HdC: Display is a huge engine room for growth at Google. The Ad Exchange is central to our strategy as it creates a more efficient and open marketplace for advertisers, agencies and publishers, enabling the great benefits of display advertising - including its measurability, customization and creativity - to occur at great scale.
Can you see display and addressable media as the core advertising business for Google in the future as opposed to search?
We've already well past the notion that display is a secondary business at Google. Display today is a core business for us - you saw that on our earnings call, but most importantly, we're seeing it in our interactions with agencies and advertisers. Display is top of mind in all of these discussions. We're deeply invested in technology, engineering, product and sales teams, as well as deep technology and creative partnerships, to help design and deliver advertising solutions for advertisers and publishers alike. I look at the incredible growth at Invite, on the Google Display Network and on YouTube and I can see that advertisers are really excited about the display opportunity with us. That said, search advertising is Google's single biggest source of revenue and I'd expect that to continue for some time. Search is proven, incredibly effective, continues to grow very fast and there's a ton of new formats and tools. Ask me again in 10 years, when things like mobile and TV have more fully converged under the display advertising umbrella!
In general, are you surprised how quickly the display media industry (PC-based, mobile, video) is evolving? What do you think drives this?
I never cease to be amazed. Technology has boomed in recent years and this is really what's driving new opportunities - as you know, display is not a recent invention, but the new capabilities are. As a result of this, on the buy-side, we're finally at the point where agencies and creatives can put their visions into reality - highly relevant, targeted and engaging campaigns at scale across multiple platforms. And on the sell-side, while there's a lot more innovation to come, publishers can now maximize returns across direct and indirect and across multiple platforms and formats, so they're embracing the area.
To partners such as ad networks and agencies who worry that you're going to swallow or steal their business someday, what do you say?
We are long term partners and we want to make display advertising work better for them. You can see this in our technology partnerships with advertising and media agencies, and the way that so many of the leading ad networks are accessing inventory via the Ad Exchange. All of this helps them provide an even better service to their clients. Those folks that augment their technology, relationships and expertise with what we bring to display are huge beneficiaries of our investment in this area and will continue to be in years ahead.
Any predictions for 2011 in the digital advertising industry?
Apart from the fact that it's going to grow rapidly? Here's a few predictions. We're going to see continued hockey stick growth in the addressable component of display but, coupled with that, I think there's going to be a revived, serious industry discussion about how contextual messaging and audience targeting work together. These two strategies are going to be used in far more sophisticated ways to complement each other - contextual to give reach and high-impact placements, and addressable to upsell and deliver more customized ads. Certainly, that's what our strategy is focused on. And in 2011 we're going to see more evidence emerging of how exchanges and real time bidding are driving up publishers' returns, while enabling them to have control over their inventory. There's some skepticism now, but in 2011, I think it will become almost universally accepted that publishers are benefiting.
By John Ebbert