There were echoes in the advertising industry last year that search advertising which Google has dominated in so many ways over the past decade was about to decline in terms of revenue in the wake of mobile, the sudden return of display advertising and real-time bidding advertising networks.
Bloomberg reported these rumors to be true on January 20th after Google missed sales expectations for the first time in nearly three years: “Page, CEO since April, is exiting poorly performing businesses while expanding in new areas, including the mobile Web, to lessen reliance on traditional search. While that's helping boost sales, it also crimps the amount of money Google can collect from advertisers because ads viewed on handsets are considered less valuable than those on a computer screen.”
I sat down with a Group Marketing Manager of Google's Mobile Ads, Jesse Haines in Toronto this week to discuss Google's mobile ads strategy moving forward.
Haines says it's a three step strategy for agencies and their respective brands to move towards mobile advertising. The first includes the HowToGoMo initative launched last fall which focuses on getting your website mobile optimized. Haines says that only 21% of sites include mobile advertising according to their latest figures which in turn is a huge opportunity for Google. Further, 40% of consumers who visit a non-mobile optimized site on their smartphones are likely to go to a competitor's site instead.
That underlines the importance of having a mobile website which complements Google's existing AdMob platform for ads inside applications as there's been a back and forth battle between what is used more- the mobile web or mobile applications.
The second step is to leverage the fact that about a third of searches have local intent and use some of the unique mobile inputs that smartphones have to bolster advertising such as offering a deal based on location.
Thirdly, Google wants advertisers to start thinking in a cross-media way across four screens- the smartphone, tablet, television and personal computer. They say tablet and smartphone usage peaks in the evening while people watch television so your advertising should synchronize across all screens.
Haines said the company did a lot of research with the help of Nielsen and found that recall would increase 24% across all four screens from just 50% on television to 74% across all screens.
As for tablets, Haines says that Google feels you don't need to optimize your site as it's not much different from the web and that consumers are rather looking for interactivity and rich media formats.
Further, despite the popularity of Apple, it is a closed system while Google is an open system which allows marketers to be more creative, something they'll cherish.
While Google might stand to make less money than traditional search in mobile as the Bloomberg article suggests, they realize they have to move towards how consumers use devices which is increasingly mobile, perhaps upwards of 10% now in North America in terms of time spent.
It's just ironic that the proliferation of Android and how much it's allowed the smartphone market to accelerate is one of the reasons sales declined last quarter in search advertising. Still, the numbers would be far uglier had they not made the leap into mobile in the first place.
I believe Google will come out of this state of flux as their traditional advertising models transition as a company with a chance to make more even more money, especially when the display advertising real-time networks finally overcome the technological hurdles to integrate with YouTube, television and across all mediums further accelerating the advertising spend in Google's direction.