By Eric Auchard
Google Inc.'s search for revenue beyond its wildly popular pay-per-
click advertising system has everyone from publishers to phone
companies unnerved by the seemingly endless scope of the Web leader's
Nowhere is this more closely felt than Madison Avenue, where the
advertising industry sees Google encroaching on turf ad agencies and
media buyers have considered their own for much of the past century.
Seeking to diversify its revenue base, Google has begun offering
advertisers a set of free marketing analysis tools to help customers
boost how much they spend on text ads carried by Google.com or
affiliated sites. It is selling ads in print publications and expected
to move into branded, graphical ads.
These moves, which some see as competing with systems offered by
independent companies and ad agencies themselves, has provoked
grumbling among many in the advertising industry.
"There is an inherent conflict of interest there," said Brian
McAndrews, chief executive of aQuantive Inc., a company that is both a
big buyer and reseller of Google advertising but also a rival supplier
of ad measurement tools.
"Am I going to use Google to measure my search results on Microsoft
and Yahoo? Am I going to use Google to measure my advertising results
on ESPN?" McAndrews asked rhetorically during the Reuters Media and
Advertising Summit on Thursday.
The company is the top independent supplier of ad-buying tools
advertisers use to buy online ads on Google's ad network as well as
Yahoo, Ask Jeeves and other networks.
Wall Street analysts estimate that about 5 percent of the $10 billion
spent on online ads runs through aQuantive's system.
"From a consumer perspective, Google is all good," Merrill Lynch
analyst Lauren Rich Fine said in a recent note to clients. "However,
Google is starting to attract negative publicity (tied to) its foray
into other mediums."
His argument that Google's encroachment into other businesses, including
the large advertising agencies, drove Google shares down 4.7 percent
last Monday, its biggest percentage loss in a year.
The stock has since recovered most of its losses, closing at $417.70
on Friday, but the debate over Google's power to transform whole
industries only continues to grow.
GOOGLE GOBBLES GROWTH
The success of Google's keyword search system among advertisers has in
just a few years spawned a niche industry known as search engine
optimization (SEO) made up of tech-savvy marketers who help companies
find ways to insure their Web sites feature at the top of Google
searches and ads.
"Google needs this ecosystem," New York-based Susquehanna Financial
analyst Marianne Wolk said of the web if ad agencies, marketing
support firms and other industry organizations that help advertisers
make use of Google ads.
David Verklin, chief executive of Carat Americas, the largest
independent media services company in North America, with $6 billion
in customer billings, said Google has the power to create new
businesses, but also tear them down.
IProspect, a unit of Carat, is one of the search marketers who have
prospered on the back of Google's success. Companies like Motorola
Inc. pay iProspect to target ads tied to 300 words associated with
Motorola wireless products, he said.
Verklin complains Google has begun charging marketing firms like his
own $50,000 a month to use Google's ad buying system.
"We're going to try and convince (Google) we think that's a bad idea,"
Verklin said. "I don't want to have to use one tool to manage Google
and my own tool to manage Yahoo and Ask Jeeves and everyone else," he
said of conflicts between ad systems.
Advertisers are spooked by the idea of relying entirely on Google to
deliver their ads and want independent ways to shop around for the
best price and the greatest exposure, he said.
Google hears the growing drumbeat of criticism. Executives say they
must do a better job of clarifying their aims.
"When the business was just about ads it was pretty straightforward,"
Marc Leibowitz, Google's director of strategic partnerships, said in a
"There's this notion that Google has a grand master devious plan" to
put ad agencies and publishers out of business, Leibowitz
said. "Nothing could be further from the truth. "We see ourselves in a
symbiotic relationship with them." (For other news from the Reuters
Media and Advertising Summit, please double-click on:
Copyright 2005 Reuters Limited.
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