The concept of what constitutes an effective advertising model is constantly shifting, and this week Google
But first, a story
In last week's earnings conference call, Jonathan Rosenberg told an interesting story. The head of Google product management was in Italy just a few weeks ago, at the Piazza San Marco in Venice. While sweating profusely in 90-degree weather, he saw a huge billboard advertising a ski jacket. What a waste of money, he thought. "So I took a photo of the ad with my smartphone, and I sent it to my team as proof there’s lots of upside in improving ads."
Google is doing that in different ways, including creating new ad formats that allow advertisers to include more useful information. Like, say, a clickable phone number in mobile ads. "One of our customers," Rosenberg says, "Carnival Cruises
If you're like me, you're thinking, "Well, duh!" But this just highlights how much there is to learn (and how quickly things change) in the online and mobile ad industries.
Two trends
Management is seeing a couple of major shifts among big-time advertisers. First, traditional brand advertisers like Procter & Gamble
Second, there's a trend toward more integrated, major campaigns. "Integrated" simply means utilizing ads across the Google spectrum: display (YouTube, Google Finance, Gmail, etc.), mobile, and search. During the World Cup, for example, P&G, Anheuser-Busch InBev
ROFL, ROPO
If you're wondering about the true effectiveness of online ads, you're smart to do so (especially if you're an advertiser). But all these big companies seem to know about the "ROPO effect," which is the tendency for consumers to "research online and purchase offline." According to Google, this is a growing trend, and now 61% of Internet users who intend to purchase something visit a website first.
Such knowledge and the ability to use it practically is vitally important for Google. For all the talk of Android for phones, the Chrome operating system, Gmail, Picasa, Docs, Maps, and Navigation, it's important to realize that advertising is responsible for 97% of the company's revenue. Fortunately for investors, it appears Google is up to the challenge.