Friday, December 15, 2006

Agencies: Google Has Put A Target On Your Back

by Dave Morgan

IF YOU'RE IN THE AD agency business, you'd better buy The Wall Street Journal today (although you can be sure that lots of online media and agency news aggregators will link to the story.) If there was any question in your mind about Google's quest to unseat ad agencies, they are answered in Kevin Delaney's piece reporting on Google's new ad programs, including its tests with video, radio, newspapers, television, click-to-call, cell phones, and online maps. This is in addition, of course, to Google's core search and contextual ad listings, which are already generating $10 billion in annualized revenue.

Google's intentions relative to its planned offerings for the world's marketers are quite well summed up by CEO Eric Schmidt, who tells the WSJ, "The long-term fantasy is we walk up to you and you give us, say, $10 million and we'll completely allocate it for you across different media and ad types."

Well, that makes it pretty clear. If Google executives fantasize about controlling the allocation of media spend across all online and offline channels, they certainly seem to have their sights set on taking over the media ad business. To Sir Martin Sorrell, Google may be a "Freinemy" (the term conjures images in my mind of some sort of huggable stuffed dragon with a forked tongue, vicious spiked tail and a smiley, happy face); but, to any marketing services company that derives significant revenue or client relationships from media planning or buying, Google's moves should put in bas relief the seriousness of its threat to your business.

Of course, some in the agency business might take solace in the fact that media is only one component of the services that most marketing service companies provide. Creative, for example, is an area that Google certainly won't enter, since it lives in the world of automated, simple text ads.

Or not? More from Delaney's story: "The new ad offerings include some elements the simple text-only search ads don't have: For instance, with its radio-ad test, Google is offering a directory of specialists who can help advertisers create the spots, writings scripts and recording and delivering audio files." Google apparently intends also to be in the creative business. But, probably not to worry about them entering the client strategy and account management piece as well. That requires a bunch of really smart people who can identify and solve really hard problems, and also a propensity for smothering clients with lavish entertainment and constant compliments. Yes, that's in Delaney's article too.

You might temporarily take solace in the fact that many of Google's search and context advertisers are too small to have ad agencies anyway, so the threat to your business is minimal. But just as my company's business gets better and better though the learning that comes from accumulating greater sums of audience information, so too will Google learn, from its interactions with hundreds of thousands of smaller advertisers, how to help larger advertisers streamline their advertising process.

Google's disintermediation of agencies in the ad process is underway on the media side and appears to be coming on the creative side. What's an agency to do? Not work with Google? No. That's not the answer. Observe. Learn. Innovate. That's the answer.

Watch what Google is doing, whether that be by working or partnering with it, or just by paying better attention. Google Google: you'll be surprised by how much information on its activities and strategies is publicly available. Google is taking some very fresh approaches to businesses that haven't changed much in decades. You might be surprised by what you learn.

Don't just let your observations sit. Analyze what Google's doing and why; understand why it has been so successful with so many clients. Spend the time and resources and apply some real rigor to your analysis. Take time to truly understand the essence of what the company does and how it works. The secret to its success is probably simpler than you think.

Then, most important, innovate. Apply what you've learned. Do to your business what Google would, if that company owned it. There is clearly magic in Google's business model. Don't be afraid to adopt it. Don't be afraid to change. You still have time. Google has a long way to go until Schmidt's fantasies are reality.

Dave Morgan is Chairman of Tacoda.


1 comment:

  1. Anonymous2:16 PM

    Intersting article, but far-fetched. If only it was that easy!
    You can never replace the human element, or the intricate knowledge of knowing the local marketplace.

    The Big Mexican!