Case Study:
While Google may be the premiere search engine of the Internet, it has lagged in its ability to earn revenue from display ads, a business that is expected to grow to almost $8 billion in the United States alone. Yahoo! has run in first place for some time, although Google’s acquisitions of ad-friendly YouTube and ad specialist DoubleClick were major investments the firm hoped would help it catch up in the display ad business. Now, Google is drawing near its goal. Its display advertising business should soon be generating $1 billion in sales each year, according to industry analysts and the company’s CEO. That will represent a 40 percent increase and will account for about 4 percent of Google’s total annual sales. The revenue is expected to come mostly from about $700 million raised from video and banner ads on YouTube. “Display is now a key business for us,” said Google’s vice president of product management. “Our goal is to bring the science of search to the art of display,” agrees the firm’s executive in charge of display advertising. The U.S. search advertising marketing is worth more than $11 billion a year, but its growth is slowing and Google already dominates this area. Online search ads have generally been cheaper than display ads, and their messages often inspire specific customer responses, such as clicking on a Web link or making a purchase. These concrete results make the effects of search advertising easy to measure and have sometimes kept advertisers away from the more expensive display business, which is typically effective for more general purposes such as raising brand awareness. But Internet firms that rely on ad revenue may be seeing a shift in that trend, as advertisers begin to switch their branding campaigns online from print and TV. “There’s a lot of money to be tapped that otherwise would be allocated to TV that will be moved online,” says one technology analyst. That migration will be good news for Google in its drive to increase display advertising. The search firm is setting up new tools to attract more advertisers and offer concrete benefits for their ad dollars. It has purchased Teracent, for instance, a firm that customizes color, language, and other advertising elements according to the viewer’s identity. Google hopes to leverage this capability with DoubleClick’s skill in ad placement to help target messages better. Google will also use a tool called Campaign Insights to combine its own user database with advertisers’ server logs and help advertisers better measure the effectiveness of their ads. “The consensus is the click is the wrong metric in display,” says one digital ad agency CEO. One reason is that 8 percent of Web users account for about 85 percent of all clicks. Google hopes to help solve that problem. “This should help advertisers get the balance between search and display right because they will have a better understanding of any lift that results from their display campaigns,” said Google’s advertising product director. Google will also expand the DoubleClick Ad Exchange, which it created to offer advertisers more options for buying and trading online ad display space. And it has purchased AdMob, a mobile ad network that could help it consolidate mobile display advertising, as it did for search. With this purchase, said Google’s vice president of product management, “we see an opportunity to be able to work together to deliver faster and more innovative experiences to users and advertisers.”
Q1. How do you think Google’s expected dominance of the online display advertising market will affect marketers who already use the Internet for marketing communications? Will its push into this market attract any marketers who aren’t currently using online marketing messages?
Q2. Do you think Google is investing enough in efforts to measure the effectiveness of online display ads? Are you ever influenced by these ads?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.