By Yi-Wyn Yen
Google has made no secret that it wants to be more than just an online search advertising company. But the Internet giant is finding out how tough it is to break into into the old-media market.
The company’s attempt to roll its online advertising tools into a single, ad-buying and selling system to include TV, radio, and print is taking longer than anticipated. “The offline initiatives have been a real test for us,” said Tim Armstrong, Google’s president of advertising and commerce at a UBS Global Media Conference earlier this week. “We’re in the very, very early stages of connecting businesses. This is a 2, 3, 5-year product that we’re going to work on.”
Breaking into traditional media would be a major coup for Google (GOOG). UBS analyst Ben Schachter estimates that advertisers could spend $500 billion for centralized digital platforms that track both online and offline advertising by 2024. Microsoft (MSFT) and Yahoo (YHOO) are also working on creating similar software tools to integrate across-the-board buying efforts. “We believe that Google is intent on being the early front-runner,” Schachter wrote in a report. “First-mover advantages will be important for the long term.”
Google is dabbling in print and radio, and seems to be making the most headway in TV. In April, Google partnered with EchoStar Communications (DISH) to test selling ads to local advertisers in the San Francisco Bay Area. With the set-top boxes, Google is able to get “second-by-second ratings” and figure out what type of ads match with TV programs based on channel surfing behavior. “Doing better pieces of creative can lead to efficiencies in terms of how ads perform,” Armstrong said. “That feels very familiar to us at Google.”
Google may know how to rule the Internet with its AdWords system, but it faces different challenges on Madison Avenue. Among its biggest problems is learning how to deal with big brand advertisers who are wary about using a system that would give Google access to a lot of valuable data. Armstrong referred to the dilemma as a “process.”
“These are very big businesses. On a basic level, they are testing these platforms,” he said. “There’s a high level of interest, and a high level of work that needs to be done.”
While advertisers may be interested in spending less to sell more, Google still must convince the powerful ad agencies that a digital platform that measures the effectiveness of an ad campaign is a good idea.
Google’s quantitative approach to make agencies more efficient may not be something agencies necessarily want. Agencies creating big-budget campaigns for major advertisers often test new concepts to help build brand awareness. Google’s proposal to quantify that kind of squishy data could make advertisers question an agency’s relevance.
Armstrong criticized those pushing the public perception of Google as a “friend or foe.” He described the relationship between Google and agencies as the “largest friendship network.”
