Google and RIvals will be Helped by Slow but Gigantic Surge to Online

Implications: Comscore's absurd data caused a seismic roar in the media world, but it turned out that the data was awry, as it is unfortunately with all analytic firms.  Google's growth is relentless, as is the growth of all online.  This article looks at a few of the ways other companies can compete with Google in advertising, amid the run-up by the juggernaut.

Analysis:

As I’ve mentioned before, the market for search, as we know it, is over, and Google has won.  Additionally, Microsoft and Yahoo! have both been weakened in this arena, do both their own inadequacy (Yahoo!’s painful delay in launching their advertising platform Panama to compete with Adsense and Microsoft’s painful delay in moving to a variable cost pay per click platform) and due to Google’s great no-cost branding campaign.

 

The first truism of Google’s news is that the onset of the catastrophic online advertising has been greatly exaggerated.  Comscore reported the doomsday news, and they are on the firing line.  They should be, as neither them, Neilsen / Net Ratings, Alexa, or Compete produces worthy statistics.  This is a huge problem.  Google, on the other hand, continues to be the machine that they have been to date, with no real signs of slowing on the ad market.  Even with a consumer slowdown in purchasing, which will have a greater impact on store traffic than on e-commerce but an effect nonetheless (Forrester projects a reduction in online retail growth from 21% in 2007 to 17% in 2008), Google and search are still king.

 

I would expect online ad growth to be very impressive over the next few years, even with ad recessions, as companies smartly move their ad budgets into the online space.  Currently, the ad distribution as compared to eyeball distribution is extremely poorly laid out, and this distribution continues to skew as the younger generation ages.  Simply put, online advertising is greatly underutilized by advertisers.

 

So that leaves open the question of whether anyone can compete against Google in this space.  Here are five of the various potential options:

 

<!--[if !supportLists]-->1)      <!--[endif]-->International – Google has an even wider lead in Europe, especially in the UK, but they are not impenetrable.  For one, there are pockets where Google’s penetration is low, especially in China, and those pockets can spread.  There are also obvious differences in these market, especially in wireless and in social shopping, and those advantages can be exploited (that is, before Google buys the exploiter J).

<!--[if !supportLists]-->2)      <!--[endif]-->Brand advertising online comes back in vogue – numerous studies show that brand advertising is as, if not more, effective online as it is offline, yet vertical and portal ad networks are not getting their fair share.  This is due in part to the failure to adequately measure the impact of these campaigns, the limited nature of the inventory (banner advertisements), centralized control of the branding budget away from the online group, etc.

<!--[if !supportLists]-->3)      <!--[endif]-->Increase of social marketing, in terms of ads through social networks (Beacon, MySpace Ads, etc) and blogs, or conversely ad networks that specialize in social media.

<!--[if !supportLists]-->4)      <!--[endif]-->Wireless marketing – now Google may at some point control this world, but they currently are just beginning to dip their foot in.  No one has figured out wireless as an ad medium.

<!--[if !supportLists]-->5)      <!--[endif]-->New search – there are numerous companies trying to be game changes in terms of search, from people-driven Wikia to visual search to multi-touch search navigation.  Whether anyone of these takes hold is an open question, but search as we know it will likely change dramatically over time.