for W3c validation
So, Google purchased DoubleClick for $3.1 BILLION (jeez, that is a lot of money) to give Google an instant, major foothold in online display advertising. This tells me one thing: keyword advertising is not the only online advertising game in town. Evidence of this is the fact that others in the industry (Microsoft) think this is big enough of a deal to play the anti-trust card. Sure, they could have built the technology behind DoubleClick – but Google realized advertising is a relationship business (surprise, surprise – just like every other business). It would take years to build all the relationships DoubleClick has.
Google has always been known for it’s text link ads – which are effective for hundreds of thousands of businesses worldwide. CPC (cost per click) advertising works for a variety of companies — such as E-commerce sites that make money as a result of visitors showing up and buying products. For example, say Company X generates an average of $4 in profit for every visitor that shows up at their site — they will gladly pay $2 for each incremental visitor to their site. It makes sense to buy as much traffic as possible for less than $4 per visitor. Company X doesn’t really care if you remember their name as long as they catch you when you are looking to purchase something they sell. This is why they don’t mind buying text ads for certain search terms and getting very minimal branding in the process.
However, keyword advertising doesn’t quite cut it for large brand advertisers who can’t make money off their traffic — like Ford and Coca-Cola — or are focused on building their brand for the long-term. Fortune 500 companies have multi-national brands they’ve spent years (or decades) and millions of dollars to build. Ford wants to engrain their F-150 into your head so that, when you’re in the market for a truck, you think of them 1st. I’m sure some will argue with me on this, but I really don’t think that consumers use a search engine to determine what type of car or truck they test drive. I think brand advertising and word of mouth are the two primary reasons for consumers choosing Honda over Kia or Lexus over BMW. The larger the investment, the more people desire established brands because of the reputation (brand) they’ve built. Building a brand is not cheap (in most cases) and takes a long time. Brand advertisers know they’ll be around in 5 years — meaning their ad dollars are spent to attract customers 5 years from now in addition to current customers. Brand advertisers are more than willing to spend the extra money to build their “brand” rather than just buying traffic with a text advertisement. Apple is one company who has done an extroardinary job of using advertisements to build their image. They would not have the image they do today without the years of visual advertisements they’ve invested in.
Branding is also important for cheap products whose goal is to sell in mass — such as soft drinks. Does anyone really do a search for “best softdrink” to determine whether they buy Coke or Pepsi? I doubt it – they go by what they recognize in the store. Why do they identify with Coke better than Pepsi (I personally like Pepsi)? Brand advertising.
My point is this: brand advertising is as important, if not more so, as keyword advertising in the online advertising industry. Plenty of web sites (CNN, Bankrate, WebMD, Yahoo!, etc) make plenty of money as a result of banner advertising — and it’s only going to increase. Consumers are spending more time consuming media online — meaning it’s inevitable that more of the advertising dollars spent by large brand advertisers are going to shift online as well. The shift will not happen overnight, but, day-by-day, it’s slowly happening. As everyone knows, change doesn’t come quickly in any industry – online advertising is no different. Google’s purchase of DoubleClick means they see the massive banner advertising opportunity just like I do.