• by Tameka Kee , September 3, 2008

Google's advertising teams are working on a self-serve ad platform for YouTube and a system for measuring the effectiveness of display ads akin to the Quality Score system for paid search. That's according to Tim Armstrong, the company's president of advertising and commerce, North America, who spoke with attendees of the Citi Investment Research Technology Conference on Tuesday.

"How do you measure the quality of a display ad?" Armstrong said. "A metric like that would be a big benefit, because there's not much quality in display."

He said that Google was working to bring the same level of ad quality and accountability to the display marketplace that it has brought to search. "We've been working hard with the DoubleClick team to measure display ads in a more effective manner," Armstrong said. "It took us a little while to get up to speed on industry standards, but we're thinking about what we can do beyond that. And we'll have announcements in the future."

Citigroup analyst Mark Mahaney asked whether factors like the effectiveness of a display ad's landing page would be considered in terms of the overall quality. "That's a factor in the calculation of a Quality Score in search," Mahaney said. "But I doubt that any display ads are served based on the quality of the landing page now."

Armstrong agreed, although he said that sometimes advertisers would not want consumers to go to a landing page. He added that a display ad's Quality Score would likely be more difficult to calculate than for search, as the ads are often run strictly on a brand impression basis. "But the display and search ad businesses start from the same consumer base, and everyone from advertisers to publishers to our competitors is talking about the fact that they're coming together," Armstrong said. "So strategically, having a platform that cuts across them is significant."

Mahaney asked Armstrong whether Google would have a sizeable share of the display market within five years. "By most accounts, your share of the search market is between 60 and 70% in the U.S.," Mahaney said. "Is it feasible that you'll have a meaningful share of the display market--at least 10 to 20%--in five years?"

Armstrong responded that six months ago the company was unsure. "But now the opportunity is clear," he said. "It takes three things to be successful in display. You need inventory, targeting and measurement, and a consumer base." He said that Google had the inventory, offering YouTube and its spot as the one of the top most-heavily-trafficked video properties as an example, as well as AdSense and DoubleClick's targeting and measurement capabilities.

Google also has the consumer base, he added. "If you look at the top display spenders who aren't using Google for display, but could be, they're at the top of the list in terms of search spending with us," Armstrong said. "Three years ago, the conversation was all about search with them." He said that discussions with agencies and advertisers were half focused on search and half focused on display and YouTube now. "And from the revenue perspective, it's become a fifty-fifty opportunity as well," he said.

The search giant also has big plans for smaller advertisers and publishers with YouTube. Mahaney asked Armstrong whether video uploaders could expect a self-serve platform that would allow them to verify that their content was not pirated, that it fit into a particular demographic category or vertical, and that they would be up for having an ad run on it if Google could do something relevant.

"Yes," Armstrong said, alluding to a platform akin to AdSense, but not announcing anything specific. "The more people you're able to let benefit economically, the more content--and better-quality content--gets produced. And the better it is, the more people will watch it." Armstrong said that better monetization would lead to more eyeballs, which would in turn attract larger advertisers and contribute to Google's bottom line.

Still, some with experience in the online video market said that self-serve platforms for smaller publishers and advertisers may not be enough to help Google wring more revenue out of YouTube. "Video is a brand-building vehicle, and most brand spenders are not small advertisers," said Amir Ashkenazi, CEO and cofounder of Adap.tv. "Sure, you can do it--but a lot of the monetization in video comes from bigger companies through multiple ad networks."

Lastly, Armstrong said that the company had been working to improve the "quote-to-collect process," or the amount of time and effort it took to go from getting a client's YouTube RFP to the execution, and to the payment. "We'd get these RFPs that would say, 'I want to spend this much money, I want this serving criteria, and this is how I want to measure it. Can you meet all these criteria with YouTube?'" Armstrong said. "And we had problems meeting them, but we're strong at it now and we're scaling it."