MEDIA BUYING DIRECT RESPONSE TELEVISION (DRTV) ARTICLE ..

 

Googlemania and Its Impact on American Media

By: Peter Koeppel
Published: 12/05

 

In a series of articles in the New York Times, The Wall Street Journal and Ad Age, I recently read with amazement about the incredible growth and power of Google. They pointed out that in 2005 Google will sell over $6 billion in ads, doubling what they sold the prior year. That equates to more advertising than is sold by any TV network, magazine publisher or newspaper chain. Next year Google is expected to generate more than $9.5 billion in ad revenue, which will place it among the top four American media companies. To give you an idea of how big Google has become those revenues will put it ahead of NBC Universal and Time Warner in ad sales. In addition, their profits are increasing more than 100% a year. They have a market value of $120 billion, their stock is trading at $400, up 300% since their IPO and they have close to $8 billion in cash and marketable securities. That's enough money to buy a small cable network.
 
David B. Yoffie, a professor at Harvard Business School is quoted in one of the NY Times articles, Google is the realization of everything we thought the Internet was going to be about but really wasn't until Google. Google has already had a significant influence on small to medium sized businesses by enabling them to advertise cost efficiently and precisely target their prospects. In addition to direct competitors like Microsoft and their Internet search business, the real estate, newspaper, auto and retail industries are keeping a close eye on Google, according to the NY Times. Even Wal- Mart is concerned about how Google could potentially provide the consumer with additional information that will enable them to shop more efficiently for the lowest prices.
 
Google is even contemplating getting into TV advertising. This could have a profound effect on the TV industry, since Google tends to drive down prices in markets it enters. The DRTV model is more suited to Google vs. brand advertising, since their platform is based on precise measurement and tracking of results. Google is also interested in delivering TV ads tailored to each viewer through set top boxes, according to the Times. If they had their own TV channel or network, I'm sure it would allow consumers to search for a particular show, video or product. All these developments could provide an excellent opportunity for DRTV advertisers and DRTV media buyers.
 
Companies like Yahoo and Microsoft's MSN aren't just standing around allowing Google to dominate the online search and ad business. Yahoo has been buying up Internet companies and Microsoft has made improving their search capability their top priority. So I don't expect Google to totally dominate the online ad business, which will translate into more competition and better rates and advertising options for marketers and media buyers.
 
Even though it appears that Google is driving down the price of online advertising, keep in mind that the cost of certain types of online advertising is no longer a bargain and will not pay out for direct response advertisers. For example, the price of advertising on major portals such as MSN is skyrocketing. MSN charges several hundred thousand dollars to $1 million for a prime, 24-hour ad spot on its home page, according to the Wall Street Journal. Compared to the cost of advertising on the major portals, direct response TV and search engine marketing should remain cost efficient options for direct response marketers and media buyers. Marketers who effectively integrate their direct response TV media buys and online campaigns and stay on top of the latest advances in both mediums will be positioned to take advantage of the best opportunities in today's fragmented media landscape.
 
Peter Koeppel is president of Koeppel Direct a leading direct response TV media buying firm.