Google's Display Advertising Plans Include Gmail, YouTube

Proprietary Properties, Third-Party Network and Efficiency Are Search Giant's Strategies for Success

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NEW YORK ( -- For a company that has made a big business of indexing third-party websites, a substantial part of Google's display success hinges on its ability to milk YouTube and its other owned and operated properties such as Gmail and Google Finance.

Google Finance did not initially feature advertising, but it now runs rectangle-sized ads.
Google Finance did not initially feature advertising, but it now runs rectangle-sized ads.
In fact, those areas were two of the three big priorities outlined by VP Neal Mohan at a press briefing last week where a parade of Google executives described the company's plans to expand its ad business beyond search keywords.

"Display is truly at a tipping point," Mr. Mohan said. "We think it can be substantially larger than the $20 billion it is today, whether [it's] $40 billion, $60 billion, or $80 billion, but there are a lot of challenges that remain."

Mr. Mohan said there were gross inefficiencies to the display ad buying process. As an example, he said it takes 30 days or more to get a creative advertising unit up and running. "That process should be much more streamlined," he said.

Display in Gmail
But perhaps the more significant strategy on display was Mr. Mohan's presentation of what he called the Google Display Network, which included YouTube as well as Google properties Google Finance, Google Maps, Google Books and even Gmail. Mr. Mohan did not detail what a display unit might look like in Gmail, and a company insider said it has yet to work out the specific ad requirements against those properties. Google Finance, for example, did not initially feature advertising, but it now runs rectangle-sized ads.

Beyond Mr. Mohan's remarks, the company last week made a couple more moves that could affect its owned and operated inventory. First, it acquired ITA Software Inc., a software company that specializes in organizing and searching flight information such as ticket prices and flight times, for $700 million in cash. ITA licenses its product to a broad array of websites and airlines, such as Hotwire, Orbitz, American Airlines and Continental Airlines.

Though the deal is sure to draw close scrutiny from the Federal Trade Commission, the acquisition could help the search giant fill out its owned and operated pages as well as further dominate search. (The FTC recently approved Google's $750 million acquisition of mobile advertising firm AdMob.) Although a company insider says there are no plans at the moment to monetize the flight-travel search pages generated by the purchase of ITA, the deal will no doubt increase Google's lineup of owned properties.

At the Guardian's technology conference last Thursday, CEO Eric Schmidt added more fuel to the rumor that Google is launching a social network called Google Me, which could increase its owned pages. When asked if Google Me is fact or fiction, Mr. Schmidt equivocated in his response, saying, "That would be a product announcement, and I won't say."

Facebook's display dominance
Creating a service to rival Facebook could help Google boost its distant rank among display advertising publishers. According to ComScore, Google sites (including YouTube) place sixth among web publishers for display ad impressions at 25.8 billion, the equivalent of 2.4% of the total impressions for the first quarter of 2010. Facebook easily dominated the display ad market for the same period at 16.2% or 176.3 billion impressions.

Facebook's top spot in display advertising suggests that any attempt by Google to grab more of the pie will surely have to include growing out its own properties. At the same time, the Mountain View-based company plans to also grow its share by better connecting its current crop of publishing partners, which include,, and, to advertisers. The idea there is to serve as a one-stop-shop for both parties, effectively making Google the main go-between for the display business, a role it already owns for search advertising. Google recently acquired Invite Media, a demand-side platform, as part of that strategy.

"Our publishing partners asked us to help them build out better display buying tools," Mr. Mohan said. "They wanted more control, more streamlining, and that's what we're giving them."

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