Three years ago, Google acquired DoubleClick to grow beyond search advertising. The $3.1 billion purchase allowed them to tap the market for display ads on the top and sides of webpages. Google’s stock soared 35% in the two months following the deal.
Since then stocks have stagnated. Google brought back behavioral advertising halted by DoubleClick. The current wave of “Do Not Track” bills in Congress threaten to limit the cookies companies can use to track ad effectiveness. The attention of anti-trust regulators has also been captured in Europe.
Google allows users to adjust online profiles and even opt out of tracking from the ads preferences manager. According to Neal Mohan, VP for product management at Google, for every seven users that adjust their preferences, only one user opts out. He says, “What we find is that the more relevant the ad, the better the user experience is.”
Threats to Google display ads include Microsoft, Facebook, Twitter, and even Apple. Yahoo! was the big contender, but now Twitter is poised to take in larger shares of ad dollars. Apple’s iAd program for mobile devices is going to prove a worthy adversary as people spend more time online mobily, even shopping from their smartphones.
As of October display ad sales by Google were budgeted at $2.5 billion annually. Google says display ads reach 80% of internet users. The company says 99% of its 1000 largest advertisers run both display ads and text-based search ads.
Analysts counter that at least half of said revenue is from ads run on YouTube (Google acquired in 2006). YouTube would likely be successful without display revenue. YouTube surpassed Google as most-visited site on the net. Video marketing is proving a wise investment for many businesses.
Bloomberg Businessweek cites Facebook as Google’s biggest threat to display ads. (I think they could’ve ended the statement after “Facebook is Google’s biggest threat.”) Facebook revenue in 2011 will be around $4 billion. Revenue comes almost entirely from the small display ads run on members’ pages. Facebook sells these ads directly, not allowing outsiders like Google access to Facebook’s 500 million members.
Google senior vice president of advertising, Susan Wojcicki says “Facebook will definitely do interesting things and has an interesting perspective, but the web is a really big place.” She’s been at Google for 12 years now. In fact it’s the only job that showed on Wojcicki's LinkedIn profile. My guess is that she’s hoping to stay there a few more years. But I do have to wonder if she is on Facebook.
For help with your display ads, call Fletcher Freelance today. (715) 584-6773
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