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A New Advertising Engine
[October 28, 2006]

A New Advertising Engine

(Newsbytes Via Thomson Dialog NewsEdge) NEW YORK -- At Google Inc.'s new office near the Hudson River, Volvo's top U.S. advertising manager has just flown in from California to talk about next year's launch of a new car, aimed at the hip, 20-something crowd.

Linda Gangeri, a Volvo executive, wants to hear Google's ideas about online video. She high-fives the company for its recent decision to purchase online video phenomenon YouTube Inc. and asks for Google's thoughts about how to advertise the new car, which Volvo is considering launching with commercials only on the Internet.

"This is a target we've never reached before and one you cannot reach via traditional marketing messages -- they reject it," she tells them. "We look to you and challenge you, with Google being more of that young, targeted mind-set."


Just a few years ago, Google was a bit player on Madison Avenue. It specialized in tiny text ads shown alongside search results and in the margins of thousands of Web sites that partner with Google.

But recently Google has moved beyond search, reaching out to big advertisers to sell them online graphical or display ads on its partner sites. The firm is developing new Web video ad formats that could give TV commercials a run for their money and has been staffing up new projects to sell ads offline in newspapers and magazines and on radio.

Earlier this month, Google's ambitions were on display when it opened its new office in the old Port Authority building, covering 1 1/2 floors on an entire Manhattan block in the funky Chelsea neighborhood. The company has recruited executives from some of the biggest media firms and is rapidly expanding its 500-member team here in an attempt to cultivate relationships with Madison Avenue and large advertisers.

"There's probably a false assumption in the marketplace that Google is a bunch of machines in Mountain View [Calif.] and we don't have relationships like you might see at Conde Nast up the street or at ABC television," said Patrick Keane, Google's director of product marketing.

Google's strategy is to bring the math and science that fueled its search-engine ad success to other forms of marketing. The company's existing text-ad system allows advertisers to see how many people click on each ad and pay only when someone clicks, helping advertisers calculate the return on their marketing dollars. Eventually Google hopes to offer similar metrics for online video ads and off-line campaigns, though it is still in the early stages of figuring out how those might work.

"They're trying to take the DNA of search marketing" to apply it to other kinds of advertising, said Timothy Hanlon, senior vice president at Denuo, a new-media consulting division of Publicis Groupe. Hanlon added that the bigger pot of money in traditional "brand-marketing budgets" is a natural target for Google.

In wooing Madison Avenue, Google faces some challenges. Its foray into display and video ads brings it face to face with rival Yahoo Inc., which established its office here in 1997 and is regarded as the leader in helping large companies develop branding campaigns on the Web. Last year, Google reorganized its entire sales force into 12 industry-specific teams after realizing that big advertisers didn't want a sales team of "generalists"; they wanted experts familiar with their field.

Ad agencies seem open to working with Google, though some said the search firm has tried to go around them and pitch advertisers directly. And while Google's ad products beyond search are experimental, they seem worth trying, some said.

"The scariest thing about Google is they don't know what they don't know," said Jason Clement, associate director of search engine marketing at Carat Fusion, an advertising agency. "There's a difference between a Harvard mathematician and someone who's been selling ads for 20 years. The mathematician is smarter, but if you want Coca-Cola's dollars, the guy selling billboards for 20 years is the one you want."

Unlike Yahoo, AOL or other Web sites that attract a big audience, Google doesn't sell ads on its home page, Google.com. Instead, it partners with thousands of other Web sites and places ads on them. Most of the ads today are small text items, titled "Ads by Google," but increasingly Google is helping companies place banner and video ads on these same partner sites.

By applying technology to measure their impact, Google plans to differentiate its banner and video ads from those of its competitors. Teaming with online research firm ComScore Networks Inc., Google is trying to correlate the effectiveness of each ad by tracking the number of people exposed to it who later perform searches about the product.

For example, people who visited the AutoTrader.com site this summer were shown an image of a Volvo sport-utility vehicle advertising the car for lease at $389 a month. ComScore placed "cookies," or tracing files, on the computers of visitors and tracked how many typed the word "Volvo" or "Volvo SUV" into a search box weeks or months later. During the Web campaign for the Volvo's XC90, Google said 39 percent of Internet users who were exposed to the ads later conducted online searches for Volvo cars.

While the online campaign was running, Google also measured a 183 percent increase in visits to the Volvo Car Corp. site, Volvocars.com, and a 164 percent increase in the number of people who clicked more deeply into Volvo's site, indicating greater interest.

Google did not try to correlate viewership of the online ads with car sales data. Nor could it say how much impact a TV campaign Volvo also was running might have had on Internet searches or site visits.

Anna Papadopoulos, interactive media director of Volvo's campaign with ad agency Euro RSCG 4D, said Google's data provided Volvo with confidence and made clear that Google wanted to be accountable for the results. "At the very least, we were able to know that the Google campaign was attributed to" those numbers, she said. Papadopoulos said Volvo also advertises with other major Internet networks, including Yahoo, Microsoft Corp.'s MSN and AOL, and that each has its strengths. Yahoo and MSN, for example, use technology that can show ads to potential customers who have indicated an interest in products based on past browsing. While Google doesn't offer that capability, Papadopoulos likes Google's hands-on customer service. She said she also was impressed with how Google matched the demographics of likely Volvo buyers with visitor demographics at dozens of small sites.

Google, which announced this month that it was buying online video site YouTube for $1.65 billion in stock, has big plans to expand into video advertising. The firm hasn't announced exactly what it plans to do with YouTube, but both properties are pushing a new kind of Internet advertising called "click to play." The ads are essentially online video commercials that don't play unless a visitor clicks on the image.

Google said it opposes "pre-roll" Web ads, which resemble TV commercials by interrupting site visitors and forcing them to watch a video before they can see the content they are seeking. With Google's click-to-play ad service, advertisers will be able to select specific Web sites where they want their video ad displayed or allow Google to select the sites, based on whether the audience of a Web site or its content matches that of the advertiser.

Google thinks the ads will do well with movie studios, which could use trailers as click-to-play ads, and with carmakers, who can use video to draw Internet users shopping for a car. But the format remains new and largely untested.

As one of the most-searched automakers on the Web, Volvo agreed to use Google's new video format to apply its recent "Who Would You Give a Volvo To?" TV ads to the Web. And it is thinking about using the format for its new car next year.

"As a small brand, we do have to take risks," said Volvo's Gangeri. "But at the same time, if you want to reach a target like [our new vehicle], you can't do that in the safe, secure world of Volvo as we know it."

2006 The Washington Post Company

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