense is "long tail" in practise. The adsense system enables Google to commercialize the long tail of web sites and that’s a pretty long tail! Google’s network of niche publishers using the adsense technology consist of several million web sites. And the real beauty of it is that it keeps on growing as the web grows. That is one of the reasons that adsense revenue has risen so sharply the past couple of years. 70 million blogs today, 140 million in one year? Imagine what that would mean for Google’s ad revenue, and they practically have no competition.

Previous Google deals with companies like Myspace and the You tube buyout has all been about one single thing, buying ad inventory. They are buying places to display their adsense ads. As mentioned in an earlier post on this blog this is a traffic sensitive business model. As long as the traffic is high Google will reap the rewards anyway. The acquisition of Doubleclick though is of a different kind.

Adsense ads has up to recently been text ads. Those days are gone and we are now seeing more and more display and video ads. Who buys those ads? Companies looking for brand awareness and companies that wants to communicate with their target audience. These companies are big and most of them use international agencies like the one I work for. Most of these companies don’t live in a "customer acquisition cost" type of world. They have parameters like demography, geography, annual income, gender, that decide where they allocate their budget. All the soft values that distribution maniacs like my self forgot years ago! My point is that the correctly targeted banner ad is not dead, it has just been reborn!

Up to now the adsense system has been limited in many ways. You can’t use third party ad-serving systems, it’s been poor on segmentation and the creative’s has been very limited indeed. This will change with a Doubleclick integration. Doubleclicks customers are the ones that Google now tries to please. It’s no longer the long tail of small and medium size companies or the web-distribution giants that Google are targeting. It’s the big FMCG companies, the automakers, the telecom giants and so on. These companies need data, they need flexibility and they make decisions based on other values than Amazon or Expedia. Doubleclick will provide just that.

So the Doubleclick acquisition will go down very well in the agency world and with the companies we all want to play with. I am sorry Microsoft and Yahoo it was another smart move from Mountain View.

Tuesday, April 17, 2007

Google buys Doubleclick, by Even Aas-Eng

I will comment on this when I have time but if you are interested you can check out this FAQ that Google released regarding its acquisition.

Monday, April 16, 2007

Hello, My Name Is Gord, And I’ve Been Behaviorally Targeted, by Even Aas-Eng

Here is a great example of why it works and some interesting points on why we should be a bit careful.

Wednesday, April 11, 2007

What’s new? Demographic targeting. By Even Aas-Eng

MSN has for a while offered the option of buying demographic targeted ads. The segmentation is based on passport logins and windows live id. With the introduction of adcenter, Microsoft’s ad words competitor, demographic targeting has reached the search arena as well. And apparently with good results. According to searchenginewatch several clients has experienced a drastic decrease in cost per action using the new tool. And its good news for Microsoft, this is probably the first innovation within search that they launch before Google or yahoo.

So while Microsoft launches demographic search, Google goes the other way and launches demographic banner advertisement in their site targeting network. A interesting move that should suite the agency world well. The data used to perform the segmentation comes from comscore who has gathered demographic information about sites taking part in Google’s site targeting program. So offline segmentation goes online, why did it take so long?

You can read more about demo-targeting in adcenter here:

And Google demo-targeting here: