Thursday, October 04, 2007
Don't give Google double the power
BY Joseph Turow
Google's decision to spend $3.1 billion to buy little-known DoubleClick will affect the future of American media and the way advertisers tell stories about you and me. Eventually, if Google has its way, what we see on the Web, hear on the radio or read in print will largely be based on decisions Google computers make about how different we are and why.
Already Google can likely say quite specifically how you search for stuff on the Web. Google can also send you text ads and (very soon) video ads that fit your search interests, your background and what you are reading about on thousands of Web sites. Other firms are doing the same thing. But by acquiring DoubleClick, Google will jump so far ahead of the pack with the technology and knowledge to be the only place marketers have to go to reach you and just about anybody else.
Perhaps more than any other company, Google sees that American media and marketing will change profoundly in the coming decades. At the center of the transformation is a phenomenon called ad-serving. Many of the ads that we receive online come from a company that makes deals with Web sites to send ("serve") ads to you when you reach the site. The Web site receives a part of the revenue that the ad-serving firm makes from selling the ads. Advertisers like digital ad-serving because they pay only if the customer reacts to the ad- clicks on it or responds in some other way. Because they need to show action-oriented results, Google and its competitors have been collecting loads of information on Internet users, slicing and dicing what they know about us and our actions in relation to different topics so that they will know what ad will yield what action from what person.
Ad-serving can be very lucrative. AOL, Microsoft, Yahoo, ValueClick and others bring in a lot of cash. Google makes, by far, the most money from it on its search site as well as its ad network. Moreover, Google has been the most aggressive in seeing ad-serving as where its future lies. That future is not just on the Web. Google's top executives understand that consumers are using all sorts of media in all sorts of places. They also know that marketers want to follow their best customers wherever they go, and they want Google's technology to help them do it. So far, Google has tested the waters of ad-serving in mobile phones, radio, newspapers and satellite television. The company's secret weapon: Its knowledge of us.
Google can use its enormous and accumulating knowledge of who we are and what we do to become the "go to" company of choice when it comes to advertising on any medium. Some years from now, Procter and Gamble will go to Google to sell diapers rather than to CBS, Meredith Publications, Rodale Press or Clear Channel Outdoor. With its huge database, Google will identify the particular individuals and types of individuals P&G wants to reach, will know where and when to reach them across media, and will digitally insert ads tailored for them in CBS, Meredith, Rodale and Clear Channel vehicles. Those media firms will feel forced to share in the take. You and I will see the results, too, though we may not know it. Wherever we go, we will receive ads and discounts (and maybe even different articles and programs) based on whether and when Google thinks we are valuable to one or another sponsor.
Of course, Google knows that Microsoft and other competitors want to do this, too. And Google has an Achilles heel: Almost all its ad-serving activity has involved text ads - meaning it has dealt with millions of small advertisers. Google has by all accounts not cultivated really big sponsors, the Fortune 1000s of the world. DoubleClick, the king of display advertising with powerful technology and strong ties to the largest ad agencies, will allow Google to rush into this territory. The merged company can then create new networks and other facilities for marketers that will drive it far ahead of rivals in the business of database ad-serving. This advantage will feed on itself so that Google will become the most influential entity in the new media world. With competitors marginalized, the great proportion of ads we receive, tailored to us across a wide range of media, will be based on what Google thinks about us. At the start of a great marketing-and-media transformation, the meaningful protection of consumers requires we ensure real competition even among giants.
Google supporters argue that the company is being unfairly singled out and that its plans for DoubleClick don't threaten competition or the public. But their claims can't be evaluated because so little is known about Google's goals for DoubleClick and about the ad-serving market. That's why the Federal Trade Commission merger review and the upcoming congressional hearings on the subject must carefully evaluate the union's impact and be ready to act in support of genuine competition across the new media marketplace. Ultimately at stake is more than whether we receive ads tailored to our interests. It's about what kind of news, entertainment and marketing system we want for our democracy.
Joseph Turow is the Robert Lewis Shayon Professor of Communication at the University of Pennsylvania's Annenberg School for Communication. He is the author of "Niche Envy: Marketing Discrimination in the Digital Age" (MIT Press, 2006).