Google, Schmoogle, Says Saatchi

[encyclomedia]

Google, Schmoogle, Says Saatchi

Remember that widely misunderstood quote that computers wouldn't be of any use in the home, the one that's gone down as a stand-in for the tendency to downplay the importance of technological change? We wonder if this op-ed piece from the quill of Lord Maurice Saatchi will be the ad industry version of that.

In a May 29 article in the Financial Times, the "M" in M&C Saatchi gets all ontological on us, name-checking Freud, Henry Ford, Orson Welles, and one Viscount Rothemere(!) in the service of an argument that current digitalmania is just hype, since people are essentially irrational and don't know what they want "until a brilliant person shows them."

It's clear Lord Saatchi, who's probably two-thirds gold bullion thanks to the interruptive marketing era, is sitting out the whole Web 2.0 epoch -- you know, the thing where companies listen to consumers and actually bring them into the creative process. But why wouldn't you when you have an 80-year-old business cliché to hang your hat on? Writes Lord Saatchi, "Henry Ford confirmed the point. Asked if he had carried out research before he invented the Model T Ford, he replied: 'If I had asked people what they wan ted, I would have built a faster horse.'"


read the rest here

[Europa]

M Saatchi will have to eat his words as Google gets ready to eat the business of traditional media houses, who, like the business of advertising, are just overdressed fatasses, too comfortable with their fat paycheues to accept that media has overnight turned over.

Google is the new Media Giant.

[Paramvir]

there is a bit of truth in Europa's words. Google has been diligently getting into the advertising media business, now the latest been placing ads on Google Maps. Gmaps already has a mobile version, which is now connected to GPS and Voila, you have a free GPS Mapping solution, powered by Advertising courtesy of Google!

Science Daily — Atlanta (May 23, 2005) -- A 30-second prime-time television spot was once considered to be the most effective form of advertising, but search engine ads are replacing it. This year, predicts Advertising Age, the combined advertising revenues of Google and Yahoo! will rival the combined prime-time ad revenues of America's three big television networks, ABC, CBS and NBC. Now, researchers at the Georgia Institute of Technology and the University of California, Berkeley have discovered a computer algorithm that could further increase profits for search engine advertising.
"Our algorithm balances two trade-offs in a way that optimizes revenue in Google's advertising model," says Vijay Vazirani, professor in the College of Computing at Georgia Tech.
When Internet users perform a search on Google or Yahoo!, a separate list of advertising links appears to the right of each page of search results. Advertisers place bids for their ad links to appear with certain keywords, and the ads are ranked roughly in order of the amounts of the bids. (Search engines also take into account the popularity of the ad or "clickthrough rate.") An advertiser pays only when someone chooses to click on the ad link. On Google, advertisers can also specify a maximum daily budget for their ads. Once the budgeted amount is spent, an ad is dropped for the rest of the day.
Upon examining the Google ad model, Vijay Vazirani, together with his two Georgia Tech Ph.D. students, Aranyak Mehta and Amin Saberi, and Umesh Vazirani, a professor of computer science at Berkeley, realized that always giving the top spot to the highest bidder is not the best strategy for Google. The top bidders might rapidly exhaust their budgets and get dropped from the auction, thus reducing the competition for that keyword.
Google's profits will be higher, the researchers reasoned, if it somehow weighs both bids and remaining budget when ranking ads. They found a mathematical formula that finds the optimal trade-off between bids and remaining budget, maximizing what the advertisers are spending.
The research team has filed a provisional patent for their work to ensure that the research remains in the public domain. The team continues to explore other applications for their algorithm such as in engineering and for solving other computer science problems.
Note: This story has been adapted from a news release issued by Georgia Institute Of Technology.

Google's Search for the Advertising Edge
Click-throughs are a hit, so now the search giant is chasing radio, print, and even TV. And marketers are paying attention

From businessweek

For those buying advertising these days, the first stop for many is Google (GOOG). Already the leader in Internet search, the Mountain View (Calif.) company is quickly growing new media tentacles -- from buying and selling magazine and newspaper ad space to last week's announcement that it's entering the radio advertising fray and TV ad placement isn't far off.



To learn where the Internet search giant is headed, just sit in on a recent session with Google sales folks and one of its advertisers. It's a frigid, snow-swept afternoon in Malvern, Pa., at the campus of mutual fund giant Vanguard.

The meeting begins with a discussion of the fund company's simple text ads that run alongside the right side of a Google search and link Net surfers to Vanguard's homepage. That strategy is clearly a slam-dunk: Vanguard in November paid the least per keyword of any of its rivals yet scored the best rate of click-through from ads to its Web site. The Vanguard team is grinning.

COUNTING CLICKS. Then the contagion kicks in. The Google model has opened up so many possibilities for reaching consumers that the two sides at the cramped conference-room table are acting like they are rowing the same scull rather than buying and selling. Way ahead of schedule, they're quickly onto new Google products. Piquing Vanguard's curiosity: a series of banner ads on a network of small-audience sites tailored for the client by Google and a new product in which consumers can, if Vanguard bites, click an on-screen icon to make an Internet phone call to a mutual fund adviser.

This meeting lasts about 90 minutes, brief these days by Google standards. National sales chief Tim Armstrong says planning sessions can last a few hours, and some clients are asking for a "summit," a half-day deep-dive into all things Google. As Google's media footprint expands, Armstrong, 35, seems to be wearing the biggest sneakers, with his estimated 2,500-person sales and marketing unit. Based in Google's Times Square offices in Manhattan, Armstrong's sales group will help bring Net ad revenues to an estimated $6.5 billion for 2006, up from just $2 billion in 2004.

Google's popularity with advertisers is foremost based on cost and accountability. Its simple text-ad service, called AdWords, enables marketers literally to count how many Net surfers click from a Google text ad to the company's Web site. That ad model is increasingly preferred to traditional TV, print, and radio ads that have difficulty quantifying how many people are actually paying attention.

IT'S THE FOLLOW-THROUGH. But while Google has gone from search engine to media octopus in less than a year since expanding its reach, it hasn't lost all the feel of an Internet startup. Says a slightly self-effacing Armstrong: "One of our challenges is just figuring out the right way to sell and even who and how many should be in the room when we go see a client."

For the Vanguard meeting, there are just six people -- two from Google, two from Vanguard, and two from Vanguard's ad agency, Avenue A/Razorfish. It turns out that with AdWords, Vanguard in November spent less than 50¢ per click, one-tenth that of some rivals, and 14% of Net surfers exposed to the ad clicked through to its Web site.

That performance beats the response rate from a typical direct-mail effort, for example, of about 2%. And it's why Vanguard upped its Net ad spending by 33% since 2003, to $12 million last year, while it cut every other media category, according to TNS Media Intelligence. Vanguard spent $40 million total on ads last year, says TNS.

BLOG-WARY. Next up: how to better reach financial planners. So Google pitches the company a "site targeting" program in which its banner ads could appear on a handpicked network of news sites, blogs, and even message boards. But Vanguard is wary of throwing up its logo and Web site link next to unpredictable content like blogs. For now, Google looks out for advertisers with its own eyeballs.

But ad sales manager for financial services Jerry Canning lets it be known that Google is working on an algorithmic lever that advertisers might pull in the future to keep their ads from running next to blue or just pinheaded consumer-generated postings. In Vanguard's case, it might be someone mouthing off about its fees or an ill-informed analysis of college savings plans. "We're in the trust business, so we like to examine the content adjacent to our ads," says Sean Haggerty, Vanguard's marketing chief.

Vanguard is also interested in RSS feeds (for really simple syndication) and podcasts, to which retirement planners subscribe. It's a delicate balance, though, between putting up an effective ad and intruding on the Web surfer's self-directed content, worries Vanguard's director of marketing Marilyn Harvey. Such concerns surprise Armstrong. He's fascinated that, overall, many of the same advertisers that increasingly want to jam their brands into TV shows "are as sensitive as we are about polluting the Web experience."

"NO BRICKS AND MORTAR." Another of Google's new products now in the testing phase surfaces: Click-to-Call. This allows people with Internet phone service to connect to, say, a Vanguard call center via a mouse-click. Vanguard worries, though, about driving traffic to its centers during hours when staffing is low. The Net, after all, is a 24/7 medium.

Google's Canning assures Harvey that phone service can be targeted both by geography and time of day. Again, Harvey is interested but wary: She doesn't want to drive phone calls, which are expensive to handle, for general inquiries. "We like our Web site to do most of the work," she says.

Still, Vanguard's Haggerty is almost giddy with all the possibilities. "As big as we are, we are a Web and 1-800-number company. We have no bricks and mortar, so our Web site and call centers tell us what works," he says. He might even hike his now-small TV ad spending, but only after TV and the Internet mesh, as Google expects, in the consumer's living room. No wonder Google is examining buying up TV time and reselling it to its advertisers.

TABLES TURNED. But such ventures progress slowly, especially such recent moves as reselling magazine ad space and offering TV shows like Star Trek via broadband. "People think it's a no-brainer for us, but it takes time to do these things right," says Armstrong.

Yet the ad world has certainly been turned on its ear since the distant days (way back in 2003) when auto makers booted Armstrong and his staff out of pitch meetings because text ads didn't show pictures of cars. Now some General Motors (GM) ads actually link a GM brand name with the search engine for the instant cachet, calling on consumers to "Google Pontiac."

Says GM sales and marketing chief Mark LaNeve: "We're touting Google, frankly, because it stands for credibility and consumer empowerment, and we like the association." Recalls Armstrong: "I remember one guy in Detroit who cut us off, saying we didn't understand advertising." Now it's the advertisers that are busy trying to understand Google.