Google's Ad Empire is Good for Small Business
Google is the leader in online search and search-based advertising, and recent acquisitions are designed to expand the vast Google empire. Critics take exception to Google undercutting traditional marketing channels, but the evolving advertising landscape levels the playing field for small and medium businesses.
Google recently purchased AdMob, which targets advertising on mobile devices, and now has also acquired Teracent, a firm focused on online display advertising. Google's voracious appetite for new advertising revenue streams borders on monopolistic.
As Google and Bing duke it out for online search and search-based advertising dominance--with Google by far the reigning champ and odds-on favorite--traditional marketing is taking a hit. The flip side to that story, though, is that small and medium businesses have an opportunity to market more efficiently and, in effect, match the marketing efforts of larger corporate competitors on a fraction of the budget.
The traditional marketing methods include print, radio, and television. One of the main reasons for print media being on the list of endangered species is that print advertising has plummeted to the point that many publications can no longer afford to stay in business. Ad revenue drives the markets.
Television and radio advertising are capable of reaching thousands, or even millions of people at one time, but they are prohibitively expensive for most small and medium businesses. Local businesses can leverage cheaper, market-specific advertising with cable TV, but producing the ads is still costly.
The bigger issue, though--even above the cost of such advertising--is the effectiveness. TV and radio advertising is sold based on demographics. The audience for Oprah Winfrey is different than the audience for Rush Limbaugh which is different than the audience for Monday Night Football.
Advertisers can achieve some degree of targeting by purchasing ad time during broadcasts that closely match the target audience for their product or service. Even that level of targeting is fairly broad though and results in spending money to advertise to a significant number of people who have no interest in what you have to offer.
Google has established its dominance based on advertising targeted at keywords. Not only is the advertising itself more targeted as a result, but the company only pays for advertising to the core audience rather than to a broad market segment in hopes of finding the target audience.
That is where Google's purchase of Teracent comes in. Teracent does for online display ads what Google has done for keyword search advertising. The display ads can be more audience-specific. For example a sporting goods store can market a display ad for skis in Colorado, while displaying an ad for golf clubs in Arizona.
All of these factors benefit small and medium companies and enable them to compete head-to-head with larger competitors. These smaller companies can get more bang for their marketing bucks by purchasing advertising that is much more likely to result in revenue.
Of course, the dirty secret in all of this is that the larger companies could shake things up and tilt things back in their favor by applying the same logic. Even mammoth marketers like McDonald's and Coca Cola could cut marketing costs significantly by advertising more intelligently with targeted marketing rather than just carpet bombing the general public.
At the rate things are changing both on the Internet and with marketing, it won't be long before Google is delivering targeted holographic ads like Tom Cruise saw in the mall scene in Minority Report.