High rollers only, please
Now that Google is a publicly traded company, traditions and advertiser friendly philosophies seem destined to clash with fiduciary responsibility. Imagine this scenario: Everybody uses Google, so every advertiser needs a presence there, and the law of supply and demand makes Google one expensive place to be.
Big companies were reluctant a few years back to shift a significant amount of their advertising budgets to search marketing. This reluctance made conditions perfect for small businesses to take advantage of Google's relevancy at bargain basement prices while Google built its reputation and search share.
But big companies wised up, making competition for ad space even fiercer. Those big budgets provided a big advantage in organic results, too. While bootstrappy, budget-conscious companies tweaked and tested and gamed to get better organic placement, large companies realized pretty fast it was easier just to buy a site already ranking for relevant keywords.
Trends like these, along with Google's own renewed focus on raising search ad real estate prices by reducing the number of ads while increasing relevancy for users and, by default, conversion rates for advertisers, mean Google was already headed for high-roller club status. And now Google is reaching into Yahoo's pot, too.
Effectively, Google has the potential to reach 90 percent or more of Internet searchers: 90 percent of the US, adding to 90 percent of the UK and Europe. That's what, a couple of hundred million searchers? Add that to other advertising roads Google is traveling—TV, radio, print, wireless—and remember how a 30-second spot during the Super Bowl grabs a couple of million dollars for the network broadcasting it.
Consider this also: According to ComScore Chairman Gian Fulgoni, Google has made its billions from just five percent of its ads being clicked. Not to insult your math ability, but that's 95 percent of Google ads that are not clicked. Though clicks are monetized based on direct action, Fulgoni says only 16 percent of ads have direct online effects; 21 percent have latent online effects, and 63 percent have latent offline effects.
"[S]o 84% of the value isn’t being monetized by search engines," Search Insider's David Berkowitz summarizes in his "Dreaming of a Super Model" report. The value in that 84 percent is in less tangible branding value. Enquiro attributes a 16 percent brand lift when the brand made an appearance in the top organic result and the top sponsored result.
Fulgoni used these numbers to suggest Google could maximize profit by adding a layer of cost to search advertising in the form of cost per impression. Either by display advertising (Google can certainly pull up DoubleClick's CPM expertise for this*), or by simply charging every time a text ad appears on the search results page, Google could up its ad revenue by huge margins. Advantage: advertisers with huge budgets, and Google shareholders. Disadvantage: Google goes back on its core philosophy of clean interface, simplicity, and equality of opportunity.
Think that can't happen? You could be right, but "fiduciary responsibility to shareholders" is a much weightier phrase than "advertisers will be outraged." Berkowitz joins a likely chorus that advertisers would break this model:
"So, what would a CPM model add to search? In this economy or any economy, not much. Yes, it would show marketers that there is more they should value. At the same time, that would make search marketing much less appealing. There are competing forces: the engines aren’t cashing in as well as they could be, but marketers have enough pricing concerns with search even when they’re getting a great return on investment, let alone when they’re struggling."
Of course, high roller tables in Vegas and national television networks with primetime programming don't cater to the struggling advertiser. Advertisers would be outraged and many would likely leave—but the cold, hard, unpleasant fact is that with enough market share and enough fiduciary responsibility Google nor advertisers would have much choice. For advertisers, it's be on Google or risk it in the margins of the rest of the search world. For Google, everyday is Super Bowl Sunday.
To get (big money) advertisers on board, Berkowitz suggests, Google would have to be able to prove the benefits of branding impact with actual numbers. Enquiro's Gord Hotchkiss also questions whether an unclicked ad has much impact beyond being subconsciously stored on the "white board" of our working (short-term) memory.
Ask yourself, though, how many national (or local, for that matter) television ads work their way from short-term to long-term memory. Then think about how much that lack of transference cost the advertiser. Still yet there is value in awareness, and advertisers have not stopped advertising on a national, primetime level.
*Google's acquisition of DoubleClick has already sparked antitrust concerns, but it seems to me it's hard to prove antitrust claims on the Internet, where competition is virtually limitless, even when natural, but not necessarily permanent, monopolies develop. I think this scenario, where DoubleClick's display advertising/behavioral targeting capabilities are pulled up for search results, is fairly unlikely given Google's general tendency towards a cleaner interface, which has been one of the company's principle paths to success. It would be much easier and less annoying to the end user just to better monetize the text ads themselves. But stranger things have happened…
About the author:
Jason Lee Miller is a WebProNews editor and writer covering business and technology.
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