Tuesday morning I am interviewing Eric Schmidt at the Web 2 Expo. Usually I obsess about these interviews, this time, I’m more than obsessing. Why? Today there were 4000 people in the audience, and that’s quite something to look out over. And there’s much news happening around Google – this will be Eric’s first live interview in front of the industry since the DoubleClick deal, and I want to make sure it’s good. So can you help me? I’m reading a lot of stuff on the deal, of course, and still formulating my own thoughts (I think I’ll wait to post till after I talk to him), but here’s what’s on my reading list:
Alarm Clock: Google CEO Eric Schmidt called in on the announcement conference call and explained that Google did a strategic review this year and discovered that the scale of the display ad business was larger than the company had initially thought. To our ears this sounds like spin to justify the deal. Surely Google management knows that brand advertising is big business that Google has had problems with.
WatchMojo: …since the next wave of growth is display/banners at the expense of video (and the one after that being video), Google did not apparently blink today, spending twice what it spent on YouTube to keep DCLK out of the hands of MSFT.
PaidContent: When I asked why display advertising had taken on greater importance in the last year, Sergey Brin said, “We’ve though display advertising has been important for several years.” He mentioned several Google efforts in display but—to paraphrase—nothing on the scale of DoubleClick. He said “we’ve had a lot to keep us busy in search and search advertising” … that remains important but “we can now afford” to give more attention to display.
NYT (first story): The sale offers Google access to DoubleClick’s advertisement software and, more importantly, its relationships with Web publishers, advertisers and advertising agencies.
For months, Google has been trying to expand its foothold in online advertising into display ads, the area where DoubleClick is strongest. Google made its name and still generates most of its revenue from search and contextual text ads.
Charlene Li: There’s been rational points made from some voices in the privacy advocacy community — namely Lauren Weinstein from the California Initiative For Internet Privacy — that Google would refrain from creating detailed user profiles, especially to stay in the good graces of its users. My point above is that Google can create user profiles only with the permission of the publishers and advertisers that it serves — and can benefit from them only if those same parties participate. It’s unlikely that anyone in that value chain will want to risk violating user privacy, so only minimal data — if any — will be passed between parties.
Chicago Trib: At a time when advertising dollars and readership are drifting to the Internet at an increasingly rapid pace, many newspaper industry executives share Curley’s circumspection about the online giants.
Blogoscoped: Sergey Brin emphasized that user privacy will be handled as top priority among all the different integration challenges. Wonder what kind of potential privacy issues he had in mind? After all, DoubleClick is tracking a whole lot of web traffic with their cookies. Combine that with what Google can already track through all the sites running AdSense, and you got an even greater percentage of the web covered…(more)
The River: As Google moves to become more Madison Avenue — becoming more entrenched in the advertising/marketing mainstream — it takes the whole media world just a little more digital and technology-oriented. After all, Eric Schmidt has said he wants people to think of Google as an “operating system” for advertising, or some such. Can you imagine anyone even conceiving of an operating system for advertising, before Google?
Kedrosky: To borrow a phrase from Microsoft’s past, this is a brazen attempt to cut off Microsoft’s future air supply.
GoYaMi: In June of 2004 DoubleClick acquired Performics, an affiliate network and management company and search engine marketing agency in an all cash deal totaling between $58M and $65M.
Now, seemingly in an effort to acquire the DART ad technologies and publisher relationships, Google has also acquired an affiliate network and search engine marketing agency that consequently gets paid by their customers to help them perform better in Google.
Microsoft (via WaPo): Microsoft said yesterday that Google’s proposed purchase of Internet advertising company DoubleClick raises antitrust and privacy concerns that deserve careful review by authorities.
Executives at the software giant said they talked over the weekend with AT&T, AOL and Yahoo about similar concerns. Microsoft had bid for DoubleClick but lost to Google. (more from the Journal)
Google: This new partnership represents a tremendous opportunity for us at Google to broaden and deepen our inventory of available ads and to better serve both our publishers and users. Together, Google and DoubleClick will empower agencies, advertisers, and publishers to collaborate more efficiently and effectively, which will, in turn, provide a better experience for our users.
The Search (written two years ago): There was always the fallback of simply running banners on Google’s prodigious traffic—one deal with DoubleClick, an ad network that specialized in serving graphical banners, would probably net the company millions of dollars. But that felt like a sellout—DoubleClick’s ads were often gaudy and irrelevant. They represented everything Page and Brin felt was wrong with the Internet. “They didn’t want to turn the Web site into the online version of Forty-second Street,” recalls investor and director Michael Moritz.
So…what would YOU ask him?
What’s the first thought that runs through your head before you drive to work (eg. traffic sucks, I wish I had a better breakfast, gotta schedule more meetings, etc.), and what’s the last thought you have before you go to sleep (eg. it’s good to be me, bye-bye microsoft, I wish this mattress was softer, etc. )?
This deal is all about relevancy, and the flip side of relevancy is privacy.
Search history is a pretty good “database of intentions,” but it’s still very incomplete.
If I search for [maya], will my search history tell you if I’m looking for Maya Angelou or the Maya civilization or the Maya animation software from Autodesk? Maybe.
Right now my search for [maya] turns up all of these as both search results and PPC ads — not very relevant.
But if you also had my recent browsing history, you’d know that I’ve been looking for flights to the Yucatan so you’d show me search results for the Maya civilization and ads for adventure travel and hotels in Cancun.
The DoubleClick deal has the potential to deliver a big leap in relevancy for search results, search ads, AdSense ads, and DoubleClick ads — not to mention Dish/DirecTV ads down the line. And relevancy equals more clicks and higher CPCs.
But the only way this can happen is if Google solves the privacy riddle. And we can see that Google’s competitors are already sounding the privacy alarm (even though that’s the height of hypocrisy from folks like AT&T).
So my question for Sergey would be a two-parter. First, see if he thinks the DoubleClick deal can improve relevancy of both ads and search results.
Then second, how can Google confront the privacy issue head-on, in public and with with full transparency, to turn this potential privacy liability into a competitive advantage?
Just like Google rocked the world with Gmail’s “infinity plus one” data quota, they can turn the privacy issue to their advantage if they’re clever about it. Has Sergey considered this?
Sorry, I meant to say ‘Eric’, not ‘Sergey’.
In the spirit of Google’s strenuous academic requirements, why not ask a multiple choice question such as the below…
What was the true motivation behind purchasing Double Click for a 10X multiple?
A. “Cut off Microsoft’s future air supply.”
B. Next step in tracking all user behavior data on the Internet.
C. Dominate display advertising in the same way they have dominated search and contextual ads.
D. All of the above and much more.
Don’t they think they will slowly but surely get too big? The big publishers use Doubleclick because the big agencies use Doubleclick and they want a direct relationship with the big Agencies. The people in the big agencies would like a job, as would the people at the publishers, and an operating system would mostly mean that the client can book directly, letting the system handle the optimization.
But the brokering part that is how the old world works, doesn’t scale well enough for Google. And just those people that don’t scale will be very opposed to the entire automation. And even the top people don’t like it as they suddenly don’t have the customer relationship anymore.
This is why Google only has rest places at the moment and buying Doubleclick will likely not change that, just make them be seen as more of a danger.
Thoughts? 🙂
Here’s some more reading for you.
1. “We do not intend to compromise our user focus for short-term economic gain.”
http://investor.google.com/faq.html#users
DoubleClick has a bad reputation among users, and is perhaps the most-blocked ad domain there is. Google’s DoubleClick FAQ says the benefits for users are faster page loads and more relevant ads. How will Google make DoubleClick ads more relevant without compromising privacy?
2. Relevancy vs. Privacy
http://avc.blogs.com/a_vc/2006/08/relevancy_vs_pr.html
Read the comments — users see this deal as a sellout to serve advertisers and publishers. How will Google maintain its reputation as a user-focused company, willing to forego short-term gain for the best possible user experience?
If you simplify and say that the display ad business is the product of entrenched networks and relationships between publishers and larger advertisers and not technology, how does Google intend to innovate in this space (which they presumably would in order to get any direct increased value out of an aquisition)? If it’s the market data Google is after (presuming that Google will not track users), how will they gather and use that data without alienating the publishers and large advertisers (who already don’t understand what Google does and/or see them as a danger)?
Hello John,
When integration is complete, Google will gain access to the conversion data of all Doubleclick advertisers, including search conversion.
For privacy reason, they might not look into individual conversion data, but what would prevent them from aggregating conversion information on the same keyword / industry across all the advertisers operating on DFA?
Question to Eric: What are you planning on doing with keyword conversion data? Is there a point where more than simple relevancy, Quality score may be influenced by conversion rate?
Are G’s “Ten Things” still valid?
For example:
“It’s best to do one thing really, really well. Google does search.”
How are random banner ads or video streaming related to search? And if they aren’t, is it time to revise the “philosophy”?
Questions for Eric:
1.) Google is looking at the overall advertising market (DoubleClick, Clear Channel Radio, Dish Network, AdScape, etc), is an advertising exchange service the next step to get into the long tail of traditional audio/video (the idea is to get new advertisers right?)
2.) We have access to look at our search/click history and a RSS feed of our search history, can we expect to see the same for the data that will be collected from DoubleClick ads, is this how Google is going to give us access to the information they know about us? will an API be available?
3.) A comment about Twitter success in an area related to what Dodgeball is doing and the frustration that the founders are expressing should be interesting too, is Google still a place where projects in the 10% spectrum (from the 70-20-10 formula) can shine?
You should also read http://www.democraticmedia.org/jcblog/?p=240
Ask:
How will Google react if MSFT rolls out ad-blocking software via its auto-update software
¿How will Google decide when to copy, “enhance” and provide the functionality of any popular mashup built on its APIs?
I’m referring to what just happened with Google My Maps; some people are afraid that once Google sees that a good business model is built on its infrastructure, Google will take over based on its capabilities and make the offer to the market itself.
BTW, John, today it’s my birthday. It would be a great present if you pop the question to Eric.
My question is simple: “How will Google ensure that the Doubleclickian graphical advertising is relevant?”
Call me stuck in Google’s 1999, but to me it is still all about relevance. While it might make a lot of business sense to underlay advertising with an operating system, it sounds like the operating system Google is building is just a unified way to take bids, do auctions, and push ads to multiple channels in an easy way. That may be good business.. but it’s not “Googly”, i.e. it does not hold “relevance” at its core.
So how will Google ensure that graphical ads are relevant?
One thing Google can do is force the advertiser to write a little text blurb accompanying the ad, like a regular adsense ad. Relevance can then be computed on that text. The problem, however, is that the text isn’t actually shown to the end user. There is the opportunity for advertisorial disconnect. What the graphical ad shows does not have to be what the underlying text says. And algorithmically, Google has no way to police that, right?
So how will Google ensure that graphical ads are relevant?
Mb, above, touched on my question a little bit, but did not press far enough. If I understand mb’s comments, he/she is saying that by using my clickstream information (which becomes ubiquitous with the new Google + Doubleclick reach) Google can ensure relevance by showing me advertisements that are related to my clickstream.
That may be well and good.. if we are talking about matching text to text. You can show me an ad about historical Maya tours if I just booked flights to the Yucatan.
But the question remains: How do you ensure that your ad about historical Maya tours really is about historical Maya tours? Since the graphic of the ad does not have to match the text of the ad, and since Google has no way to algorithmically/semantically understand the contents of a graphical ad, how will Google ensure that the graphical advertising is relevant?
Here is another question. This one (I apologize in advance) is a little more snarky than my previous, more earnest, one.
Eric: If I download Google Pack, it bundles the “Spyware Doctor” software.
Spyware Doctor detects and removes DoubleClick tracking cookies.
So Google essentially admits that DoubleClick, to this very day, behaves like spyware.
How do you reconcile this with your purchase of DoubleClick? Why is this not a double standard?
JG,
AFAIK the ad model of many publishers requires that ads and content are *independent* of one another. This is what I meant when I asked my question(s) above. Otherwise, there may be some “ethical” issues involved.
Indeed, if you “follow” this argument a little, then this deal will not be very different than the YouTube deal: spend a lot of money, get no value in return.
I’ll betcha that someone is laughing enough to wet their pants (e.g. Hellman & Friedman and/or JMI Equity?) — as there very well may be a large scale exodus of “reputable” advertisers / publishers.
JG,
AFAIK the ad model of many publishers requires that ads and content are *independent* of one another. This is what I meant when I asked my question(s) above. Otherwise, there may be some “ethical” issues involved.
Indeed, if you “follow” this argument a little, then this deal will not be very different than the YouTube deal: spend a lot of money, get no value in return.
I’ll betcha that someone is laughing enough to wet their pants (e.g. Hellman & Friedman and/or JMI Equity?) — as there very well may be a large scale exodus of “reputable” advertisers / publishers.
My question re performics: Will they use performics’ knowledge and data about managing SEM campaigns for lead gen/affiliate advertising to extend their PPA capabilities?
(See my link for more elaboration.)
nmw: AFAIK the ad model of many publishers requires that ads and content are *independent* of one another. This is what I meant when I asked my question(s) above. Otherwise, there may be some “ethical” issues involved.
I actually already think there are ethical issues involved, but I don’t quite understand what you mean by this above. Explain?
There will be many different *kinds* of sites on the internet — I think something like “hotels.com” is a good example of what I have long since referred to as “yellow page category” sites (indeed, “hotels.com” and “shopping.com” have been the examples I have used most often — but many more are sprouting like mushrooms, usually first having a “stint” as “parking pages”). The competition in this space will be among the TLDs.
Something like nytimes.com is *completely different* — they are selling “content” (and it is *supposed* to pure/unbiased/etc. [well, nytimes.com will actually have a *different* bias than say sciam.com and/or si.com]). It is very important for such a publication to be “authentic” in the sense that there is a clear division between “journalistic content” and “advertising” — if this becomes murky, the reputation of the journal could plummet, and then there’s no advertising, etc. [vicious circle]).
So business directories and online news publications are actually quite different animals — and I would say that a traditional search engine such as Google would need to be more independent than being an ad agency.
I guess we’ll see what happens, right? See ya back in this thread in 3 years, OK? (remember: mark your calendar!! 😉
😀 nmw