Google assumes control of the behavioral targeting world

Google logoThe advertising system that is Google just got a whole lot stronger with word today that the company is entering the behavioral targeting world in a big way. There are two reasons this is extremely significant for local media companies.

One, Google’s Adsense program is so widespread that the cookie data they’ll gather from it automatically puts them in the driver’s seat in terms of understanding the behavior of people who use the Web. The more sites in the ad network, the richer the data on behavior. Behavioral Targeting (BT) uses cookies placed on users’ machines as a way to follow behavior from site to site. Erick Schonfeld of TechCrunch describes it this way:

Since Google already knows what each site or page is about, it will use this information to place each user in one of 600 subcategories of interest. If you visit tech blogs often, you are probably interested in technology. If you visit Trulia, you are probably in the market for real estate. Through AdSense, Google can now target ads not only based on the context of the page you are on, but also based on the context of the pages you have visited in the past, even if you are on a site that is completely unrelated. For instance, as a completely hypothetical example, it might show you a real estate ad targeted to the towns you were searching on Trulia when you visit a gadget blog.

Google’s Adsense is saturated in every market, and it is used by advertisers in those markets as well. Now, those advertisers will be able to target anybody, including people who have visited their own sites. This is called “retargeting,” and it’s one of the most powerful advertising methods ever created.

But there’s a second reason for media companies to be concerned. Google also gives users the freedom to control how they are being targeted. You can determine the use of your own cookie, and this is a game-changer for web advertising. Google is doing this to head off privacy issues, and it’s damned smart. Moreover, its database will gather even more precise information for targeters, because users can actually state what kinds of advertising they want served to them as they wander the Web.

Stacey Higginbotham at Giga-Om views this as both good news and bad.

Google even provides a downloadable opt-out option that will keep you opted out of Google tracking, even if you clear out your cookies. Nice. All of this is a beautiful step forward with regards to some of Google’s least invasive information tracking. Like a boyfriend bringing you a dozen roses after cheating on you, it’s a lovely gesture — but don’t let those flowers blind you to his faults. Google stands to gain quite a bit from people self-selecting their targeted interests, as advertisers might pay even more for delivering the most relevant ads to people ( I would totally participate in this if I never had to see another acai berry or belly fat ad again). Sure, some might opt out, but few people get upset about ads delivered based on information provided by cookies.

By moving in this direction (remember, Google owns DoubleClick as well), Google has thrown a serious monkey wrench in the plans of anybody who wants to be competitive in the advertising space that is the Web, and it sets the stage for serious examination from federal anti-trust agencies. Even members of the Yahoo! Consortium need to take notice, because this undercuts their efforts to seize behavioral targeting locally.

What is it about Google, and how have they become the number one brand in the world in such a short period of time? There’s even talk today about Google being added to the Dow, to replace either General Motors or CitiBank. The pie charts of local online advertising that Gordon Borrell puts out every year are looking more and more like Pacman. Google is leading the way, as pureplay web companies are gobbling up market share at an alarming rate. Whether you believe it or not, if you’re in local media, Google is your main competitor and the most serious threat to your well being.

Well, you say, but Google isn’t a TV station or a newspaper or a radio station or a yellow pages directory or any form of content creator.

No, but it is an advertising system, and this is why you should be afraid. Its ecosystem is the World Wide Web. Its reach is far and wide, but that’s not what makes this advertising system so powerful; Google’s real strength is that it’s an enabler of others. It wins by serving the needs of others in the enabling of commerce at all levels.

Google Analytics is rapidly becoming the default web statistics platform. Don’t think so? Just ask the advertisers in your market. You say you don’t use Google Analytics on your site? You will, because the advertisers will demand it. They’re the ones with the money, and in a great many cases, they know more than you do about the Web, thanks, of course, to Google.

Did you know that YouTube is the second largest search engine in the world? Google is first, but Google owns YouTube. What does that tell you about the future of video commerce? Smart auto dealers are using it to sell cars. What will be next?

Eric Schmidt on Charlie Rose ShowGoogle CEO Eric Schmidt, who understands well that his company is an advertising system, was on Charlie Rose’s show last weekend, and here’s what was said about monetizing YouTube. Note how unconcerned Schmidt is about the business model and the faith he has in the market to create itself:

Eric Schmidt:
So there is a total market of monetizable things. Here is a model for you. For things which are going to be viewed by 2 billion people, you’re going to use advertisements. And you’ll use, in the case of YouTube, you’ll use videos around the sides, you’ll use ads at the bottom, you’ll do 15 second pre roll or post roll. And all of those experiments are being tried at YouTube. I would say YouTube’s monetization of that is half way. we’re not where we need to be, but we’re much farther along than we were last year.

Charlie Rose:
Okay. Take social networks like Facebook and MySpace. They have the same problem.

Eric Schmidt:

Charlie Rose:
The argument is made that the people who are on Facebook are interested in what their friends are doing. They’re not interested in ads because they’re not searching for products.

Eric Schmidt:
But that denies the fundamental progress of innovation. There absolutely will be solutions for that. We just haven’t invented them yet. we’re still waiting for the 20 percent timers to come up with these insights.

Charlie Rose:
Got some Google boys and girls out there working on this as we speak.

Eric Schmidt:
You can’t sort of tell them. It has to occur naturally through the bottoms up process. So we’re waiting. But we know it will come, because the amount of time being spent on that is so significant that we know we can use that time for some form of entertainment, advertising or some other kind of immersive experience.

“So we’re waiting,” he says. Meanwhile, media companies are desperate to force the issue, and this may not be a good use of resources. What media companies want is a way to monetize content, but if Google has shown us anything, it’s that content is not king online, and if that’s your only play, you will always take a back seat to its (or somebody else’s) advertising system. If we want to compete with Google at the local level, we have to play the ad system game, but the response is usually, “That’s not our business model.” Enabling commerce is the real road to online profitability downstream, not multi-platform distribution of content that is increasingly seen as unnecessary to advertisers.

We can beat Google locally for two reasons. One, we have sales feet on the street, and, two, we have a mass media platform from which we can drive business. But we’ve got to first understand what that business is, and we can do no better than studying Google to find out. After all, everything about Google is out in the open. If we claim ignorance, it’s our own fault.

We need no other reason to become Google experts than this: the people formerly known as our advertisers and the people who will be advertisers downstream are already there.

(Originally published in AR&D’s Media 2.0 Intel newsletter)


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