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We often hear that the Internet has changed the world. It has most certainly changed the worlds of
advertising, retail, news, and magazine and book publishing, and Google has played a central role in this
change. If one were asked to fill in the blank in the sentence “Google is a(n) ___________ company” with
what they feel is the most descriptive word, very few would choose the word advertising. A more likely
choice would be search or technology. But in the context of its business regime and its revenues, an
argument could be made that it is predominantly an advertising company.
One effect that online advertising has had on the Internet economy is enabling small to
medium businesses (SMBs) to become viable participants in the online ad arena along with the heavy
hitters. A small business with a limited ad budget—and with a well-tuned AdWords campaign—can
compete with the big guns on the same Google search results page. This is because the real-time
auction-based system used by AdWords for determining ad position uses both keyword and landing
page quality scores, on the one hand, and keyword bids, on the other. And quality scores count for a lot
in this system. This relatively new ad technology doesn’t level the playing field entirely; big advertising
budgets and the consequent ability of the large retailers to mount very effective campaigns still count for
a lot. But the system does give the SMBs a better entrée than is the case with traditional media channels.
Market analysts tell us that online consumer purchases continue to accelerate in comparison to in-store
purchases, so we think this comparative leverage of the SMBs in the online arena can be expected to
grow in importance. |
