Google’s Next Big Battle: A Conversation With Ad Chief Susan Wojcicki

From my Forbes blog:

Straightforward and unflashy, Susan Wojcicki doesn’t come off like the most powerful woman in advertising that Forbes and others have labeled her. When we meet outside her office at the Googleplex in Mountain View, she’s dressed in jeans and a simple maroon top and speaks with an almost self-deprecating lilt.

But as the search giant’s senior vice president of advertising and commerce, she is indeed the exec leading the development of some of the most disruptive ad technologies of the past half-century. I interviewed Wojcicki (pronounced wo-JIT-ski) for my article in the current issue of Forbes on how Google is gunning for brand advertising, the image advertising still dominated by television and the dwindling pages of slick magazines.

After picking up “detox” lemonades at a juice bar, we walked past a T. Rex skeleton sculpture festooned with plastic pink flamingos to a set of tables to talk about how the company aims to wrest away brand advertising budgets, which still constitute the majority of ad spending worldwide thanks to the persistent popularity of television among advertisers. Over the slap of spikes and serves from a nearby volleyball court and the occasional caw of a crow resting in the nearby trees, she explained her vision of Google’s next big step beyond search and plain-vanilla display ads. This is an edited version of our conversation.

Google senior VP Susan Wojcicki

Google senior VP Susan Wojcicki

Q: Lots of brand marketers and agencies say they can get truly large audiences more easily on TV than on YouTube or elsewhere online. Why haven’t online ads been able to provide similar branding opportunities as TV and other traditional media?

A: Most advertising is a portfolio of different types of advertising. TV definitely is effective for lots of advertisers. If we want to talk about the long-term future, the question is: Where is TV going? Will all TVs be Internet-enabled? And if they are Internet-enabled, what does your TV look like then? Is your TV then basically a screen attached to your computer in your living room? There could be all different types of things your TV looks like in the future.

Q: You still hear the argument that TV is a lean-back medium and people in that kind of environment are always going to be more receptive to brand messaging. Are people ever going to be as receptive online?

A: Even in TV advertising, they try to target specific types of users. That’s why they’ll say, “We want users who watch sports,” because that means a certain type of demographic. Users are opting into seeing specific shows on TV, and I think it’s similar with digital. They are choosing specific shows to see.

I’m not really sure that lean-back vs. interactive necessarily means that the user is more or less receptive. It’s counterintuitive that something where you’re engaging, you’re less receptive. If users are engaging with something, they’re choosing to see something. That’s the whole concept of what we’re doing with TrueView [YouTube ads that viewers can skip and that advertisers pay for only if they’re viewed], where users are choosing to see something, so they’re engaging with it. …

Read the rest of the interview.

Display Ads As Compelling As TV Spots: A Conversation With Google VP Neal Mohan

From my Forbes blog:

In the lobby of Google’s Building 900 at its Mountain View headquarters, there’s a display of Google-colored squares and rectangles that looks like a bland abstract-art piece. It turns out these are the shape and relative size of standard display-ad units that run on nearly every commercial website.

The “display” display exposes the paradox of Google’s attempt to extend its dominion over online ads to the realm of image advertising done chiefly on television and in glossy magazines. To get the wide reach of television, the company needs to shoehorn image ads into those standardized, easy-to-buy units, but it also needs to provide technology that allows marketers to do more compelling pitches inside those boxes. Resolving that paradox is the job of Neal Mohan, Google’s vice president of display ads.

After joining the company with the $3.2 billion acquisition of display technology firm DoubleClick in 2007, Mohan has helped build or buy what’s likely the industry’s broadest set of technologies needed to create, place, and measure the impact of display ads. In an extensive interview for a story in the current issue of Forbes, we talked about how he and hundreds of engineers in Mountain View and New York City are trying to apply that technology to wrest billions of brand advertising dollars from TV. This is an edited version of our conversation.

Google VP Neal Mohan

Google VP Neal Mohan

Q: Could you lay out the key challenges today in getting more brand advertising to move online?

A: The primary use case for advertisers online is generally performance-oriented. That applies not just to search advertising but frankly to display, and even video ads have been performance-oriented. That’s done the industry well. There’s been a lot of growth around impressions and clicks and conversions.

But the next big opportunity for the industry if we are going to grow it not just X percent a year but 10X over the next few years is to crack this brand advertising nut. It’s not about display banners or text ads or rich media or video or mobile. It’s really about all of the above, and what the objectives of the brand advertiser are. It’s more upper-funnel campaigns where brands are looking to establish their brand or a new product that they’re looking to bring to market.

Q: Why the focus on brand advertising now?

A: There are a couple of things coming together that make this the right time for this opportunity to be addressed. The first is just the fundamental consumer trend. Fifty-seven percent of media consumption is online now, greater than any other channel combined, including television. …

Read the complete interview.

Look Out, Television: Google Goes For The Biggest Advertising Prize Of All

Google's BrandLab at YouTube headquarters

Google’s BrandLab at YouTube headquarters

From my Forbes magazine feature story:

IT’S MID-SEPTEMBER, and Volkswagen of America has a problem: It won’t have any new models coming out until the spring. Keeping VW front and center in consumers’ minds has drawn a group of marketing folks from the automaker and two of its ad agencies to Google’s BrandLab at its YouTube headquarters south of San Francisco. Dedicated to “evangelizing the art and science of brand-building,” the richly appointed meeting space is basically a man cave for ad creatives, complete with overstuffed couches, booze and the mother of all big screens, an assemblage of 32 flat-panel displays massed into 300 square feet of video overload.

In one corner of the BrandLab, Google’s Jeff Rozic goes to work running VW’s folks through a rapid-fire succession of video ad campaigns the BrandLab feels have worked. His earnest delivery is well-honed, courtesy of 100-plus similar “private workshops” held for potential advertisers from Coca-Cola to Toyota over the past year. VW has some catching up to do, a point Rozic makes intentionally or not by highlighting 13 travel vignettes produced by a rival, Nissan Mexico. His larger point: Don’t clutter a story with too blatant a call to action. “We shouldn’t apologize for trying to sell cars,” one VW exec protests. “Sure,” Rozic shoots back, “but you have to be careful to distinguish when you’re telling a story and when you’re selling.”

Fair point. Rozic is clearly selling–and it’s a product intended to change Google’s path. The king of the click is now lecturing one of the world’s most accomplished advertisers to forget those clicks and amp up the image ads. CEO Larry Page can go on as much as he wants about self-driving cars, wearable computers or any of the company’s other “moon shots.” But Google fundamentally remains the most disruptive advertising company of the past half-century. As its total advertising-revenue growth rate has halved in the past two years, from 29% to 15% (thanks in part to Facebook and Twitter), it’s now charging full-bore toward the biggest pot of advertising gold it doesn’t own: brand advertising, the image ads you see in glossy magazines and on television.

Most online ads–the banners that litter nearly every commercial website and, most notably, Google’s search ads–have failed to help marketers move the needle on classic advertising measures like brand awareness and intent to purchase. Instead, they mainly drive people to a product page to click the buy button. Direct marketing is lucrative: Search is still upwards of 60% of Google’s ad revenue, helping it earn an estimated 15.8% net margin in 2013–but image ads will come to dominate digital advertising in this decade.

Look at the numbers: Digital brand advertising is an $18 billion market this year, according to eMarketer. Its forecast implies that number will double by 2018, at which point it will have passed search and direct marketing, with plenty of room to grow. Television advertising, comprising almost entirely image ads, is currently a $200 billion global market. And it’s a vulnerable one, as the medium’s iron grip on the bulk of ad spending looks a little less firm as younger people scatter to YouTube and Netflix when they aren’t Snapchatting or Instagramming on iPhones or skipping ads entirely on their DVRs. Some 75% of respondents to an Interactive Advertising Bureau poll of 5,000 ad execs expect to see some spending move from TV to digital video in the next year.

This explains the man cave. YouTube remains one of the greatest acquisitions of the Internet era. Larry and Sergey paid $1.65 billion in 2006 for a business that today would conservatively be worth $20 billion as a stand-alone. So what’s another $400 million or so to build out a brand ad business? …

Read the rest of the story.

Exclusive: Media Trading Startup MediaCrossing Aims To Shake Up Online Advertising

From my Forbes blog:

The hottest trend in online advertising today is the rapid automation of ad sales through exchanges like those run by Google, Yahoo, and Facebook. This so-called programmatic trading works something like equities trading on a stock exchange like the Nasdaq, and it’s growing like crazy.

But to Bill Lederer‘s mind, the job was never finished. Lederer, former CEO of early e-commerce company and executive at the WPP-owned media, marketing, and data services firm Kantar, has just announced a $6 million Series A round of funding for a new company, MediaCrossing, that he claims will do just that. In the process, it also could disrupt a lot of existing players in the online ad business, from Google and Facebook to a raft of ad tech companies.

In an exclusive interview on the new company, founded with former Wall Street technologist and entrepreneur and MediaCrossing Chief Technology Officer Ted Yang, Lederer says the Stamford, Conn.-based company is the first true digital media trading company. “We take the best of Wall Street and the best of Madison Avenue and put it together in a trading business,” says Lederer. “We haven’t seen that yet.” …

Since Lederer isn’t opening up the inside workings of the technology (though you can get a little more detail here), and few outsiders have delved into it to offer an independent assessment, it’s difficult to assess his claim to have created something entirely new that will shake up the online ad industry. Jeff Zabin, founder and research director for information technology research firm Gleanster, who was briefed on the company’s plans, says MediaCrossing is “fundamentally changing the game for digital media buying.” …

Read the whole story.

Meet Hummingbird: Google Just Revamped Search To Answer Your Long Questions Better


From my Forbes blog:

Google has updated its core algorithm that controls the answers we get to queries on its search engine in a bid to make them work better for longer, more complex questions.

The update, code-named Hummingbird, is the biggest change to the underpinnings of the world’s leading search engine since early 2010, when Google upgraded its algorithm to one it called Caffeine. Google made the change about a month ago, it announced at a press event in the garage of the Menlo Park (Calif.) house where Google started. The event also celebrated the 15th anniversary of Google’s founding, which is tomorrow.

Most people won’t notice an overt difference to search results. But with more people making more complex queries, especially as they can increasingly speak their searches into their smartphones, there’s a need for new mathematical formulas to handle them.

This update to the algorithm focuses more on ranking sites for better relevance by tapping further into the company’s Knowledge Graph, its encyclopedia of 570 million concepts and relationships among them, according to Amit Singhal, Google’s senior VP of search. (For example, there’s a Knowledge Graph “card,” or information box, for the Eiffel Tower, and Knowledge Graph knows it’s a tower, that it has a height, that it’s in Paris, etc., so Google can anticipate you might want to know some of those facts.) Caffeine was more focused on better indexing and crawling of sites to speed results.

After the event, Scott Huffman, a key engineering director at Google currently working on natural language, told me that part of the impetus for the change was that as more people speak searches into phones, they’re doing so in a more natural way than they type in queries–which is to say more complicated. So Google’s search formulas needed to be able to respond to them.

Partly that is through even great use of the Knowledge Graph, so obvious discrete terms can be identified quickly. But it’s also interesting that although queries are getting more complex, that doesn’t always mean it’s harder to find the right answers. The more terms people use, Huffman says, the more context Google can divine. So those extra words, even if they’re in a more complex query, can give Google better information–but only if the algorithms are adjusted to be able to recognize the relationship among those terms.

Ultimately, he says, “we want to get to a natural conversation” between people and Google search on whatever devices they’re using. …

Read the rest of the story.

13 Questions For 2013 In The World Of Online Advertising

questionsCross-posted at my blog The New Persuaders:

For the past few years, I’ve offered predictions here and on The New Persuaders for what’s likely to come in the next year. This year, I’m going to shake it up and throw out a few questions instead. I think I know the answers to some of them, but if many won’t be answered definitively by year-end, they remain top of mind for me and probably for many others in online media and advertising.

So in this, the first full week of the new year, here are some questions to which I hope to start finding answers:

* Will image advertising finally take off online? I have to believe that as people spend more and more time online instead of reading print publications and watching TV, brand marketers will want and need to reach them there with ads that are aimed at creating consideration for later purchases, not just eliciting an immediate sale like Google’s search ads and too many banner ads. We’re already starting to see signs of such advertising with the early success of Facebook’s Sponsored StoriesTwitter’s Promoted Tweets, and YouTube’s TrueView ads–not to mention the explosion of tablets, which provide a lean-back experience more compatible with image advertising. This won’t be a sudden change, since brand marketers and agencies don’t move quickly, but you can’t tell me there aren’t going to be increasingly compelling ways for brands to influence people online.

* Can advertisers and publishers make ads more personal without scaring people? That’s the $64 billion question, and it likely won’t get answered in full this year. It’s easy for headline-hungry politicians to make a big deal out of Facebook’s latest privacy gaffe or the Wall Street Journal’s or the New York Times’ latest scare story about an ad that followed somebody all over the Web. That’s especially so since Facebook really does push the privacy envelope too far at times, and too many advertisers idiotically chase one more sales conversion at the cost of scaring off hundreds of others or inviting onerous legislation. But making ads more useful to each individual person is not only crucial to online commerce, it’s potentially better for most consumers as well–seriously, I don’t need to see another ad for a fitness center or a new credit card, but that ad for Camper van Beethoven’s new CD had me in a split-second. The answer lies in these two words, everyone: transparency and choice.

* Will mobile advertising work? Well, some of it already does, to hear Google and Facebook tell it. And while those already devalued digital dimes so far turn to pennies when it comes to ads on smartphones and tablets, this still feels more like growing pains than a crisis in online advertising. Sure, the screens are small and people don’t like to be interrupted in their mobile cocoons. So a different kind of advertising is probably needed–clearly, banners don’t cut it on a four-inch screen. But the value to advertisers of knowing your location and maybe the apps you’re using, coupled with knowledge of what your friends like–all with permission, of course–is huge. That permission may be really tough to earn. But if advertisers can offer tangible value, perhaps in the form of useful services related to what you’re doing or looking for or shopping for–and isn’t that the ultimate native ad?–people may loosen their hold on that information.

I have a lot more questions, but I’ve got to stop before too much of 2013 is gone.

Check out more questions at the full post.

Why Do Programmers Hate Internet Advertising So Much?

Facebook ad question (Photo credit: renaissancechambara)

From my blog The New Persuaders:

Another week, another pontificating programmer slamming online advertising. What is it with these guys?

The latest example is a steaming heap of linkbait from software developer and entrepreneur Patrick Dobson entitled Facebook Should Fire Sheryl Sandberg. That would be the chief operating officer of Facebook, whose purported crime is that she steered Facebook toward being an ad-supported company.

In Dobson’s telling, while Facebook cofounder and CEO Mark Zuckerberg was off at an ashram in India, onetime Google ad exec Sandberg mandated that Facebook would henceforth be an advertising company. Proof of her folly? Facebook’s now worth half of what it was at its IPO three months ago as it “continues to flounder in advertising hell.”

This, despite the fact that Facebook will gross about $5 billion in ad revenues this year, despite the fact that its current market cap is still more than $40 billion less than eight years after the company’s founding in a Harvard dorm.

Thousands of Web developers would love to flounder this badly.

Dobson’s preferred alternative is that Facebook should gradually phase out advertising in favor of–and I have to get technical here, because the bigger picture he provides is fuzzy–selling access to its application programming interface. That way, developers can build businesses like Zynga did on top of the social network in the way personal computer software developers built applications atop Microsoft’s Windows. From his post:

… There is massive value in the social graph and the ability to build applications on top of it. I believe the value is greater than all of the advertising revenue generated on the web to date. … What is the best way to monetize the social graph? To sell access to the social graph! … Developers can then figure out if advertising, or micro transactions, or payed access is the best way to monetize the social graph.

I’m not really sure what “selling access to the social graph” would be, though it sounds like the result could make Facebook’s many privacy gaffes to date look tame.

But the bigger problem is the persistent implication by tech folks like Dobson that advertising is beneath them, and beneath any intelligent human being. Now, I’m no huge fan of most advertising, and all too often it is indeed lame. But there’s no doubt it can be useful at the right place and time, and even when it misses the mark, advertising is a small, remarkably frictionless price to pay for a whole lot of free Web services.

The notion that advertising is evil, to use a favorite term of Google critics, or at least useless is a longstanding meme in Silicon Valley. It goes at least as far back as Google’s founding, before it became–right–the biggest online ad company on the planet. Cofounders Larry Page and Sergey Brin famously wrote in their Stanford doctoral thesis describing Google that advertising could pollute search results.

Why this antipathy to advertising? A lot of tech folks seem to believe they’re immune to the influence of advertising. More than that, they assume that no one else is much influenced by it either (despite ample evidence over many decades that ads do influence people’s attitudes and behavior). Therefore, the reasoning goes, ads are nothing more than an annoyance, an inefficient allocation of capital. Dobson accuses Sandberg of a “rampant lack of business creativity” that has “no place in centers of innovation,” later saying she should start an ad agency in Miami. …

Read the complete post at The New Persuaders.