Live from SES San Jose: Google Hunts Future Ad Venues

CEO Eric Schmidt told an audience of search advertisers that his company’s business model of selling targeted ads at auction can make the transition to other online and offline media — including radio and perhaps television.

Speaking at this year’s Search Engine Strategies meeting in San Jose CA, Schmidt pointed to a flock of new ad deals Google signed in the week or so before the gathering. Those new drives — all either still in the signed agreement stage or in early testing — are intended to “give people more ability to target places where their ads can go”, Schmidt said. “These are big expansions of new content that we think are going to be very successful for our advertisers.”

The pacts include a deal signed with XM Satellite radio at the beginning of August to insert audio spots for Google advertisers into XM’s non-music digital programming. Marketers will be able to place those Google ads automatically using dMarc, the ad insertion platform that Google purchased last January. That program should be up and operating by the last quarter of 2006.

Then there’s the agreement Google announced on Sunday with MTV Networks. Under that deal, Google will distribute some of its video programming to Web sites and blogs on Google’s AdSense network under an ad-supported business model. Google will insert the video ads into the content, in a major step beyond the text-based and graphical ads that the AdSense publisher network now delivers.

Finally on Monday, Google floated news of an agreement to provide search functions and pay-per-click search advertising to MySpace.com and a handful of other sites operated by Fox Interactive Media, the Web arm of Rupert Murdoch’s News Corp. The multi-year deal will make Google AdSense the exclusive distributor of text-based pay-per-click ads to MySpace.com and some of Fox Interactive’s other media properties, which include Fox.com, Foxsports.com, AmericanIdol.com and gaming network IGN.com. Google will also have first crack at display advertising inventory on those Web properties and will replace Yahoo! as the search engine on MySpace.

Taken together, these deals have been read as signs that Google is interested in expanding its ad model beyond text and banners — despite reportedly indifferent results from a test of print ads earlier this year.

Schmidt confirmed that Google is indeed looking to be part of the new-media advertising future on the Web.

“These are big expansions into new content that we think are going to be very successful for our advertisers,” he said. “we think radio is going to be a very good medium. And it’s obvious that much of the world’s video will be repurposed onto the Web or developed for the Web. It’s also obvious that people who own those copyrights have a proper need to monetize them. So we announced with MTV the ability to take video ads, target them into video streams and deliver them to third parties, the way our AdSense network does.”

And MySpace represents almost 100 million users spending “hours and hours a day” on the site, Schmidt said. “That’s a whole new category of people whom we think advertisers will want to reach. It’s an under-monetized opportunity for advertisers to reach an audience that they’re not reaching already.”

Schmidt sidestepped questions from moderator Danny Sullivan about the inferior measurability of ads in media such as radio compared to the trackability of pay-per-click ads on the Internet. Will ads in those other media get the same metrical advantage that has made search marketing an ad staple?

“These are early days for these problems,” Schmidt said. “We’ve all been in this [search] business for six or seven years. Targeted, measurable radio ads are starting now. Targeted, measurable video ads on the Internet are starting now. At Google we’ve thought about doing targeted, measurable ads on real television. So we’re thinking about using our targetable advertising system for every form of advertising.

“Why would we do that? Because it’s a big opportunity to provide greater value to advertisers. It’s an even bigger opportunity to provide greater value to end users.”

On the MySpace deal, Schmidt said that Fox Interactive planned to incorporate Google search functions within the social networking site, as well as in gaming site IGN.com, which Fox also operates. “Today many of their members leave those communities to do a Google search. They’re going to integrate Google within those communities.”

Asked if Google was in danger of overextending itself with initiatives not only into new forms of advertising but with developments in Web analytics, e-mail, maps, desktop search, instant messaging, calendar applications and even hosted spreadsheet programs, Schmidt said that diffuse innovation was the motive behind the company’s drive to become more transparent.

“In terms of why all these products are coming out, the master plan is simply to solve problems that people have online,” he said. “The test we apply is not whether we think these things are great, but do they fundamentally affect people’s online experience in a positive way?

“We use search as a unifying experience. But if you think about it, indexing the world’s information includes personal information, which is held in online word processing, online spreadsheets, online calendars, online e-mail. If we can unify those in a way that would make them shareable, we think that has a really big impact on our users.”