A couple of weeks ago, I wrote in my all-too-infrequently-updated-blog about the paradox of competition that Google faces. On one hand, they are all about the consumer, making them a demi-god in the eyes of searchers. On the other hand, they are beginning to competitively enter into markets previously thought to be safe from Google’s strengthening ability to dominate new areas of business. Froogle, for example, still in beta and rarely marketed, is now 5th in the comparison shopping industry with 8.49% market share. Considering industry leader Shopping.com has 18.38% market share, it becomes easy to see how quickly consumers adopt Google services.
I read this article on Reuters last night that talks about how top New York ad agencies are feeling the pressures of Google’s expanding markets. Additionally, Brian McAndrews makes a great point at the reuters Media and Advertising Summit in Thursday:
“There is an inherent conflict of interest there,” said Brian McAndrews, chief executive of aQuantive Inc., a company that is both a big buyer and reseller of Google advertising but also a rival supplier of ad measurement tools.
“Am I going to use Google to measure my search results on Microsoft and Yahoo? Am I going to use Google to measure my advertising results on ESPN?” McAndrews asked rhetorically during the Reuters Media and Advertising Summit on Thursday.
Now, I have two thoughts on this. First, yes, regardless of the “Don’t be Evil” policy, the conflict of interest is immense. Google looks to justify advertising costs on its AdWords service, but also allows for reporting on other engines’ performance as well. The responsibility then falls upon the business owner/marketer to verify the data, or measure it separately with other analytics tools.
Second, I can’t empathize with the traditional ad agencies on this one.
Nowhere is this more closely felt than Madison Avenue, where the advertising industry sees Google encroaching on turf ad agencies and media buyers have considered their own for much of the past century.
I may be speaking way out of line seeing as I have no traditional ad experience, but as a business person, I look at the advertising industry and think about how amazingly lucky they have been to not be forced to redefine and reinvent their businesses every 20-25 years in order to be successful. Microsoft has just started going through this, Apple began a few years ago, Dell is coming up on this, IBM did this several years ago, and the companies that haven’t, the Xerox’s, and the HPs are dying. There has been little forced innovation in traditional advertising since TV, and I sense that large ad agencies may have a feeling of entitlement here as they’ve grown used to not needing to innovate to continue competing at the level they have been, when they should be focusing on how this new medium can be leveraged to their benefit and the benefit of their clients.
At my previous and current companies, we have always been amazed that no large ad agency has taken the leap into defining themselves in the online marketing space. It seems as though they are waiting for it to become more profitable and larger market (managing client ad campaigns..banner, sem, email, etc) before getting into it.
Just one note on that: Microsoft did that with Search, and we all know how that’s turning out.