Why Google will never conquer Madison Avenue

Why Google will never conquer Madison Avenue
By Dave Pasternack, Did-it.com
April 10th, 2007


Every new inroad that Google makes into non-search media creates more anxiety on Madison Avenue. This past week, when Google announced it would begin using its auction-based ad platform to sell television ads on Echostar’s DISH Network, a satellite-based network with 13.1 million subscribers, you could almost smell the panic.

Ad agencies have a lot to be concerned about, including audience fragmentation, consumer rebellion against intrusive ads, clutter, a failure to embrace technology, plus the overall secular shift of ad dollars from traditional untargeted media to targeted media. But any panic over Google is, in my view, unjustified, and so I offer this piece as a reality check.

Everybody agrees that Google rules Search. The question is whether Google can apply those same things that made them dominant in Search to non-Search media such as radio, television and newspapers. If it can, Madison Avenue, and the whole old media establishment, may be doomed.

There are, however, several fundamental reasons why Google may just as likely fail, or at least stumble along the way. Here are three of them:

1. The self-serve model only works with media that are not creative-dependent

Google has more than 400,000 advertisers using its Adwords system, but the text-based advertising they’re doing is a far cry from the way most advertising is created, especially in terms of the need for creative excellence to differentiate the messaging. No one needs an ad agency to write 40 characters of text using Google’s self-serve platform.

With non-search media, however, creative excellence makes the difference between campaign success and failure. For example, you can take the same exact script for a TV or radio spot, hand them to two different director/cinematographer/talent teams, and wind up with two completely different experiences, one wonderful, the other horrible. This is where talent, insight and experience count (and this is why talented, insightful, experienced producers will continue to make the big bucks). Google has yet to demonstrate any core competency in the creative area, nor has it expressed any interest in terms of getting into this field. For this reason alone, ad agencies can breathe a sigh of relief.

2. The mechanics of media buying doesn’t create interest in the medium: the audience does!

Sure, Google’s Adwords platform makes it easy to buy media. But few advertisers have been kept out of any media because they’ve found it too hard to buy. The mere fact that Google can make media buying easier doesn’t make the media in question any more attractive, in fact I’d argue that it makes it far easier for media neophytes to make serious, money-wasting mistakes.

There’s an even bigger problem with automated, auction-based media buying systems such as the one that Google is touting. While auctions may introduce efficiencies into the buying process, they also introduce uncertainty. How can any advertiser plan a multichannel marketing campaign when there’s always a chance that somebody, somewhere, will outbid them for a key campaign component?

It’s true that advertisers at the bottom rungs of the food chain may be attracted to the marginal discounts that auction-based ad buying may deliver to them. But price is rarely a big concern at the start of any advertising campaign: what matters are results. If results are good, then spending can be re-upped, and price discounts can be negotiated at a later stage.

Google (and its shareholders) may expect that providing a more automated, more efficient way of buying media will convince many of its 400,000 Adwords clients to take the plunge into non-search media, but in fact provides no compelling reasons to do so, and this is why the general response to its forays into non-Search media have been lukewarm.

3. Google only thrives where media is measurable

Google became a multibillion dollar powerhouse because those little text ads it matches to search queries are surprisingly effective, and this effectiveness can be precisely measured in real time. But broadcast television, radio and print are inherently unmeasurable media. Google can make such media easier to buy, and perhaps even a bit cheaper to buy, but can’t make these media any more measurable or transparent by itself. There are no real advantages to using Google to buy your media for you, beyond the marginal discounts and ease-of-buying issues discussed above.

The exception to this proposition exists in cable TV, where today’s generation of smart set-top boxes provide both measurability and the ability to provide targeted messaging to very narrow audience segments whose characteristics have been mined from network subscription databases. This is why the Echostar deal is important for Google: because it is the one area where it can actually add value, both for advertisers (who will be able to see highly granular, usage-based stats about how and whether viewers are consuming their messages), and subscribers (who will see fewer irrelevant ads).

Addressable advertising with a high degree of transparency and accountability is undoubtedly the wave of the future. But the Google-Echostar test is small, invitation-only, and it remains to be seen whether major advertisers, especially those seeking the kind of scale that one can only get from broadcast media, will get on board anytime soon. Furthermore, Google is certainly not the only player in this space, which is crowded with technology companies that have been working on the problem of making advertising more accountable and relevant for longer than Google has even been a company.

David Pasternack is president and co-founder of Did-it.com,