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February 12, 2008

Since the now in/famous "frienemy" title given to Google by the keepers of Madison Avenue, the question has loomed; Is Google friend or foe to the advertising agency community?

Google would like agencies to believe they are in no way a threat. Not exactly true. Doomsday theorist would have the agencies believe that Google's goal is to eventually disintermediate agencies entirely from their clients. This is certainly not true. There is nothing Google would like more than to work with agencies utilizing Google technologies to plan, execute and measure all advertising activities. The friend or foe answer lies much more in a grey area, hence "frienemy." Google is a threat to agencies, but only those advertising agencies who fail to incorporate technologies and techniques that improve their effectiveness as stewards of their clients' budgets. But if that makes Google a threat to the agency model, then you'd have to throw Platform-A and Microsoft into the mix as well.

Google's real goal is to be THE advertising OS (operating system) through which all advertising decisions are planned, executed and measured. The announcement at the 4As conference of an integrated dashboard for agencies is simply the latest evolution of this strategy. Robert Young laid out a great analysis of this strategy more than a year ago in his piece " Google... The OS for Advertising" and Dave Morgan expanded on Robert's analysis with his own insightful piece soon after. The question is, if we were talking about Google's strategy to become the advertising OS over a year ago, why have we seen so little traction for Google since -- and will things change this time?

Why so little progress? First is that agencies have resisted change at nearly every turn. Media buying is no small part of the agencies' bottom line. Before agencies will accept a new system for performing this function, three things have to take place: 1) The new system must easily demonstrate improved ROI results. 2) The new system must demonstrate a level of sophistication that requires and justifies the role of agencies as intermediaries. 3) Agency will have to develop the proper human and organizational structure to better utilize this new advertising OS. None of these things will happen overnight.

The second slowing force is that outside of search marketing and the AdSense network, Google's attempts at improving the world of print, radio and video advertising have not exactly set the world on fire. If you have read my thoughts on this before, you know that my issue with Google tackling print, radio or video is that unlike search, where the company first mastered the medium and improved people's experience with information on the Internet, Google has approached every other medium as an advertising solution first.

Why expect progress now? Despite what the agencies think, they are not in competition with Google. But a host of others are. Microsoft wants to build a better advertising OS, Platform-A certainly has a lot of the pieces and in the very near future Facebook could be a major threat to Google's world.

I still maintain that the company that best improves users' experience with a medium has the hands-down advantage in building the best system for incorporating appropriate and relevant advertising (which is why we will continue to see a rash of content platform acquisitions).

There are a number of amazing companies looking at better ways for people to access and consume content -- and each innovation will bring the potential to revolutionize the associated advertising model. Add to this that if Google's (or other would-be advertising OS developers') technology allows smaller independent agencies to provide media planning and purchasing services that could once only be provided by the largest agencies, this would very much threaten the holding-company model. For this reason it behooves major agencies to adopt emerging planning and measurement tools to learn where they can apply their advantages (mostly found in economies of scale).

In the end, Google's dashboard for agencies is a major announcement -- but a small step toward the full advertising OS. Are agencies ready to collaborate in the production of a system that works for everyone?

By Joe Marchese
Joe Marchese is President of socialvibe.
Courtesy of http://www.mediapost.com

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