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July 6, 2007 | Comments Off on Email Marketing

 

Digging Deeper:’Frienemy’ Google Not a Threat (Yet) to Traditional Ad Sales

Google Print Ads.jpgIf you browse through Googles job openings, the dozens of advertising sales positions ” from account manager of Print Ads in Chicago to account manager of Google Television in New York ” youd think Google was a major media conglomerate that owned TV stations and newspapers. Instead, Google has been trying to take its automated online system for selling Internet advertising into the traditional realms of selling ads for print, radio and TV.

Googles push to take a piece of the action in advertising sales across the media spectrum ” online or off ” has made media companies wary, especially after its $3.1 billion purchase of online ad server DoubleClick. But it hasnt stopped Big Media from cutting deals with the search giant to test the waters of an automated system. EchoStar made a deal to sell TV ad space on the Dish Network through Google; Clear Channel made a deal to sell a small slice of its radio stations ad inventory through Google Audio Ads; and various newspaper companies including The New York Times Co. have tested out Google Print Ads.

Googles first moves into print ads were unsuccessful in 2005, as BusinessWeek pointed out in Google Fumbles Offline . But try, try again, and Google started to make headway, as a recent AdAge article noted that the Seattle Times received six-figure revenues from a test in Google Print Ads. If Google can provide more efficiency with unsold ad inventory, couldnt it simply cut out all the salespeople and automate the whole thing? Where would that leave the traditional sales folks at media companies?

[Google Print Ads] is an interesting experiment, and its something we need to look at, said Sean Coughlin, retail sales manager at the San Francisco Chronicle, which is trying the system. Are they an enemy? No. Are they a friend? No. Are they a frienemy? Yeah. [laughs] Thats what they are.

The short answer is: Sales folks arent endangered ” at least, not yet.

Advantage: Google

Before we get into the long answer, lets look briefly at what Google is providing these media companies. With Print Ads, a limited number of advertisers have the chance to bid on print ad space in dozens of newspapers and magazines around the country. And in Google Audio Ads, the automated system checks the unsold inventory of a radio station for the next day, and then lets advertisers buy open 30-second spots. (The Google Television ad system has yet to be tested.) Google then takes a cut of the ad revenues, which it works out with each media outlet.

In both radio and print, Google allows the media outlets to reject ads if they arent priced high enough or are from advertisers with whom they currently have relationships. These are very much experimental systems, with the most mature one, Print Ads, still in alpha test and slated to graduate to beta test sometime soon. An Echostar spokesperson told me Google will be brokering a relatively small percentage of TV spots for the Dish Network, and that this percentage will most likely grow if the test is successful.

The idea is that Google is helping to bring new advertisers ” smaller online advertisers who normally couldnt afford expensive media buys ” into the fold for media companies by bringing in decent money for unsold ad space.

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We have built a large advertiser network online over the past five years, and these advertisers are looking for additional ways of getting exposure, said Richard Holden, director of product management at Google. These other forms of media are logical places for them to spendIts a win-win situation, because these are advertisers, usually quite small, that havent had the ability to advertise in these media before. So were bringing these new advertisers to these publishers, and these advertisers are getting a new form of exposure they wouldnt have had before.

So should traditional media outlets try this out with Google, or is there a risk that Google will become the default place for cross-media ad buys online and offline?

Its a classic risk vs. reward scenario, said Randy Bennett, vice president of audience and new business development at the Newspaper Association of America . Will newspapers generate more revenue by having a standardized front-end for advertisers and by Google delivering non-traditional advertisers, than the potential loss from price depreciation and commissions to Google? The bottom line is that newspapers do need a platform that will make it easier for advertisers to place newspaper ads across markets, by targeted segmentsIf Google, or some other technology platform, can remove some of the friction in the newspaper buying process, then sales teams can focus on sales.

Randy Bennett.jpg

Of course Google isnt the only automated online platform in town. Yahoo has made deals with newspaper companies to sell online advertising and not print; eBay is readying a TV-ad sales exchange; and Softwave Media Exchange and Bid4Spots help bring broadcasters and advertisers together in more automated ways.

I talked to local sales managers in TV, newspaper and radio sales, and they all were intrigued by the idea of Googles system and the chance to expland their current roster of advertisers. John Kelly is the vice president of advertising at the Daily Herald suburban newspapers outside of Chicago. He just signed on with Google Print Ads and is cautiously optimistic.

In our case, there are 16,000 businesses in our area [with five or more employees], Kelly told me. With our existing sales force, were penetrating less than 10% of that. So if Google came in at the local level, the dynamics are going to change in how we start to sell advertising into our paper and onto our website, ultimatelyCan they serve as an auxiliary sales force? And with so many public companies under pressure, is this a good way to increase margins and decrease expenses? Absolutely.

In radio, the Clear Channel chain of stations saw a complementary opportunity to sell more radio spots to advertisers that hadnt considered buying radio before. [Google has] cultivated this universe of advertisers who are advertising online and are not using radio, said Michele Clarke, a spokesperson for Clear Channel. For Clear Channel thats the potential to tap into tens of thousands of new advertisers. So they are not people the existing sales forces were working with anyway.

Advantage: Face-to-Face Sales

So how do the existing sales forces feel about the entry of Google into automated sales at their media properties? Many people I contacted either hadnt heard about Googles efforts or had no comment. The SF Chronicles Coughlin doesnt believe Google or an automated system could take the place of face-to-face sales calls, and he still tells salespeople to get out, get out, get out in front of advertisers in person.

More and more people say you can do it online, and thats good for convenience, he said. But when it comes to buying advertising for something local it helps to have someone in front of them whos not just a newspaper rep but a media rep because we do online and newspaper [sales] and combine the twoTheres not going to be an online system that replaces that personal experience; I dont care how groovy they get.

Other people believe the current system for selling radio and TV ads is too complex (and perhaps convoluted) to try to automate.

The Google [Audio Ads] system will focus on buying 30-second ads, but buying radio is much richer than that for most advertisers, said Clear Channel spokesperson Clarke. Stations combine on-air and online [sales], they do sponsorships and promotions or remote broadcasts. There are almost infinite ways to buy radio. For putting together those packages, youre going to need a traditional sales rep, both at the local level and the national level. Its complementary, because you cant go onto the Google system and put together that kind of rich campaign.

Jeff McCausland, director of sales for Fox Kansas, KSAS-TV in Wichita, Kan., owned by Clear Channel Broadcasting, said that their current TV ad-sales system still lacked some basic interoperability, so it was hard for him to believe that Google could create a viable, workable solution.

Right now, for our national [ad] business, some of it moves to us electronically but if Fox changes a program, then that has to be done over the phone or email, McCausland told me. We have to talk to our rep firm, our rep firm has to talk to our buyer, the buyer has to put that back in the system. So even if the order comes in electronically, the order still has to be maintained. Putting an order into the system is the easy part. Tracking the way it was ordered, with program changes and make-goods, all those little things, makes it tough.

Still, its tough to count out automation in the long run if it will save time and energy for the advertisers and the salespeople ” and bring in more revenues. Googles Holden is careful to say that Googles efforts are complementary to existing sales at traditional media companies, but he does see room for bringing efficiencies to those sales.

There are ways we would be glad to work with publishers in helping them bring more efficiencies to their existing model, he told me. The truth is we view this as being very complementary. There is a relationship sale that happens at the top end of these markets, and were not expert in that by any means. We do have a direct sales force but the power of what weve done is through software and efficiencies through that.

On the newspaper side, the complexity of ad sales isnt as much of a problem as in TV and radio, and perhaps thats why Google has had the most success in print first.

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The Daily Heralds Kelly thinks that Googles Print Ads system will bring in ad sales that will be priced lower than the regular ad sales but higher than the Heralds current take from so-called remnant merchants who sell leftover ad pages. Kelly cant imagine a day when big clients such as department stores will be able to make long-term ad deals with newspapers without a live sales rep.

Major retailers really depend on local salespeople to be their eyes and ears in the local markets, Kelly said. We do local research for them. Its hard to quantify that, and its very important. You have a lot of egos involved here. There are a lot of advertisers who feel that they can get a better price through face-to-face interactions over a long period of time. And the way this [automated] model has been built its transaction by transaction, at least at this point. If Im a regular advertiser, a major retailer, I dont want to deal with this every week.

Another saving grace for broadcasting sales staff is that most small businesses still dont have the know-how to create their own audio or video advertisements, and will go to the salespeople for help with creative.

Patrick Caracciolo, local sales manager of WLIR FM in Long Island, said that he is interested in using Google Audio Ads but his stations ad trafficking system isnt compatible with Google at this point. He said ad sales folks will still serve a purpose in radio even with the Google system in place.

For the guy down the block who has the Shed Kingdom, hell always need someone to come and sell radio to him to help him with creative, Caracciolo told me. I think [Google Audio Ads] is more for infomercial-type sales, I dont think its for that small mom-and-pop business because who will do the creative for that? Obviously everyone has a microphone on their computer and can do audio editing. But youd be surprised. A lot of people today dont even read emails, believe it or not. You think everyone is so computer hip and savvy. But its not true.

A Futures Market in Ads?

Still, Google has been adept at selling text ads to countless small businesses who advertise on AdSense and AdWords, so its hard to count them out in the long haul. Plus, as Holden explained to me, Google is starting to offer a creative marketplace online for Google Audio Ads to help match advertisers to people who can help create their radio ads.

And after Google gets its foot in the door for print, radio and TV ad sales, what happens next? Will the fox eat the hens in the henhouse, or continue to play the gentleman in the middle? The Daily Heralds Kelly wonders just how this new relationship between newspapers and the search giant will turn out.

This is the early part of Google courting us, and its hard to tell whether it will be an abusive relationship or a loving relationship, he said. I dont know the answer to thatFor us as an industry, we have to screw our heads on differently and be open to new and different ways. And we have the option of not accepting [ads from Google] if it doesnt work. And the system that Google has set up is very fair.

Kelly still frets about those 20-plus sales job openings for Google in the Chicago area. Googles Holden says those sales positions are mainly to help out Fortune 1000 companies who need help doing online advertising through Google. But he also says that Google salespeople will be helping online advertisers make the leap to offline ads as well.

As AdWords expands beyond search and looks at these other traditional media [our salespeople] will be selling into that as well, Holden said. The sale theyll be looking at is a cross-media sale that might start with online and then have a customer understand the opportunity in print. Again I see it as complementary to what these other sales forces are doing that are dedicated to these different types of media. Our folks are more about how you would buy into these other media with search being the lead buy.

The NAAs Bennett isnt quite as worried about Google, and sees them warily as the frienemy.

Newspapers should be concerned about all competition, he said. This Google test will certainly not preclude Google from selling against newspapers online, but increased sales forces for Google could also draw in more advertisers ” particularly national advertisers not currently spending in newspapers ” to the print product and, perhaps subsequently, into our online products as well.

The SF Chronicles Coughlin takes heart in Yahoo and Google doing so many partnerships with traditional media as a validation of their importance and staying power.

The Googles and Yahoos are realizing, with all this partnering, that they know theyre going to need to align themselves with content partners, he said. Im not threatened by them. Im watching them like a hawk. At the end of the day, what theyd really like us to do is open the floodgates, and that would allow them to put together a consortium to broker every city in the world. Ill get this much for New York, and Ill get this much for Albuquerque. What theyre really trying to do is create a futures market. But were not going to let them because were going to close 90% of accounts to them, and I dont know any circumstance where we would open that up.

What do you think? Should Google be welcomed into the ad sales process for newspapers, TV and radio, or shunned as a fox in the henhouse? Where do you see Google going with this strategy in the long term? Share your thoughts in the comments below.


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