• by Shankar Gupta , November 10, 2005

A patent application filed by Google in September is making waves this week, as the described technology could put the search giant in a position to sell online ads to the millions of small businesses that have so far avoided adopting the medium.

The patent describes "a system for providing on-line advertising, comprising: an advertising generation engine to present an interface guiding on-line advertising creation." It appears to outline a self-service advertising model for the small business or individual user; the application itself notes that Google's current model sometimes presents a challenge to smaller users.

"Placing creatives and advertisements on-line for access by the general Web community can be especially problematic for individual or small advertisers," the filing states. The product the patent describes, dubbed "Google Automat," can create an independent Web page to describe a product or service, which can then in theory be promoted through Google's other services.

The patent application is fueling speculation that Google could be up to creating a major classifieds service, in the mold of Craigslist or eBay. Last month, Google Base, a site where users could apparently submit listings--commercial or noncommercial--appeared online briefly.

Google did not respond to requests for comment.

Analysts said the move could position Google to move in on the vast untapped market of small businesses that resist online advertising by the technical barriers to entry. "This is another sort of direct channel--in the same way that Google Base is a direct content acquisition strategy, this seems to me to be geared towards the low end of the market," said Greg Sterling, an analyst with the Kelsey Group. "I think Google understands the challenge to small business proprietors to enter search marketing, and this is an attempt to address that."

Benjamin Schachter, a financial analyst with UBS Investment Research, issued an analyst's note stating that Automat could give Google the ability to enter direct competition with other classified listings services. "Clearly there is enormous potential for Google to significantly expand AdWords and AdSense into more traditional classifieds-type listings," Schachter wrote. "Additionally, we think Google would likely position itself both as a competitor and compliment to listing services."

Schachter hedged, however, pointing out that any product is still in only the patent application phase. "This is another potential blockbuster product for Google, however, keep in mind that nothing is currently available except a patent application," he wrote.