The concept of pay-for-performance advertising, which is the key driver behind the boom in online advertising, is radically transforming the data publishing industry. While this transformation has been destabilizing, on balance it's been beneficial, and we have in large part Google to thank.
So with Google now reaping outsized rewards for its brilliant innovation in online advertising, why is it now playing around with print advertising? Yes, if you haven't read about it already, Google is apparently buying full-page ads in a few magazines on a test basis, and reselling them as fractional page ads to some of its AdWords advertisers. While there isn't a lot of information available on how serious Google is about this test, most of the reporting about this move consists of little more than fawning praise, usually along the lines of, "Isn't Google clever for seeing this opportunity?" or "Google can't fail because it knows so much about advertising."
Huh? All I see is a company that seems to be showing more hubris than insight.
In the online world, Google is delivering the advertising it sells, in an electronic format, and in a fully automated environment. That equates to nearly pure profit on everything it sells. What does the print advertising environment offer? Pretty much the exact opposite.
And while Google programmers are renowned for their cleverness, any publisher reading this is sure to be smiling at the thought of Google trying to automate the "process" of advertisers designing and uploading their own ads, in the right size, format and resolution, all in time to meet strict print production deadlines.
There's also the question of sales. Google, like many Web start-ups, is a big fan of what's called "self-provisioning," letting customers place their own orders and manage their own accounts. Customers interact with Google on its terms, using its preferred methods. Whether customers are happily trading this impersonal approach for the greater efficiency it allegedly yields is a topic for another day. What is significant here is that Google has no culture of personalized interaction and "knee-to-knee" selling, and indeed it appears almost antithetical to its business model. Yet this is what it will take to chase this relatively low-margin business it now apparently covets.
In this new environment, with Google taking real inventory risk, it seems inevitable that Google will end up writing some big checks for print ad pages it couldn't sell. There will also inevitably be lots of Google filler ads for fractional units it couldn't sell and for advertisers who didn't submit materials in time, and these costs could easily subsume what are likely to be the thin profits for re-selling space.
I am hoping that the Google test of print advertising sales stems more from an innocent "dude, couldn't we like sell print ads too?" moment than an orchestrated strategy to get its hands on an even bigger slice of the national advertising pie, along with the right to decide when and where much of this advertising gets placed, a development that would leave many publishers in a dangerous state of dependency. With Google able to decide which publishers will prosper and which won't, it would truly be in a position to stop a few presses.
We're pleased to announce a Model of Excellence award for 2005 has been awarded to Business Partnering International for its AgencyFinder service.
For a handy reference to Models of Excellence winners for 2005 and years past, please visit our awards page for the complete lists and full details.
Kelly Gay, Chairman, President and CEO
of KnowledgeStorm, has been confirmed as a speaker.
InfoCommerce 2005
November 6-8 | Philadelphia
The Working Conference for the Thinking Publisher.