Google's Sheryl Sandberg on Next-Generation Advertising
On Thursday at the Supernova conference, Udi Manber Google's VP of
Engineering talked about what
a difficult problem search is. This was followed up by Sheryl Sandberg, Google's Global
VP of Sales and Operations, giving a presentation entitled What's next for
advertising?.
Google's History in Advertising
Sheryl started by providing a little history on Google's approach to search advertising. She said that "before Google advertising was focused on the advertiser," but when Google was developing their advertising model they started by "focusing on providing useful information to users." In other words, they "wanted the ads to be just as useful as the search results."
While I would definitely agree that Google has been very focused on creating a good advertising experience for their users, I have to point out that the idea was not a new one. When Google started doing this type of advertising, Overture (acquired by Yahoo) had been delivering similar ads for years. This is why Yahoo owns patent #6,269,361 - which Google licensed from Yahoo right before the Google IPO.
Regardless, Sheryl gave a good example of sponsored results being more relevant that organic results, when she talked about searching for "Sunday NY Times Subscription." This is a query that implies a very clear user intent. In her example query, both the first organic link and first commercial link pointed to a web-page allowing her to get a subscription to the Sunday Times. However, the ad included a special 20% promotion that the NY Times was running.
Extend to Content Network
After successfully delivering ads with their search results, Sheryl explained that Google extended its advertising model to a network of non-Google content. However, they continued to try and ensure the ads were valuable for users by contextually matching the ads to the content. For example, if you are visiting a car site, then the AdSense ads should be about cars. I've written before about how vulnerable a source of revenue I think this is for Google.
What Next in Online Advertising?
Sheryl then highlighted two big changes to the way that individuals are consuming content, neither of which will be surprising to regular readers of Read/WriteWeb:
- Social networks play a great role in user's context
- Individuals going beyond consuming content to also creating it
She shared three key points for the future of online advertising:
- Advertisers need to get better at creating a 1:1 experience for their users. As an example, she cited the work that Cadillac did with their MyCadillac campaign.
- Advertisements need to continue increasing personalization. This was surprising to me, given that I don't believe Google has publicly announced any plans to incorporate behavioral targeting into their ad delivery system.
- Users are demanding the delivery of information to be an experience and advertising must respond to it, just like content needs to.
Conclusion
While I generally agree with all three of Sheryl's points about where online advertising is going, I think the the use of experience is a very loaded concept. It is important to point out that one of the things that ended up being so key for Google, and other search engine advertising programs, was that the ads were text.This made it much more efficient for ad agencies to create ranges of ads, ensuring that relevant ads were consistently delivered. In fact, in some cases the internal marketing department was able to create the text ads. To the extent that improving the experience requires rich media ads, it may be a very difficult process to personalize those ads - due to a more limited inventory.
What do you think about where the online ad business is heading?
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Great post Sean. I'd have to agree that advertising needs to continually be more relevant and more personal. Humor never hurts either. Regardless, I think Google realizes that text ads, while effectively, contextually targeted aren't the only way to go.
Hence the purchase of Double Click and Feedburner. Wouldn't be surprised to see more behavioral targeting as well.
Interesting times and great insight for those of us who couldn't make the conference. Thanks for sharing.
Posted by: Brendan Monaghan | June 24, 2007 5:31 PM
My two cents == I think this not just the future, is already being experimented with:
"Individuals going beyond consuming content to also creating it" Telecom New Zealand has a campaign at the moment where people submit advertising videos in exchange for bidding on prizes. I also consider this a valuable advertising experience.
There is nothing appealing about video advertising that downloads/plays without a click. I agree that this definitely does not improve the experience. Peer recommendation of appealing ads is the only way, other than deals like BMW has with TED. I have seen a number of ads forwarded by friends on my email because they were hilarious! My friends and I have seen the rap cat videos, chatted to the virtual BK chicken, my sister has even purposefully watched a Coke ad on a friends Bebo page! People will watch videos that their friends like, why not apply this to advertising?
Advertisers need to be willing to utilise word of "mouth" and we need more thought put into the study of memetics.
Posted by: Daryl | June 24, 2007 6:02 PM
Speaking of user generated content, I think Google's next move will be geared towards serving more relevant ads to user generated content on social network services. And I believe their relevancy tune-up will take more interest in user profile data. The content generated and shared on these services are not always ideal suited for the way Google currently delivers their contextual ads. There's just too much noise to grab hold of signal that is thematic. I think Google will look at person's interests (and his/her contacts' interests) and try to deliver ads that are hopefully more relevant to the user and the frequent visitors. Favorite music, books, movies, schools they go to, local addresses, these data points are all potentially highly magnetizable and perhaps equally relevant to the viewers than simple content-contextual ads.
Posted by: soxiam | June 24, 2007 7:24 PM
Overture (formerly goto.com) did sell auction-style search related ads well before Google, but to Sheryl's point, Google incorporated "ad quality" into their auction first -- only now with Yahoo's Panama, years after Google's implementation, do we see that. Google's success does indeed stem from its pioneering success in incorporating users' interests. (Traditional ad targeting -- which includes Gator adware, Doubleclick's purchase of Abacus, and the selling of beer ads during football games and cleaning products during soap operas -- also tries to focus on the user, but it has admittedly been less targeted and thus less successful.)
Posted by: Jonathan T | June 24, 2007 9:35 PM
A key part of the success of the google adwords has also been that their platform, and simple text based ad format, had made online advertising accessable to smaller businesses. Individually they may be tiny accounts, but just look at all the ads you come accross from the smaller businesses. Keeping things simple and affordable enough for these advertisers will be important. Appealing, experience style ads on social networks may be great for big company branding exercises, and we'll not doubt see a lot more of them. Small business advertisers are looking for a more short term or immediate result (sale or newsletter sign up etc) and to find customers (users) ready to purchase. Here better personalization and targeting will help. Already the Microsoft adcenter gives options of targeting ads to male/female and age segments. How accurate these actually are at the moment, I'm not too sure, I presume the data comes from hotmail account registrations, but it is a step in this direction.
Posted by: Robert | June 25, 2007 3:19 AM
Hmm, am I missing something here? Here's one example:
http://technology.guardian.co.uk/news/story/0,,2078061,00.html?gusrc=rss&feed=11
And doesn't Eric Schmidt's comment that "The algorithms [software] will get better and we will get better at personalisation" indicate that the advertising will also become more geared towards personalisation?
Posted by: Craig | June 25, 2007 6:10 AM