TELECOM Digest OnLine - Sorted: Google Wants to Dominate Madison Avenue, Too

Google Wants to Dominate Madison Avenue, Too

Monty Solomon (
Sun, 30 Oct 2005 12:27:21 -0400


Mountain View, Calif.

In many ways, Larry Page and Sergey Brin seem an unlikely pair to lead
an advertising revolution. As Stanford graduate students sketching out
the idea that became Google, the two software engineers sniffed in an
academic paper that "advertising-funded search engines will inherently
be biased toward the advertisers and away from the needs of

They softened that line a bit by the time they got around to pitching
their business to venture capitalists, allowing that selling ads would
be a handy safety net if their other, less distasteful ideas for
generating revenue didn't pan out.

Google soared in popularity in its first years but had no meaningful
revenue until the founders reluctantly fell on that safety net and
started selling ads. Even then, they approached advertising with the
mind-set of engineers: Ads would look more like fortune cookies than
anything Madison Avenue would come up with.

As it turned out, the safety net was a trampoline. Those little ads --
12 word snippets of text, linked to topics that users are actually
interested in -- have turned Google into one of the biggest
advertising vehicles the world has ever seen. This year, Google will
sell $6.1 billion in ads, nearly double what it sold last year,
according to Anthony Noto, an analyst at Goldman Sachs. That is more
advertising than is sold by any newspaper chain, magazine publisher
or television network. By next year, Mr. Noto said, he expects Google
to have advertising revenue of $9.5 billion. That would place it
fourth among American media companies in total ad sales after Viacom,
the News Corporation and the Walt Disney Company, but ahead of giants
including NBC Universal and Time Warner.

Not content to just suck advertising dollars from Web search, Google
is using its windfall to pay for an eclectic range of ambitious
projects that have the potential to radically disrupt other
industries. Among other things, it is offering to build a free
wireless Internet network in San Francisco, plans to scan nearly every
book published and is testing a free classified advertising system it
calls Google Base.

More quietly, Google is also preparing to disrupt the advertising
business itself, by replacing creative salesmanship with cold
number-crunching. Its premise so far is that advertising is most
effective when seen only by people who are interested in what's for
sale, based on what they are searching for or reading about on the
Web. Because Google's ad-buying clients pay for ads only when users
click on them, they can precisely measure their effectiveness -- and
are willing to pay more for ads that really sell their products.

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