Google: Calling Our Ad System Closed is ‘Ridiculous’

What do you think people get wrong about Google’s approach to display?
One of the things that makes our space interesting, but sometimes complicated, is its very dynamic nature. There are new technologies and new companies popping up all the time. That leads to a lot of complexity in the industry. I try to boil it down to the principle. One of the questions is why is Google investing so much in this market? One of the things people miss is what we believe the true potential of the industry really is. Depending on how you measure it now, it’s $10-30 billion. It’s growing at nice clip. One of the things people overlook is when you think of the potential of display, we think the real potential is this $200 billion number. People overlook that. Our goal is to grow the industry to that number.

The dynamics of TV seem quite different from online advertising in many ways. When you’re talking about a $200 billion market, are you including TV? Google’s made some progress there but not much. Are we going to see TV spots on exchanges?
The way we think of it is less shift of dollars from offline to online, from TV to digital. It is where consumer behavior is going. We’re all consuming more and more content digitally, whether video or mobile. The overall digital pie is very large. The distinction between offline and online will go away. That’s how we get at that $200 billion number. Digital is effective and efficient and works for advertisers. We also think that when consumers are consuming content digitally and spending more time on devices, the overall opportunity to reach them grows. We think there’s future innovation in advertising overall, especially when you get into connecting digital to in-store. For my thinking it’s not about a shift from one place to another. Consumer behavior is changing. The digital opportunity will be that much larger. If you look at ad dollars to audience time today, there’s a disequilibrium.

Yahoo recently tightened up its exchange-participation requirements. Do you see a “war on the middlemen” happening in online advertising?
The way to think of it is you can get focus on the technology and the emerging companies on [the Luma landscape] slide and new ones every day. Ultimately what matters is what our publishers and advertisers are looking for. The way we think about Google display is starting with our publishers. Does the publisher have the toolset to get the maximum value of the content it created and audience it aggregated, whether they sell it themselves or monetize through other channels? My job is to make sure they have a seamless integrated tool to do that. That’s what we’re focused on doing. From a publisher perspective it’s about “do I have a revenue management platform that allows me to get more out of my direct and indirect sales?” Each advertiser is making a decision about the type of technology they use to acquire customers and get brand recognition. Some choose to do it through a DSP, some come directly to the Google display network. They should all exist because different advertisers make different decisions.

Do you get the sense if publishers are more comfortable that they’ll fare well in programmatic buying?
Larger publishers are getting more sophisticated. Our acquisition of Admeld was driven by demand of customers to have that robust yield management capacity. The awareness of how this real time-based buying can be a complement to their existing revenue streams as opposed to a risk is an awareness that’s growing. The reason is publishers have used it enough to collect enough data to see how it works. They see the lift they’re getting. We did a study last year showing publishers get a 180 percent lift. Nothing is better than seeing hard data to allay any fears.

What’s one big change in the programmatic ad buying area you expect in 2012?
There’s tremendous opportunity in 2012 and beyond in the area of brand-oriented campaigns. We talk about the performance standpoint. I believe a lot of this technology also applies to campaigns measured by brand metrics. One of the things you can look for in 2012 is taking the best of real-time and audience buying and combining it with things brand advertisers really care about in terms of rich formats, creativity and using it all in a real-time fashion, especially when you can now reach consumers across desktop, mobile, video, etc.