Commentary

Should Madison Avenue Worry?

  • by , Featured Contributor, December 8, 2005
A fair number of people on Madison Avenue are spending a lot of their time wondering about Google, worrying that some day soon the search giant may do to their brand advertising world what it has already done to the listings business. While I have enormous respect for Google and its accomplishments, I think that Madison Avenue's worries are a bit misplaced. Google isn't likely to be the enemy that they fear it may become.

It is certainly an understatement to write that Google has been an extraordinary advertising story. In a few short years, it has built a highly profitable ad listings business with a $6 billion annual run-rate that grows at about 100 percent a year and shows no signs of slowing down. In major stories in publications from The New York Times to the Wall Street Journal to Business Week over the past six weeks, Madison Avenue has been told to watch out for Google. Many of the stories focused on Google's recent forays into traditional advertising channels like magazines and newspapers, and its stated intentions to enter the television business as well. As a result, the anxiety level on Madison Avenue has risen significantly.

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I am not convinced that Google's magic will disrupt brand advertising to the level that many believe.

Google is the modern Yellow Pages. It has been successful because small and medium-sized businesses have been poorly served by traditional marketing channels like telemarketing, direct mail, radio, newspaper display, and Yellow Pages. They are systemically inefficient and are no match for Google's version of search and contextual advertising. Google's ascendancy over these traditional media has only just begun. It can certainly grow to five or six times its size over the next few years on this basis alone. This is an enormous market and Google is simply gobbling it up.

However, brand advertising is different.

  • The clients are different. They tend to be large and strategically focused versus the small and tactically focused businesses that dominate the listings business today.
  • They require different approaches to the consumer. Brand advertisers want consumer engagement. Listings advertisers want speed and efficiency.
  • They require different sales channels. Brand advertisers work through ad agencies. Listings advertisers generally prefer self-service.
  • They require different organizational cultures. The skill-set focus for media companies that serve brand advertisers and agencies are sales, marketing, and relationship management. Companies that serve listings buyers tend to focus on engineering, process management, objectivity and quantitative analysis.
  • The science is different. This is the area that may be most challenging for Google, since it is, at its core, all about science. Brand advertising online requires lots of science, but it is quite different from listings or direct response--what I would call "emotional" science. It is about research and using science to change marketplace perceptions, rather than using science to produce immediate results. It is not always logical. In listings, logic is all that matters, since it is all about the results.

    All of this said, it is great to see Google shifting its attention to Madison Avenue. The attention and competition can only be good for the industry. However, Madison Avenue shouldn't fear too much. Google is now moving onto unfamiliar turf. Markets where logic doesn't dictate success are markets where a Ph.D.-laden company may find success more elusive than it is used to.

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