Up to this point, Google (NSDQ: GOOG) has taken an arms-length approach to display advertising. Now that its merger with DoubleClick has passed regulatory muster, Google must deal with the charges coming from internet advocates that the deal will allow it to violate the privacy of web users. With the industry having been given free reign to police itself on these matters by the U.S. Federal Trade Commission last December, Google knows it will have to tread carefully - even as advertisers demand more access to millions of rich behavioral insights online ad companies like Google and DoubleClick glean every day from internet users.
Following the presentations of Google executives on their Press Day summit, I spoke to Eileen Naughton, director of media platforms, how Google plans to handle the coming minefield of linking its search functions with DoubleClick's display serving.
-- Fees and tracking: Google assembled an array of marketers to discuss its ad activities in the consumer packaged goods, travel and online classified/local areas. Though he was there to talk about the latter category, I asked Rob Weisburg, Domino's Pizza's VP for Precision Marketing, what the impact would be on his business from the addition of display advertising to Google's online marketing arsenal: "The approval of Google's acquisition of DoubleClick is extremely positive for Domino's. Certainly, the display side is more trackable. The business dynamic that I would like to see Google move into is a cost-per-action basis for display media. I think the DoubleClick acquisition will allow them to do that. At Domino's we measure everything on a cost per sale basis. What I like about CPA and cost-per-click is that those are both performance-based measurements. That means the consumer has to do something before we write Google a check. But what I like best is cost-per-sale. I can quickly see us negotiating advertising under that kind of system, due to the measurable aspect of display."
-- Agency impact: Given the expectation that the merger's approval would come today, I spoke to ad agency execs late last week about the likely impact Google/DoubleClick would have on display and the industry at large. Tom Woldum, SVP, media director, MRM Worldwide: "If they proceed by operating DoubleClick as an independent business unit, the impact shouldn't be great at all, but I've heard of all kinds of speculative scenarios that imagine Google changing the process and/or the pricing structure of ad serving in dramatic ways. It's wait-and-see right now I'm always nervous about too much power being in the hands of the few, which is sort of an ironic fear given that Google's business is really about putting marketing power in the hands of the many. I think it could be good for the industry if Google can positively influence the search analytics side of DoubleClick's business to put it on par with their display operation. I think it will be bad for the industry if the proceed with bundled pricing that forces or pressures media buyers to purchase Google display network advertising."
By David Kaplan