Google's History in Advertising
Sheryl started by providing a little history on Google's approach to search advertising. She said that "before Google advertising was focused on the advertiser," but when Google was developing their advertising model they started by "focusing on providing useful information to users." In other words, they "wanted the ads to be just as useful as the search results."
While I would definitely agree that Google has been very focused on creating a good advertising experience for their users, I have to point out that the idea was not a new one. When Google started doing this type of advertising, Overture (acquired by Yahoo) had been delivering similar ads for years. This is why Yahoo owns patent #6,269,361 - which Google licensed from Yahoo right before the Google IPO.
Regardless, Sheryl gave a good example of sponsored results being more relevant that organic results, when she talked about searching for "Sunday NY Times Subscription." This is a query that implies a very clear user intent. In her example query, both the first organic link and first commercial link pointed to a web-page allowing her to get a subscription to the Sunday Times. However, the ad included a special 20% promotion that the NY Times was running.
Extend to Content Network
After successfully delivering ads with their search results, Sheryl explained that Google extended its advertising model to a network of non-Google content. However, they continued to try and ensure the ads were valuable for users by contextually matching the ads to the content. For example, if you are visiting a car site, then the AdSense ads should be about cars. I've written before about how vulnerable a source of revenue I think this is for Google.
What Next in Online Advertising?
Sheryl then highlighted two big changes to the way that individuals are consuming content, neither of which will be surprising to regular readers of Read/WriteWeb:
- Social networks play a great role in user's context
- Individuals going beyond consuming content to also creating it
She shared three key points for the future of online advertising:
- Advertisers need to get better at creating a 1:1 experience for their users. As an example, she cited the work that Cadillac did with their MyCadillac campaign.
- Advertisements need to continue increasing personalization. This was surprising to me, given that I don't believe Google has publicly announced any plans to incorporate behavioral targeting into their ad delivery system.
- Users are demanding the delivery of information to be an experience and advertising must respond to it, just like content needs to.
While I generally agree with all three of Sheryl's points about where online advertising is going, I think the the use of experience is a very loaded concept. It is important to point out that one of the things that ended up being so key for Google, and other search engine advertising programs, was that the ads were text.This made it much more efficient for ad agencies to create ranges of ads, ensuring that relevant ads were consistently delivered. In fact, in some cases the internal marketing department was able to create the text ads. To the extent that improving the experience requires rich media ads, it may be a very difficult process to personalize those ads - due to a more limited inventory.
What do you think about where the online ad business is heading?