Google changes the context of advertising

June 1, 2004

BY MICHAEL KRAUSS

     I suppose I’m a prisoner of context. Growing up with the television advertising revolution, it’s hard to believe TV won’t be the workhorse medium for tomorrow’s marketing plans.

After a conversation with Tim Armstrong, vice president of advertising sales for Mountain View, Calif.-based Google Inc., however, my perspective started to change. I realized the predictability, transparency and impact of Internet-based contextual advertising are compelling in this time of ROI-driven precision marketing.

Now stay calm on the East Coast. The days of high-priced television ads aren’t over. Don’t lump me with the apocalypse-of-advertising crowd. Thanks to the power of sight and sound and their ability to stimulate consumer demand, traditional advertising will be here for many years to come--even if I do zap most TV ads with my TiVo.

Broadcast advertising is simply going to be a niche business. The media mix is going to shift in favor of Internet-based contextual advertising. Google is bringing you the revolution.

Contextual advertising is a system through which ads get served up online to an individual viewer of a Web page based on the content the viewer is reading. The technology relies on keywords associated with the advertiser’s products and services. If you’re seeing a page that contains those words or phrases, you’ll likely get a pop-up or see an ad served on the page.

With the dot-com bubble behind us, the only thing slowing the spread of online advertising is the diffusion of knowledge and information. As marketers become more familiar with the accountability, transparency and processes of contextual advertising, the game is finally going to change. That’s where Armstrong comes in.

He’s Google’s contextual advertising apostle. He’s the guy who makes the rounds to agencies and conferences explaining this new advertising phenomenon.

“The holy grail of marketing is to spend an ad dollar and get seven dollars back,” Armstrong says, proudly. “That’s the premise we started with when we designed Google’s ad program. People advertise to get more customers, get more revenue and get more information.”

The focus of Google’s ad program is “around making the ROI for advertising transparent,” Armstrong says. “You’re seeing the CMO of P&G, Jim Stengel, out in the press saying, ‘We want all our media to be accountable.’

“Traditional advertising is about trying to create demand,” he goes on. “Google’s technology goes out and sniffs demand across the world. Either people are self-selecting by doing searches--they’re showing their interest in certain products and services--or they are reading content properties that have a bent toward certain products and services.”

Still, Armstrong laments the waste of the old medium. “Forty years ago you could reach 80% of the U.S. population using the I Love Lucy show,” he says. Today, Google is “heading in the direction of reaching everybody who’s actually sticking their hand up and is interested in your product or service.”

The way contextual advertising works is actually pretty simple. Armstrong uses Tide as an example: “Tide builds detergents for specific reasons. There’s Tide for people with hypoallergenic skin. There’s Tide for babies. There’s Tide with bleach. Tide has many different variations. What we want Tide to do is come to us with a list of attributes or keywords (that) best describe why they built the product and why consumers should be interested.”

Google in turn takes those keywords and loads them into their ad system. “When consumers type in ‘detergent for infants’ (in an online search), we serve an ad against that keyword for Tide,” Armstrong says. “Tide determines all the targeting. They really start the chain off by how they built their product.”

While broadcast advertising has behind-the-scenes negotiations, Google is more transparent. “We let customers set their own pricing in the auction,” Armstrong says. The more popular the keywords, the higher the price.

And unlike traditional media, with Google, commitments are flexible. “Advertising is instantly cancelable,” Armstrong says.

If your ads aren’t popular, Google may even cancel you. “In the traditional media world, you are able to pay to play,” Armstrong says. But in Google’s model, the ads are served based on the user’s interest. “If Tide is running on nontargeted words and things that the users don’t understand, eventually Google will lower the rank of the Tide ads. If it gets bad enough, we’ll just take them off the page,” Armstrong says.

Google sees its customers as both the individual users who view Web pages and the advertisers. “We feel strongly that advertising is information,” Armstrong says. “If you make the advertising informational, the user will have a great experience.”

I think Google is putting into practice much of what was promised at the dawn of the Internet. Armstrong agrees, adding, “Ten years ago you did not have the level of technology. You didn’t have the marketers.” Today, thanks to Google, we have both.

“Google’s been able to grow a network of 150,000 active advertisers,” Armstrong says. “At this point, we have nearly 100% of the major ad categories running with Google. We’re at a stage right now where the tipping point has been reached.”

Think it over as you’re writing your next marketing plan. The context has changed. n

Michael Krauss is a partner with Marion Consulting Partners based in Highland Park, Ill., and can be reached at Michael.Krauss@Marionpartners.com or news@ama.org.