Gestalt: About the Size of It

by Christopher M. Schroeder, Apr 2, 2008, 2:42 PM

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This sentiment doesn't make me popular, but the acquisition of DoubleClick by Google will be profound. Because, with all of what I'm about to ramble about, Google-DoubleClick should be a one-stop shop of search and display ads across a huge universe of sites. No one has explained to me why they can't do for display advertising what they've done with AdSense. Agencies tell me, "They won't come up with the big, new, innovative and custom ideas."

Maybe - but there is a boatload of cash in pretty standard ad units. Some hot kids will make great creative, and Google-DoubleClick will just maximize the hell out of them. But, in that beautiful circle of competition, no one wants to buy everything from one company. So here are my questions. Answers, too.

>> While Google has close to three times the market share of Yahoo, both have huge numbers of searches in absolute terms. Is there a diminishing, neutral or increasing value to additional searches above Yahoo's share?

The more people who search on a given site is important from an ad perspective only to the degree it helps garner better insight into what advertising performs best. I think Yahoo's problem is that it really has not improved its engine for targeting at anywhere near the clip Google has. I was part of an investment team that recently sold a small luxury travel site, primarily an arbitrage business, leveraging search. Google simply dwarfed Yahoo in performance - not only in click-throughs but also in back-end conversions to hotel bookings. Even though a vertical qualifier like TripAdvisor out-performed Google on lead conversion at times, it rarely did so at a better price.

An advertiser once told me that vertical lead-gen businesses like that are Google. They get a ton of people from Google and refine the funnel even more, so you'd expect conversions to increase. But not necessarily at a better price.

>> If volume is not necessarily the only arbiter, where does Google's efficiency come from? Does Google just handle the algorithm process better?

Scale is extremely important - but to the degree that one builds and evolves algorithms to better understand what and why more and more people click. Google, no doubt, is steely and obsessively focused on improving CPA performances.

A conspiracy-theory group thinks Google commits massive click fraud to achieve what it does. I don't buy it. People convert or they don't. And whatever Google is doing, it is more cost-effective lead gen than other search.

>> Does scale matter in brand advertising? Do the targeting skills from search translate to those needed
in display?

The amount scale matters depends a bit on the brand - Coca-Cola has different requirements than, say, a manufacturer of hip-replacement devices.

But "qualified" scale matters most today, and will be all that matters tomorrow. Find me a ton of people: good. Find me a ton of relevant people: better. Putting the right ad messages in front of the right audiences at the right time is useful content for users, and ensures better performance.

This is as true for branding ads as performance ads. In fact, in this medium, display and conversion marry. I've rarely seen a marketer buy online for brand only - and, as a whole other topic, they now build brand on their own sites and use search to drive audiences to branded, useful engagements. Do you know the No. 1 Web site for runners over 50? A site created and managed by Nike. Does that have brand ramifications? Absolutely. Will it sell running shoes online too? You bet. And while Nike drove traffic to it with some ads, including TV and print - and there is a huge word-of-mouth aspect - it also spent a boatload on search.

In the meantime, smart marketers buy more often than not for performance or engagement first, and are persuaded of brand possibilities. You can bet that the smartest marketers have clear lead-gen metrics of their own on their back-ends, even if we charge CPMs.

There is also a human nature element here. Some of the least creative, more lazy marketers go to comScore and just pick the top five because, "Hey, no one ever fired me for doing so," and would rather deal with easy buys. The future, though, will go to those who can maximize qualified scale anywhere online - and those focused on size for size's sake are from a different era.

Christopher M. Schroeder is CEO of The HealthCentral Network. (schroeder@thcn.com)

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