Google’s new Targeting Services – threat or opportunity?
Many people ask me what i think about the new interest based ads by Google that have been launched last week.
First of all it is important to note that the enourmous success and power that Google has comes from superior technology – not only in search but also for the monetization of search-result pages with according ads they seem to have the best technology and business model by far.
Having that in mind Googles move into the field of Behavioral Targeting could undoubtedly been perceived as a threat for our business as independent targeting suppliers. And honestly – of course it is a threat. On one hand… With its unbelievable distributed network of content sites and sites under measurement by other tools like Google analytics and Crome they know more than anybody else in the world about users browsing behavior. As long as the information for showing relevant ads can be derived from content-usage they seem to be in a very good position.
Googles Targeting can also be a threat for the whole industry as it comes with even more questions regarding user privacy. And a lot of questions are still open and need to be answered – Google should really start being transparent and cooperate with the European privacy guys (which we already did – it really is possible to convince them that targeting is not necessarily bad). As they now started to build their business around the data they collect and own much more agressively than ever before it is very very important to do that in line with data privacy legislation and even more – i really hope that they start playing that part of the game differently soon and try to build trust around what they do. Otherwise it is much more likely after this product launch that especially the european legislation will come around with really tight rules that could damage the industry as a whole.
OK – those are the threats. Where is the opportunity?
The opportunity clearly lies in the fact that Behavioral Targeting will grow much faster as everybody expected from now on. Targeting will be perceived as something serious and definitely relevant by Media Agencies, Advertisers and Publishers – which has not always been the case. Of course everyone is talking about Targeting since a long time. But in fact ad-campaigns based on advanced targeting methods are still not in the main line, especially in Europe. Targeting campaigns are still treated as special cases that need a high attention by trafficking and from the consulting. The typical targeting campaign is still a special case – something many agencies are trying to avoid if possible. Although it is not possible to get reliable figures about the percentage of campaigns that are run with targeting we think it is below 5% currently.
This will change now. Simply the fact that Google startet this service will change it.
There are two reasons why the targeting penetration will change dramatically in the next 18 months. One is quite obvious: Google will be succesful. Because they weren’t until now in their content network (ad-sense) which produced really bad results compared with the search-results product (ad-words). Ad-Sense will improve and so will Youtube ads (also low-performers now).
The second reason is not so obvious but perhaps even stronger for our industry: Targeting is now perceived as something serious. Something that might help Google to use it’s Doubleclick aquisition and enter the market of display ads. This will lead to more effort on the publishers side (and agencies as well) to invest in technologies and run their own targeting solutions. And that is the point where it definitely will help us.
Ok – but will this only be a short-term push? I am pretty sure that Google will not be able to own the display ad market with their technology – if the publishers play their game wise and smooth. I think the targeting game will end up like it did with Google news as well. There will be a strong and relevant service for long-tail targeting by Google. They will also enter some low end publishers of course – especially 2009 will help them to succeed. But they will never be able to offer high level targeting based on quality content. Too far away, not enough understanding, too much automization.
And there is a last point which even makes me feel comfortable if they would enter the display market more agressively than i expect. Google only offers what we call “simple” or “classical” behavioral targeting. Showing ads based on users browsing history. Of course the browsing history might be massive and contain a lot of details. But it will never show any interest in low fat products, frozen food or body care products. Because people do not surf for this kind of products. This is why we developed predictive targeting that derives additional information from surveys and other datasources. Perhaps some of the thousands of Google developers are working on something similar as well – i don’t know. But i would bet they are not. Because it’s not a question of technology but a combination of market research, machine learning and statistics. And this is not a field Google is in at all as far as i can see.
For me it looks like a bright future for independent targeting services – especially Predictive Targeting!
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I want to make a small correction to the article above. Google has been experimenting with statistics inference (SVM) and machine learning (K-Mean clustering, Bayes) as part of a project in partnership with Netflix. Those algorithms were made scalable using Map-Reduce architecture.