The Go in Google … Putting the E Back in FrEnemy?

Rather than rehash the numbers consider instead doubleclicking on the search ad strength with the help of search engine marketers Drawing on 3Q reports from Kenshoo and Merkle including their associated conference calls and a performance marketing event held after GOOGL39s results last Thursday which included a presentation from GOOGL provides hypotheses on the continuing strength in paid search ad spending growthOne hypothesis is that shift of budgets from nondigital advertising is a key driver of search ad spending growth Merkle for its part quizzed last Thursday on what budget shifts were fueling the 24 growth that it saw in GOOGL US ad spending in 3Q up from 23 in 2Q offered this view noting the continuing shift to ecommerce Others note how new disruptors like Jetcom help drive this type of shift to search advertising If so watch for continuing pressure on nondigital ad channelsAnother hypothesis is that changing usage of mobile search as the mix of shopping activity shifts to younger users from older users is helping to drive the click volume growth needed to more than offset costperclick declines Google Sites paid click growth which includes the impact of YouTube as well as Google search was 55 in 3Q17 and 61 in 2Q17 Although companyspecific changes in the search engine results pageamp8212including more ads and in particular more Product Listing Ads which have higher clickthroughrates than text ads undoubtedly contribute to these high growth rates some search engine marketers believe that user demographics is another tailwind on click growthAs to Google39s initiatives the biggest lift may be coming from use of remarketing lists for search ads This tool can for example allow advertisers to shift their bidding to new customers away from existing customers particularly helpful for expensive keywords SEMs note less current impact from tools like customer matchFAgetabout competition to search advertising First Facebook has become a more responseoriented medium over the past two years and thus a potentially greater competitor for paid search The shift of advertising to the newsfeed from the right rail has contributed to the increasing use of FB by performance advertisers However one view from SEMs is that FB has not fundamentally changed its positioning against search for performance advertisers as search captures not only purchase intent but purchase quotinflectionquot That is to say the share of users ready to exit the application and transact is much greater on search than social platforms FB has improved its targeting of purchase intent but its users still do not use FB primarily to purchase ie at an inflection point where a performance ad would be particularly effective The higher readiness to buy when searching may somewhat inure search to shifts of performance ad budgets to socialSecond there may be reasons to question AMZN39s impact on search advertising above and beyond the relatively small scale of AMZN advertising at present There has been much commentary about how the growing numbers of Amazon Prime users are more likely to begin their shopping journey on Amazon than on search engines However some SEMs think that Amazon product search may be more complementary than cannibalistic of paid search queries even for Prime users The rising mix of PLAs specifically may be helping GOOGL forestall loss of search ad clicks and budgets to AmazonShifting to GOOGL39s overall position in the advertising ecosystem the increasing role in marketing of machine learning and quotdeep learningquot in particular may be a relatively unheralded challenge for agencies39 relationships with their clients Per the performance advertising presentation the majority of GOOGL39s conversations around performance advertising with large marketers and agencies this year concern machine learning and artificial intelligenceThe applications of deep learning cut across a wide range of services traditionally provided by ad agencies Deep learning reflects use of training of an algorithm for improved data classification eg whether a picture is of a dog or a cat and its applications include marketing design including copy testing market trends competitive intelligence campaign measurement attribution in particular and brand tracking including quantification of how brands relate to each otherMany larger marketers may be missing that as they increasingly incorporate chat bots and voice apps into their marketing search advertising expertiseamp8212at Google and elsewhereamp8212will become even more strategically valuable The learnings from search for the responsiveness needed in chat bots and voice apps could give GOOGL further inroads into advising on technology trends important to major marketers For an example of a good voice app check out the one from Domino39samp160Oh and talk about pricing pressureamp8212many of Google39s machine learning tools are available for free Google39s machine learning APIs are available free of charge and yet are still probably substantially underutilized at present by the performance marketing teams at large marketers For what can be done with the Cloud Vision API for example check out the Ad Vision report from IPG Mediabrands which gave the results of tests of online ad effectiveness using machine learning Additional lowcost solutions are available further up the value chain including Cloud ML and TensorFlow which are particularly valuable for data scientists and market researchersOne implication of GOOGL39s current business momentum is how its ad growth has funded and looks likely to continue to fund increasing technology inroads into not just the businesses of its FAANG brethren but the ad agencies themselves Of late investor concern about the ad agency business model has centered on competition from consulting firms Investors might better swing their gaze back to the darker clouds of the quotfrenemy thesisquot which has been on the shelf for a while perhaps too longThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writers

SUBSCRIBE FOR FREE MEDIAVILLAGE CONTENT | BECOME A THOUGHT LEADERSHIP CONTRIBUTOR

The Go in Google … Putting the E Back in FrEnemy?

Author

Publish date

Channel

Archived in

James Dix

FEMA and the Ad Council Encourage AANHPI Communities to Enhance Disaster Preparedness in New PSAs - Ad Council InSites

More Videos:

SUBSCRIBE FOR FREE MEDIAVILLAGE CONTENT | BECOME A THOUGHT LEADERSHIP CONTRIBUTOR

The Go in Google … Putting the E Back in FrEnemy?

Enjoying This Commentary? There's More to Love

James Dix

FEMA and the Ad Council Encourage AANHPI Communities to Enhance Disaster Preparedness in New PSAs - Ad Council InSites

Cookies