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Google has gone through a lot of executive changes this year. Last month, the company's chief business officer Nikesh Arora announced he was leaving. And in February longtime ad boss Susan Wojcicki left that post to replace YouTube chief Salar Kamangar as the CEO of the Google-owned video service.
Ms. Wojcicki's appointment overshadowed another leadership shift. A year after being charged with running Google's advertising and commerce organization alongside Ms. Wojcicki, Google Senior VP-Advertising and Commerce Sridhar Ramaswamy had taken full responsibility for the division that accounted for more than 91% of the company's $55 billion in revenue last year.
The 11-year Google vet, who started in 2003 as an engineer on Google's search-ads team, now oversees search, display, video, analytics, shopping, payments and travel product lines. He discussed his new role in an interview below.
Mr. Ramaswamy's appointment coincides with an interesting time for Google's ad business. At the same time as Google expands its non-advertising revenue in areas like hardware and digital media sales, it's also establishing more cohesion among its advertising-related businesses. For example, YouTube's ad-sales division now rolls up into Google's larger ad organization. And Mr. Ramaswamy is also forging new ties between Google's advertising and commerce businesses.
On Thursday, Google is making two changes so that businesses can treat their ads like product listings and product listings like ads.
First, the company is bringing its previously mobile-only local inventory ads to desktop, so that people can see what products are available in nearby stores while on their computers. And second, Google is adjusting how advertisers list products in product-search service Google Shopping -- which the company converted to a pay-to-play format in 2012 by requiring all listings to be paid for as ads -- so that merchants can raise the profile of certain products to coincide with sales as they would on their e-commerce sites.
"If you're managing a back-to-school sale, you might want to do something different with backpacks and stationery, moving them to the front of the store, and this interface makes it very possible," he said.
The following transcript has been edited for length.
Advertising Age: You and longtime Google ad boss Susan Wojcicki spent a year jointly running Google's ads and commerce business before she took over YouTube. Now ads and commerce are your baby. Has that led to any changes in strategy or how the organization is run?
Sridhar Ramaswamy: There is no big change in strategy. Susan and I have worked together for many, many years. We did all the planning for this year together for our team. The one thing that we are emphasizing quite a bit is that, in addition to the display and search ads team that Susan and I used to run, we also merged the YouTube ads team with the larger ads team. So part of what I've been doing is crafting a very strong brand message making sure that our advertisers are focused on video and that all of our products work with that message. So our overall theme of get mobile right, get video advertising right and make sure that we have an ads experience and ecosystem is one that we jointly worked on together, and those are the priorities for the team.
Ad Age: What has been the impact of merging the YouTube ads team with the larger Google ads team? Does that mean YouTube is reporting into you?
Mr. Ramaswamy: It's just the YouTube ads team that's part of the display team. Everything that happens on the YouTube consumer side obviously reports to Susan.
Ad Age: Does that mean Ms. Wojcicki isn't in charge of the business side of YouTube?
Mr. Ramaswamy: Susan's obviously responsible for everything that happens on the consumer side, the relationships that we have with different content creators. We work on the ads piece together.
Ad Age: You've been working on ads at Google for over a decade and have been focused more on the direct-response side like AdWords, which is Google's original revenue stream. But now you have YouTube ad sales under your belt, and many Google execs have talked for years about making a push for more brand dollars. How are you going about that?
Mr. Ramaswamy: The short answers are video and YouTube. YouTube is an amazing medium. The reach among male adults in the 18-to-34-[years-old] category is bigger than that of any cable channel. A lot of agencies and advertisers clearly relate to that. What we've been working on is making sure the metrics they use to decide investment, for example, are what they're used to seeing. So we work with industry leaders like Nielsen and comScore to give them the kind of reach metrics they can relate to from TV advertising. But we think there is a lot more that a one-on-one advertising medium like YouTube can provide to our advertisers. So we invest in things like brand lift, which is figuring out how many of the users who saw an ad for a particular brand -- how much more likely that they're going to remember the brand. We're developing these additional metrics to go above and beyond the ratings that are provided by companies like Nielsen and comScore.
Ad Age: I want to talk about Enhanced Campaigns, which is Google's push to connect mobile and desktop ad prices together and lead advertisers to put more money toward mobile. Enhanced Campaigns has yet to reverse the annual cost-per-click declines that Google has experienced since the fourth quarter of 2011. Why hasn't Enhanced Campaigns worked yet, and when does Google expect to see annual ad pricing growth again?
Mr. Ramaswamy: I should start with first emphasizing that the mobile business that Google has is very successful, is one that our users love and is also very effective for our advertisers. And mobile is a lot more than e-commerce. It can drive local commerce. It also drives an amazing number of calls every month, more than 40 million calls happen as a result of Google ads. The day-to-day mechanics of how we run these is we don't manage to CPCs, even though that's a reported metric. Our mobile business is growing extremely well and, more to the point, they deliver a tremendous amount of value for our users and advertisers. So I worry less about things like CPC mix and much more about whether it is a great product, is it something advertisers can really relate to.
Ad Age: So if CPC isn't the measure you use to determine how well Enhanced Campaigns is working, what is the measure and why is CPC the one that's reported on quarterly earnings?
Mr. Ramaswamy: I'll tell you the biggest impact that Enhanced Campaigns had on our advertisers is that being part of mobile was not a separate conversation between Google and these advertisers. It used to be in the early days of mobile, people ran campaigns on desktop, and then we would go and need to tell them, five years ago, about this amazing thing called mobile and how they really needed to be a part of this. And what Enhanced Campaigns did was set the baseline to be "Don't worry about where your users are, they are everywhere. And ... you should be everywhere." And that message resonated incredibly well with our advertisers, and then came the second round of metrics like how are mobile searches influencing actions that take place on desktop. Also we are well on our way to a truly device agnostic world, and that was the outcome we were most aiming for when we did Enhanced Campaigns. We wanted to set a new baseline on how people thought about search and display.
Ad Age: One thing I hear about mobile from advertisers and agencies is they see the audiences are there but they also see the mobile ad products aren't very good. Is the problem with mobile ad pricing as simple as the mobile ad units currently on the market just aren't good enough?
Mr. Ramaswamy: I wouldn't say that. It depends on the context, the format. There are many cases where mobile advertising is just as effective. For example, the case of TrueView. But if an advertiser has a very heavy desktop site, it is unlikely to do as well on mobile. So we work with them on [creating] great mobile experiences. Many of them have apps and so we do app promotion, which we have done for a very long time with our AdMob acquisition on the display network but also on search and YouTube most recently. Those also have the nice effect that since you're going after an app install or app usage, definitionally they work just fine on mobile.
Ad Age: Search ads are considered online's original native ad, but Google hasn't done much to date in terms of native display advertising. Are you planning to?
Mr. Ramaswamy: Native ads are a little bit of a misnomer. When I think about search advertising, native ad is not the phrase that comes to my head. I think of advertising that is in keeping with the spirit of the page that provides an enhancement to the experience that people get on the search results page. I think both you and I will agree that having an ad experience that is a very natural complement to the search experience is one our users have liked, that has served Google really, really well. Similarly I would call the TrueView format on YouTube to be a format that is in line with the spirit of what YouTube wants to be and offers things like choice to the user, which we think is important. We will continue to innovate with formats on the display network as well. I would position much more as what do we need to do to work with publishers to produce ad units that are very complementary to what they want to do on their app or site.
Ad Age: So what are you doing with publishers on that front in display?
Mr. Ramaswamy: On display there are a number of things, especially when it comes to brand advertising. I don't know if you heard about the campaign that we did on the Admob network together with Nike during the World Cup. We essentially ran a big campaign right after [Portuguese player and Nike-sponsored athlete Cristiano] Ronaldo scored a goal, which was triggered in real time and produced an incredible amount of awareness for Nike. What I said with respect to brand can be applied to the display network as a whole as well. So working with the team to make sure you have a great message both about awareness and about engagement. On the publisher side we had an announcement recently called the Partner Select program, which is premium video inventory on third-party publishers that could be bought through Google's products. That's a very nice complement to how we think about brand advertising on YouTube.
Ad Age: Are we going to see ads on Google Glass?
Mr. Ramaswamy: We have no current plans for ads on Google Glass. It has to become a widely adopted, great product. They are well on their way there, but we have no current plans.