Google and Display Advertising
March 13, 2009
A happy quack to the reader in a Near Eastern company who sent me a link to the Globes.co.il article “Israel Is Disproportionately Important to Google”. You can find it here. When I read this write up, I thought, “The author is not familiar with the GOOG’s China operation.” No problem. Individual Googlers are entitled to their data-centrism.
The March 12, 2009, article used an interview the Globes.co.il conducted with David Rosenblatt, originally from DoubleClick and now the Google VP responsible for display advertising. Mr. Rosenblatt’s comments made this write up quite useful. I don’t want to summarize the full story. I do want to highlight three points from the article that struck me as noteworthy. Your mileage may vary so read the original.
First, display advertising is big: “Global revenues form display advertising are still very concentrated: about 50% of advertising expenditure in this market goes to just 3-4 content distributors”. So what? The sector is immature which means Google can move in, bring economies of scale, inject efficiency. I think this is important and probably going to happen. Google’s current line up of competitors does not strike me as capable of mounting meaningful resistance. I can be wrong, but I am betting on Googzilla.
Second, Google’s bidding approach to setting prices is right for the present economic climate. Google’s system and method helps ensure that every ad gets sold. The unsold inventory decreases and everybody wins. Globes.co.il wrote, “The combination of Google and DoubleClick,” Rosenblatt says, “enables us to sell both our products, and we thus enable the whole world to compete for every seat on the flight. The seat goes to the customer who pays the highest price for it, and we succeed in making the maximum profit from each seat, that is, from every customer.”
Third, the recession won’t hurt every company equally. Google will be okay. “The online advertising market simply won’t grow, but it is certain that it will not weaken. As far as the market share the Internet has out of the general advertising cake is concerned, the current recession is actually good for the Internet.”
My take away: what’s good for the Internet is good for Google. Even if the economy is not so good for the Internet, Google will be not just okay, Google will grow its ad revenues. No rebranding. No paying for traffic. No becoming the search engine of NASCAR. Just a way for advertisers to reach potential buyers.
Stephen Arnold, March 13, 2009
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