The Brickwire: Google's Steady Advance into the Display Marketplace - Andy Leinicke - MediaBizBloggers

Online display advertising, or internet banners, has not amounted to a growth industry during the last five years. Even though interactive marketing budgets have grown in the face of a global recession, banners stagnated in terms of spend back in 2007. Spend levels haven't really picked up since. So why is there so much excitement about display advertising as we march into the second quarter of 2010?

The answer lies in new technology. Google has made no secret of its intent to leverage its considerable engineering and user experience talents to enter the display marketplace with force. Recently, Susan Wojcicki, Google's Vice President of Product Management, outlined an ambitious vision for Google display advertising on the Official Google Blog. Under this vision advertisers of any size would be able to:

"buy ads across the web at scale, create engaging ad formats, measure the impact of ad campaigns in innovative and insightful ways, [and] deliver relevant ads to precisely the right audiences in real-time…"

As it happens, many in the industry believe that the way display advertising is bought and sold may change in fundamental ways: it will become hyper-targeted and transparent. IAB chair David Moore predicted last month that online media planners will soon need to be "quant experts" and that demand platforms—the technologies that allow agencies and advertisers to hand pick ideal audiences—will become de rigueur. It is possible that as technologies and service expertise mature, advertisers will invest more in display advertising and use it to achieve greater potential. In fact, the Wall Street Journal recently cited a Google study that found advertisers were willing to pay up to 130% more for impressions they thought would be directed to more qualified audiences.

This finding comes as no surprise to Red Bricks Media, where we typically present campaign success as a function of measured performance at multiple points in the sales funnel. Without the right tools and technology, though, it is difficult to know which impressions and clicks are really providing value. If the economics are right, advertisers will naturally be willing to pay more for high performance.

Google has positioned itself well to provide this visibility. Our agency has already written about the sophistication, power and usability of Google Analytics. Meanwhile, Google has also been building and acquiring technologies that address other elements of Web advertising.

For example, Google now offers ad distribution with the acquisition and re-tooling of the DoubleClick Ad Exchange. There is also the Google Content Network (GCN), which has been running "image" ads for the last six years. We have begun to notice new features appearing in GCN, and they are ambitious. Recent improvements such as view-through conversion reporting, interest-based advertising (behavioral targeting), and retargeting indicate Google's growing capacity for sophisticated display advertising.

The Ad Exchange, Google Analytics, and GCN position Google well for targeting and distributing ads on the internet.

The one question I often need to answer for clients, however, is what the level of inventory quality of the GCN is. It is known as a place for publishers who invest far more in search results listings than in editorial integrity. As a result, it is necessary to take precautions against advertising with publishers who use parked domains and misleading SEO listings in order to take advantage of Google's advertising marketplace.

Although the display advertising market hasn't grown in recent years, it represents a substantial opportunity for Google, which already dominates the search space. New advertising technology is a significant evolution from the more manual buying approach of hand-selecting publisher sites with attractive demo profiles and networks with private targeting technologies. This development is the key to the growth of spend levels in display advertising. Google is moving strategically to capitalize on these trends. We share some people's worries about Google becoming an even more powerful and omnipresent vendor. Nonetheless, it is worthwhile paying attention to Google's new offerings in the display advertising landscape.

Andy Leinicke is Media Director at Red Bricks Media. He manages all aspects of our Paid Search Practice. Andy is in charge of organizing, developing and overseeing every aspect of a campaign from message and testing strategy to media buying and segmentation. He can be reached at aleinicke@redbricksmedia.com

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