Look for the advertising and
the technology industries to grow cozier in a move similar to one experienced by the financial industry during the 1970s.
That's when a set of scientists and mathematicians
developed new metrics, and suddenly a generation of employees focused on analytics joined financial firms to maximize efficiencies and profits, Google chairman and CEO Eric Schmidt told attendees at
the 90th annual American Association of Advertising Agencies Leadership Conference on Tuesday in Laguna Niguel, Calif.
"There is every reason to believe marketing will go through a similar
transition, but the principles of marketing--which are around storytelling, entertainment, targeting and selling--will be augmented by analytical tools," Schmidt said.
The goal for Google is to
develop technology that delivers actionable metrics, making it easier for advertisers and agencies to optimize and measure campaigns. More advertisers will have the tools to expand into multiple
markets that can test consumer interest in products and services.
Take, for example, Cadillac's click-to-play video ads. The car manufacturer had its ad agency create 13 versions of an ad,
testing them in multiple markets to gauge consumer impact and the correlation between viewing the ads and the actual sales. Chrysler allowed consumers to customize the Chrysler 300, but the carmaker
did it as content to draw in consumer engagement.
Honda sponsored a concert. Google engineers built technology that allowed concertgoers to ask the band questions and get responses. Schmidt
says these will become the defining models for advertisers over the next 10 or 20 years.
For Google, advertising nirvana occurs when the search giant can return the exact answer for each query,
accompanied with one perfectly targeted ad. "Eventually, maybe what we can do is guarantee advertisers who pay us money--and this is my fantasy, the sale," Schmidt says. "If we can get to that level
of that specificity, advertising will no longer be a marketing expense. It becomes a sales expense."
Schmidt also addressed the challenges of finding ways to compensate content producers and
issues of finding advertising content on YouTube when the consumer does not have a specific destination in mind. He acknowledges that financial compensation from one minute of online content brings in
much less than one minute on television, but says the solution should focus on creating more compelling and targeted ads that command higher rates.
Nearly 400 attendees signed up for the
conference, which runs through today.