Le Futur de la publicité en ligne : Search vs Display

Google is mainly known as a Search Engine. In Belgium, Google Search has about a 95% market shares. Besides Search, Google offers also Google Maps, Google Earth, Google Analytics, Google AdWords, Google AdSense, now Google Plus, Youtube and many other products. Today we will cover Google’s role in the online advertising industry and some of its most expensive acquisitions such as DoubleClick and YouTube.

First of all, a little bit of history. Back in the early days of Google, 23 October 2000, Google advertising platform, Google AdWords, was launched in beta with 350 customers. A few years later, 4 March 2003, Google announced Google AdSense enabling publishers large and small to access Google’s vast network of advertisers. Then, on October 9th 2006, Google announced its acquisition of Youtube for $1.65 billion. Finally, one year later, 13 October 2007, Google acquired Doubleclick for $3.1 billion. Amongst hundreds of acquisitions, YouTube and DoubleClick were the two most expensive.

Google has been continuously beefing up its advertising offer and financial results are following. Google reported total revenues of $9.72 billion in the third quarter of 2011, representing a 33% increase over third quarter 2010 revenues. Google-owned sites generated revenues of $6.74 billion, or 69% of total revenues while Google’s partner sites generated revenues, through AdSense programs, of $2.60 billion.

With over 95% of its revenues coming from advertising, it is obvious that Google is a technology advertising company.

Google Advertising

Both Semetis founders worked at Google during the year of DoubleClick acquisition. But why was DoubleClick acquisition so expensive and important?

First of all, what’s DoubleClick? Basicly DoubleClick is an Ad serving serving platform. It defines its offer as followed: Google's DoubleClick™ products provide ad management and ad serving solutions to companies that buy, create or sell online advertising.

Until then, Google had its own network. From the one hand, Google search properties (ie Google Search, Portals using Google Search, Google Maps,...). And from the other hand, Google Content Network (now called Google Display Network) made of numerous long tail websites using AdSense.

Google Search Advertising

Google Search is the leading search engine worldwide in terms of users and revenues generated. Its advertising platform offers advertisers the most efficient online direct marketing solution. Indeed consumers let Google know precisely what they are looking for. It gives Google a unique opportunity to offers its advertisers to match their offer with consumer intents while they are searching for it.

Thanks to this efficiency, Google AdWords can be seen as more than just a traffic acquisition channel. Online advertising having a high level of measurability: how many sales were generated by AdWords visits vs how many dollars were invested in it.

It has two consequences. The first one, Google AdWords has been considered by marketeers as a performance based channel only. The second one, because of its efficient auction based model integrating quality metrics*, Google AdWords is pull marketing (vs a push marketing). If people do not search for your brand, products, services, you won’t be able to show and push your message.

Google Building its Display Offer

Google AdWords has allowed Google to build a huge base of advertisers worldwide. Google AdSense introduced its advertisers to the Google Display Network with Text ads and Image ads. Nevertheless Google realized that Display advertising will become huge in the future and had to invest in order to strengthen its offers, its technology and its reach.

As Internet was and is still expending, from a marketing perspective, it means more consumers being online. Brands who are willing to communicate with their clients and potential clients need to move online too. They need to establish their online presence through website, blog, social media, ecommerce site and their advertising budgets need to follow there as well.

Google AdSense has allowed many small publishers to monetize their audiences offering advertisers advertising spaces. But large advertisers are also willing to be shown on top “quality” websites and Google’s offer is lacking of these top premium websites. Often large publishers have their own intern sales house. That’s where Youtube fits in. Youtube offers Google a Top Brand with a high reach and flexibility in terms of targeting being an owned properties.

Regarding the technology, DoubleClick offers Google an edge in Display advertising with an already worldwide adopted ad serving platform. Technology in this space is key. Technology is synonym of performance and performance is what will accelerate online advertising adoption by small and large advertisers. For Google it means competitive advantage and thus revenues.

Targeting technologies have improved tremendously these last 5 years. Google evolved from pages content, sites and topics targeting to audiences and remarketing. Offering capping, rich media, real time bidding, reporting and many more options to manage, control and report one’s online advertising campaigns.

Youtube with is 3 billion plus views per day offers Google a huge reach and potential. Eventhough Google do not create content, Youtube is hosting video’s from long tail amateurs to premium studio’s. Google has full control in terms of advertising and in how to monetize the site.

DoubleClick with its already working and adopted technology by many publishers (DFP) and advertisers (DFA), offers Google more potential reach than its actual AdSense network. As a matter of facts, Google is well prepared to take on the online Display advertising business.

From Search to Display - From Conversions to Branding

As Google Display revenues are growing to top $1 billion in 2011, to accelerate this path, Google’s challenge is to not be only perceived as the Search Engine by the marketeers anymore. The best online direct marketing solution but also a top Brand buidling solution.

Internally, Google has integrated DoubleClick’s teams, created, for already a couple of years now, YouTube teams. Externally, it has also started advertising its display advertising solution with the Watch This Space campaign even on Time Square.  Finally, in order to take the lead in the sector, Google needs the help of its partners: Search Agencies and Media Agencies.

Online Display Advertising, Realtime Bidding and Agencies

Online display advertising is obviously not a new market. It exists for more than a decade. Banners where amongst the first online ad formats. AdWords (and AdSense) breakthrough was about its openess. Any advertiser, from the local shop to the multinational company, was able to buy the same advertising space and compete against each other.

AdWords buying is open thanks to two elements: First, it is  an auction based model (based on price and quality*) allowing sometimes a small local company to be more relevant for the searcher than a large corporation even though selling the same product/service and beat it. Secondly, AdWords is a self-serving ad system. Any advertiser can access the platform. There is no need for a sales representative to intermediate in the transaction. There is no booking system. Facebook with its Market Place is offering the same new open self-service model.

This media buying process has hurt large Media Agencies. Indeed Media Agencies used to played on their media buying scale to negociate ad spaces’ prices down. It worked perfectly well in the offline world and in an inventory booking space. Such an environment requires good negotiating skills while the service (the planning, the execution, the management and the reporting) was becoming less important. This trend was accelerated with the 2008 economic crisis which put even more pressure on the prices and margins.

At the opposite, a self-service ad environment requires much more services to differentiate itself from the competition. Anyone can enter the market and declare himself as an online ad agency/expert.

Beyond Online Search, Online Display Advertising

Because of its identical buying process, at Semetis, we believe search agencies have built a unique expertise in managing online real-time buying platforms. As a consequence, they are ideally positioned to manage online display ads campaigns.

At Semetis, we focused on client service. It means business perspective, technical skills and analytical competences. It allow us to understand our clients objectives and to plan, set up, launch, manage, optimize and report any online campaign accordingly.

Google Display Network

For two years now we have been managing our clients’ display campaigns on the Google Display Network. Our early days challenges were implementing a process specific to Display advertising, understanding Google Display Network and its value proposition, targeting the network according to our clients’ objectives, measuring its performance, and positioning the Google Display network as a complementary network to other Display networks. We made several studies with our clients underlying Google Display Network important reach and similar quality (bounce rate or even CPA).

Search versus Display Creatives

Search advertising has a very competitive advantage which is the low cost of ad creation. The ad being a simple text ad does not require almost any creation cost. It can also be easily modify. On the other end, image ads and flash ads creation represents a cost to take into creation. It has many restrictions depending on the network (file size, dimension, loop length, etc.). Besides it implies also more time to market since approval process is slightly longer than for search. For these reasons, it is important to have a strong process in place in order to deliver on time.

Planning and Targeting on Google Display Network

Planning and targeting is also quite different from search. Search has an “always on” approach. You need to be present whenever someone search for your brand/product/service. It’s pure pull marketing. Display advertising is push marketing and depends much more on your global communication plan. Then, when it comes to targeting, you do not think in terms of keywords your potential clients/consumers might type into Google. You will think in terms of reaching your audience. Today Google offers a wide range of targeting options from site targeting to interest based targeting to achieve any Branding goals.

Continuous Follow-up

Managing these campaigns needs a daily follow up. Realtime bidding implies frequent changes of competition bidding, unknown good performing sites might pop up and require a more specific bidding, poor performing audiences might be excluded from the targeting.

Measuring Display Performance

Measuring Display performance won’t be based on the same benchmarks as of Search. Indeed when seeing an image ad people might not be as advanced in their purchasing process as they are while searching on Google. Objectives are and should also be different. Display advertising might initiate the trigger and search close it. Reach (unique visitors), visits’ quality (bounce rate, time on site, pageviews) and Multi-channels funnel conversions will be important.

Same competences but different objectives

As detailed here-above Search and Display advertising requires the same competences even though their objectives need to be fixed differently. That is why the understanding of clients’ business is the most critical point. Then, you need the processes and the skills to execute the plans.

Google And The Future of Display Advertising

In 2011, the online display advertising market is between $20 and $30 billion. But Google is convinced it will be a $200 billion industry. Technology and platforms are improving. Online population keeps growing and soon or later tv and internet will merge.

With its numerous, and sometimes expensive, acquisitions, Google will play a central role in the online display business. It has already the advertisers, the technology, the platform and the network.

For online advertising agencies, business and managing competences will be thus crucial. Search Agencies used to open platforms and realtime bidding technologies have learnt how to manage online campaigns. Moreover, search marketing being performance oriented, Search Agencies have also learnt the business objectives of their clients. They are on the first line to take over this opportunity.

At Semetis, we are ready for this shift for 2 years now and have it in our DNA. We believe it will take another 3 to 5 more years to complete the change in the media buying process.

Ecrit par Nicolas Debray