Supernatural Agency: Online business tales

Today’s announcement by Google and French global advertising mega-agency Publicis of a partnership to automate the creative aspects of online advertising is interesting to put it mildly. If I were in the traditional agency business (and I have been) I’d be very very nervous.

Google CEO Eric Schmidt offered up the possibility of this partnership creating something called ‘open source advertising’ which I assume means that they will look into developing automated ways of developing effective creative and brand positioning on the web. If this is possible (and I imagine that this partnership is more about finding that out than someone already figuring it out) then the typical agency creative team will be marginalized when it comes to Internet Marketing. Ordinarily one might think this was bad except that the typical agency creative team has already marginalized themselves by pretending that online marketing was some kind of novelty item that was beneath the interest of the brand mavens.

Imagine a scenario where a mom and pop business wants to get the most out of their limited marketing budgets. Because they can’t afford agency rates and their tendency to overspend, these businesses typically let ad sales reps in the local media choose their buys, create their ads and manage their campaigns, for ‘free’ of course. This was the business equivalent of letting the fox manage the chicken coop. Junky ads, lousy positioning, budgets spent with no measurable return and the consequent belief that ‘advertising’ doesn’t work.

Now imagine a dead simple Google process for that business, one that automates keyword selection, creates ads, targets geographically, demographically and by price, all automatically and a system that returns a specific report on ROI, daily. I think our Mom and Pop business owner would dig that (and that growth business owner and those corporate shareholders…).

These guys could own advertising as we know it and as it will become- I’m watching and wondering…an open source marketing network?

We are starting to see widespread indicators that we have been in a recession for a few months. There is a well-known meme that once you see acknowledgment of a recession in news headlines it means that the recession itself is nearly at an end. A glance at the NYTimes this morning has the R word popping up all over. So what does this mean for domaining and search marketing?

In search this means a big uptick in spending because PPC is so much more trackable and efficient when compared to costly traditional advertising. Traditional advertising is brand-focused, relying on strong brand awareness to create a premium over generic-branded products and services. In a strong economy brand equity has more value, in a recession people are looking to save money and brands are less important. In search value is the primary driver- we look for the best product at the best price. Marketers can easily track ROI in search. Ironically this makes search the more conservative marketing tool in that we know where the dollar goes and what it returned. You also do not incur the creative and production costs associated with print, video, outdoor, etc., a major cost differential. All your dollars go into bids and results. In a tight economy watch the dollars flow to the web.

For domainers this creates a long-term opportunity married to a short-term downturn. With less free flow of capital (liquidity) in the market the short-term market for selling domains goes down. Less liquidity equals lower prices and soft markets. The opportunity is in the recognition that if more dollars are flowing to search then there will be more demand for places online to host relevant advertising. As domainers, we are online media owners; that is, if you develop…

So, strategically, we need to sit down and plan for the long term so we’re situated to take full advantage when the economy turns upwards. Selling domains right now seems counterintuitive if you buy my theories here. Developing strong content around your domains and building traffic increases value as more marketers move dollars to the web. Think media ownership rather than URL ownership.

A final note. This recession is driven by the mortgage mess and oil prices. The mortgage mess will eventually be resolved with some short-term catastrophes. Oil will never go down to levels seen even a few years ago- worldwide demand is exploding ($2500 cars in India and China!). For domainers and online marketers this means more consumption on the web rather than costly travel to brick and mortar stores. It also means you should be thinking through a global approach to domaining- no matter how isolationist some dreamers would like to be, we’re in a global economy and our domains are global storefronts.

Are you a new domainer who doesn’t get how Adsense works? Have no fear, Google has launched a page for you, the Adsense Newbie Central (where do they get these names?).

Go forth and prosper!

Since Google’s purchase of ad serving network Doubleclick has been approved in the US (Europe a tougher sell so far), I thought I’d toss out a few observations about this deal. First, it never made any sense to me that Microsoft could buy aQuantive/Razorfish without a brouhaha yet Google gets accused of trying to build a monopoly. The MS deal is far closer to a conflict of interest because Razorfish is an ad agency and that means that MS is competing directly with their own customers (ad agencies buy a lot of online advertising). So one may wonder how much of the accusations against Google’s deal were emanating from Seattle…

For those who don’t know, DoubleClick is an ad serving network, primarily CPM banner ads. You make a buy, provide ad inventory and define keywords/target markets for ad placement. The servers serve the ads to the publisher sites based on those keywords or target markets. This is an obvious match for Google’s contextual text ads, in fact Google already serves up banners if publishers using Adsense choose that option. Nothing new there.

It’s the behavioral targeting that gets interesting. You visit a car review site, then a bank site then USAToday.com. You read a Honda review, check loan interest rates and then go to the sports section- voila: There just happen to be low interest Honda financing offers in the ads on the page! That’s behavioral targeting.

It gets more interesting when they start doing retargeting, that is serving up ads five sites later that still match things you were interested in earlier. This is very effective, even with banner ad blindness being the prevalent condition of most surfers.

Now, is this creepy that they know what you want? It would be if they knew who you were but they don’t- all they know is your IP address for that surfing session.

Google is media company as much as an indexing machine (watch for my take on Google Knol and domaining- coming soon!). Get used to it.