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March 14, 2006

Why Is Microsoft's Advertising

posted by MR WAVETHEORY at 3/14/2006 11:53:00 PM
Why is Microsoft's advertising announcement bad for Google? Because Microsoft is attacking Google's weakest link. Google excels at catering to direct marketers but it is horrible at dealing with brand advertisers. To put things into perspective, hear this out.

Google is a direct marketer's wet dream. Unfortunately, direct marketers are very price sensitive. These are the companies hawking flowers, toys, and other unwanted products. When keyword pricing moves up, they bail. That's what happened in Q4. Keyword prices went up and Google's revenue growth slowed down because direct marketers rebelled.

Google frankly stinks at brand advertising. Have you seen a Coca Cola ad on Google? No. Why? Because you can't sell the image of Coca Cola with a one line text link, and until Google figures out how, Coca Cola won't do anything. So, for now, what does Coca Cola want from Google? Nothing.

Now, ask yourself what happens when MSN offers Coca Cola or Yahoo branding opportunities on their home page with video spots and Flash rich media? Coca Cola jumps at it - as in the case of the MSN trial. Coca Cola loves it. That's their bread and butter because that's what they know. Coca Cola doesn't do direct response marketing. They do brand marketing. And while direct response may be big, brand advertising is huge. Brand advertising = television advertising.

Why can't Google do this? Simple. Google's product management philosophy is to build a site that allows users to find what they are looking for and leave the site as fast as possible. Oh and by the way, in case you haven't noticed, Google doesn't sell ads on its home page.

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4 Comments:

Anonymous or said...

I think there is some things you are overlooking here. One, this will be worst for yahoo in the near term than google, because yahoo has always been about brand marketing, and MS was using overture(yahoo) advertising before starting their own. Since, as you noted, google has not been good in brand marketing, there will not be a strong near term impact on google, giving them time to build their brand marketing strategy. Two, the market google is in still has much growth potential; I know small business owners who have never even tried advertising on the internet - there are alot out there like that(and google is experimenting with new ways to attract this market, I know I'm part of the experiment). Three, unlike yahoo, google is new to the brand advertising market, and has only now began to penetrate that market - they are learning how to do it, and it could represent a new growth for them. Examples there - google's collaboration and partnerships with cbs, nbc, dell, comcast. Finally with google's powerful brand recognition around the world, don't you think large brands would love to market through them; the moment google figures out how to do it, large brands will sign up - and google is trying to figure out how to do it(they have said so). Google is an aggressive sales company, they are not going to sit back while MS enter their turf. Like Microsoft, google is a learning company. Also, at least in the short term, the online advertising market is large enough for google, yahoo, and MS to be successful.

10:20 AM  
Anonymous Anonymous said...

I do not think so. G is only about search marketing and MS is brand - we all know that. Y! has both brand and search. Sure Y! will hurt when MSN leaves its network but G will hurt more.

You mentioned giving G time to build. Great. What about the CAPEX cost that will depress G's earnings?

Two, you mentioned much growth potential without downsides - that is the mantra of the dot-bombs.

Your point three is just like two. You said "it could be represent a new groth for them" - it could also represent a major failure like G video.

Finally, G has not been brand friendly with its no-evil policy. It will require will a big change in culture for them to change it. That change may alienate their loyal Google-is-simple-with-no-ads audience - its bread and butter.

Sure, the market is large enough for GYM (what, no Ask?). But is G going to be hurting? I think so.

-KL

10:20 AM  
Anonymous or said...

"G has no brand" What? It's obvious that google is already pushing in this direction. Example, just today they opened a new site with Nike. They have done similar other things like this with other brand.

You seem to think MS could easily enter this field and win hands down. But don't believe that Google with more experience and brand recognition in online ads and search can make a good push there also. I don't understand that thinking. I'm not saying they will do the brand thing better than google, but good enough to compete while their search marketing is not going to die soon.

It's good to have a balanced perspective on these things. Not a google is going to die, MS is going to win thinking.

10:21 AM  
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8:23 PM  

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