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Following Ad Failures, Google Turns Focus to Display

"Google can't seem to make a go of it anywhere else in the ad world," says BusinessWeek's Rob Hof. The search giant tried and failed to sell print and radio ads, shuttering both projects earlier this year, and its TV ad effort has been slow. Meanwhile, the economy has hit its main business, paid search, which slowed to 6% revenue growth in the first quarter of this year.

Despite these recent disappointments, Hof says that Google is now redoubling its efforts to grab a bigger piece of the display ad market, which accounts for more than a third of the $40 billion online ad market. However, it faces a tough challenge, as Yahoo and Microsoft's MSN have huge leads in display, largely because they can put ads on their own content.

That said, performance ads, the fastest-growing kind of display ads, work more like search, which could be to Google's benefit. Says Hof: "Google spies an opportunity to apply its mathematical wizardry to make those ads even more effective. The idea is to make display ads useful knowledge instead of visual clutter."

Later this summer, Google will roll out an overhauled version of the ad exchange it picked up as part of its $3.2 billion acquisition of DoubleClick last year. Hof notes that until now, Google's and DoubleClick's ad-placement systems used different software, so ad agencies had to piece together different programs to place, monitor, and measure ads. Advertisers will be able to utilize the two systems seamlessly in the new exchange, making ad buys simpler. Google hopes the improvement will push publishers to put more high-value inventory up for auction
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Read the whole story at BusinessWeek »

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