Parks Associates Blog

Thursday, January 24, 2008

“Google Will Never Become an Ad Agency,” Yeah, Just Eliminate It!

Google is working with Publics Groupe, one of the marquee advertising agencies in the world, to mesh its technology with the ad agency’s creative mind to better serve their mutual clients—advertisers. The partnership was revealed yesterday. According to Reuters’ report, Google will exchange its technological know-how for Publicis's analytical and media planning expertise. The pair characterized the collaboration as a means to better serve advertisers and help grow the digital advertising market. Who will gain most from this collaboration? In my view, definitely Google.

Since Google established its business model on advertising, its every move has given a strong hint that one day it will eliminate all the intermediaries between advertisers and consumers. Over the last three years, this goal has become quite obvious. Through acquisitions, it has amassed an impressive pool of resources touching almost every part of the advertising value chain. Almost, that is, except for the creative part. Now with access to Publics’ creative minds and practices, they will just learn everything that advertisers will ever want to know, and find technology to either improve it or automate it. Creative business, in my view, is the last candy can that Google has not touched and the only asset that traditional ad agencies can tout as “core competence” to their advertiser clients.

Eric Schmidt told reporters that Google will never become an ad agency. He meant the ad agency in a traditional definition. Google today is one of the biggest digital intermediaries between advertisers and consumers, and traditional ad agency’s role in the digital advertising space has eroded substantially and will further erode because of the presence of Google and many of its peers.

Sir Martin Sorrell, Chairman of the world’s largest ad group WPP, has already seen it through. He described Google as "a short-term friend and a long-time enemy." I agree. Google and Publics’ relationship is a honeymoon, not a long-lasting marriage.

2 Comments:

Anonymous James said...

I wonder how will Yahoo! and AOL react to this announcement? Will they follow suit by partnering up with other ad agencies?

9:38 AM  
Blogger Harry Wang said...

That's likely. And I suspect they might have already done that with a less visible agency. If you look at their acquisitions in the past, they have been extending their capability to the upstream of the advertising value chain. They are not as ambitious as Google, but they share the same vision regarding what they can do to directly serve advertisers.

11:15 AM  

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