When advertising-centric companies like Google, Inc. (NASDAQ: GOOG) start assessing business models in this recession, one thing remains clear: innovate or shrink. Standard advertising channels are all suffering as consumers close their wallets and purses amid massive layoffs and plummeting savings, and Google is not immune to this.

Google, Inc. (NASDAQ: GOOG) unveiled its Ad Manager advertising management platform this week after a beta release in June. This platform allows website operators to manage advertising inventory, tracking and ROI. And the price is right -- there is none -- which fits into Google's history of giving away some key products for free.

Google's Ad Manager public release is significant because it will allow almost anyone to set up and use both direct and network-based advertising to help eliminate costs and pump up revenue -- even if the ads aren't from Google's massively popular AdSense or AdWords program.

However, Google is making it super easy for website publishers to integrate its AdSense platform directly into its Ad Manager product. This was pretty obvious from day one as Google continues to recruit more ad customers into its universe to grow its own ad revenue. Ad revenue, still, is the biggest single component of Google's income.

In the midst of writing last week's "click fraud" post, I was suddenly struck by something. Is Google Inc. (NASDAQ: GOOG) forcing a "reboot" of the advertising industry as we know it? Although this article postulates that Google's new universal search unveiling (really just a rework) was a causal event for the rather large 10%-15% click fraud estimates that came out of Fair Isaac, what is one to make of all this?

Google has stated before that it measures click fraud activity stringently and zaps almost all of it out of existence -- sometimes before the Google ad partner is even billed. While some Google partners are not 100% convinced of this, they continue to trust the web search leader since so many businesses live or die based on Google advertising revenue. You can be mad at the company's efforts to keep click fraud under control, but you can also be quite powerless.

The company can't just give all the specifics on how it fights click fraud, lest it enable click fraud hucksters even further. But, Google will continue to face public pressure over click fraud well into 2008 unless is devises some kind of strategy (a public one) to assure customers that it it keeping a lid on the problem. Google has some of the best engineering minds on the planet -- so if any company can get this under control, keep it that way and prove to its customers that it's not a concern, it will be Google. Time to put up or shut up.

While Google Inc. (NASDAQ: GOOG) continues to make profits hand over fist in the internet advertising game, competitors Yahoo! Inc. (NASDAQ: YHOO) and Microsoft Corp. (NASDAQ: MSFT) continue to make slow but sure gains in the same space. While many an industry pundit has labeled those efforts by Yahoo! and Microsoft a failure, they really are not.

It's true the internet advertising growth at the two companies is not nearly as successful as it is at Google these days, but the companies are making progress (just not fast enough for the market). Microsoft recently launched its AdCenter initiative to lull paying advertisers to it, and Yahoo!'s recent launch of its relevancy-based advertising system -- Project Panama -- continues to be touted by Yahoo! CEO Terry Semel as very lucrative for the future of the company. Meanwhile, Google's system continues to take the lion's share of money in the internet advertising space, while the competition makes what appears to be baby steps to competing on the same level.

Microsoft has acknowledged that it was late to the shift in revenue models to Internet advertising -- specifically, relevant text advertising -- but insists that it is in the advertising game for the long haul. It said as much last week during an advertising conference for its largest online advertisers. Current Microsoft co-founder and Chief Software Architect Bill Gates stated that television, newspapers and all forms of publishing are being fundamentally changed by a shift to digital media. This is pretty obvious, and the gains Google has made in each of those areas in the last few years will make it pretty hard for Microsoft to easily jump ahead. But, like the company says, it's in this for the long haul and has a cash pile bigger than almost any company in existence.

[Disclosure: I own MSFT shares as of 5-14-07]

Well, I sort of have to say I've been waiting for this one -- someone to step up to the plate and offer contextual text ads that don't go through Google. While Google Inc.'s (NASDAQ:GOOG) ad system is the lifeblood of thousands (millions?) of small and large websites, are there alternatives out there that don't use a middleman and still work as well as Google?

Well, a company called Fast Search & Transfer this week announced and released an ad platform that does just this. In other words, this will allow media companies and online classified websites to serve up text ads that are relevant to the consumer (just like with Google) without the use of a middle entity at all.

Now, this is quite the same (or so it appears) as Microsoft Corp.'s (NASDAQ:MSFT) AdCenter and Yahoo! Inc.'s (NASDAQ:YHOO) Panama -- or is it? Both Microsoft and Yahoo! -- if they'll ever admit it -- are trying to emulate Google's fantastically-successful ad model. But, who says more folks can't leap into the fray as well?

The main issue here is first-mover advantage -- Google has it big over just about everyone. Can Fast Search & Transfers "Fast AdMomentum" platform even glean a handful of customers away from Google? It'll be hard, whatever its strategy is.

Google Inc. (NASDAQ:GOOG) has cut a deal with British broadcaster BSkyB to provide video programming and services like e-mail for the television firm's website. More important, Google video content will appear on BSkyB programming which runs through set-top boxes that store customer data. Google Adsense program for targeting advertising would be utilized to help serve relevant commercials.

The alliance joins Google with Rupert Murdoch, who controls the British company, which is run by his son.

Google stated that the deal was important to the search company. "This is a really, really big deal for us," said Eric Schmidt, Google's chairman and chief executive. "If it works, it will become our most lucrative deal from the get-go."

Indeed, that may well be so. Set-top box technology is employed in both satellite and cable deployments around the world. If Google's targeting tech allows ads to be more accurately served to consumers based on behavior, it would be a significant break-through for the TV advertising industry.

With newspaper and radio buying services already in place, Google goes after the TV.

Douglas McIntyre is a partner at 24/7 Wall St.

After reading about www.zecco.com and following coverage here at Bloggingstocks.com, I had to wonder if Google's advertising-only model can just be indefinitely extended. Is it true that just about any online company with a content- or service-rich model disrupt the status quo by providing products and services for free with ad revenue to support it?

Will this strategy work for everyone? The backers of Zecco.com sure think so -- and in the space of personal finance and online trading, I think this is one example where Zecco will shake up the online trading community with its free trades -- if it can build a customer base and attack the likes of Schwab, E*Trade and TD Ameritrade.

Can Google advertising save the, um, industry? Any industry? I'm not so sure it's that simple, but the sheer success of Google's advertising juggernaut is legendary. But, can a pretty decent transaction processing structure (if it's that complicated) be completely financed by income generated by Google ads and other relevant advertising? Zecco.com believes so, and this is an industry where I tend to believe that Zecco can indeed survive on ad revenue. Other industries are questionable, but no online trading according to your truly.

The challenge Zecco.com will have will be to build an audience and recruit longtime traders from online discount brokerages like Schwab, TD Ameritrade and E*Trade. For those that trade frequently or even daily, Zecco.com's "free trades" is bound to catch the attention of quite a few active traders among other folks. The challenge will be to get them to click on Google ads when they get over to Zecco.com.

With blogs becoming the next Internet advertising platform by many counts, it's interesting to look back a few years and see how it all got started. It seems that Google's AdSense platform, which rides along with its AdWords program (the text ads you see on a Google search page) was the kicker -- and I agree here.

I remember seeing Google AdSense ads and columns on blogs back in 2003, and -- as usual -- they were relevant to the content on the blog page and were unobtrusive. Being unobtrusive to the visitor/reader cannot be understated. In fact, my opinion is that this type of ad presentation is actually much more visible to the consumer than flashy, annoying and distracting graphic and flash-based ads.

But, are blogs destined to become the shifting point for traditional ad dollars as more and more customers seek non-network and non-corporate sources of information? The power of news is rapidly shifting to the people and away from larger corporate masters, as agendas and opinions are dissected by bloggers and readers alike, leaving very little ambiguity and bias in the news. This is just my opinion, but forming a set of facts from several sources is way better than relying on a few networks for news -- of any kind. Blogs are attracting readers in droves due to this and the niche audiences they recruit, which is prime for ads -- and, for Google.

Brian White has worked in various executive positions in technology and telecommunications and now focuses on editing and writing.

Google's highly-touted deals with MySpace.com and MTV Networks this week are pretty prolific for all parties involved. Google will further entrench its AdSense platform into two incredibly-popular web properties -- Viacom's MTV Networks and News Corp.'s MySpace.com -- at a time when both media companies needed a workable advertising solution to ensure monetary growth in both businesses. And, Google will reap the benefits of providing highly-relevant ads in front of hundreds of millions of potentially new eyeballs.

Was MySpace.com in trouble? It depends on your perspective. While the site has rocketed to almost the top spot in monthly web visitors, coming close to perennial leader Yahoo!, the way in which it brings money to the News Corp. corporate table was a pretty large unknown. Only one thing was known: MySpace.com was generating an unreal amount of visitors, ad candy to many large companies that probably wanted to purchase the property. In the end, Rupert Murdoch and News Corp. won the deal.

Now it's time to monetize that traffic without destroying the look, feel culture and uniqueness of the property -- a sure sign of driving away visitors that happens all too often when a large corporate takeover of a spirited, young and hip company happens. Google's deal with MySpace.com this week will provide that in customary Google fashion most likely (read: lucrative). Additionally, Google's deal with MTV Networks to syndicate clips from the network on Google's global AdSense network will also provide a nice boost to MTV as well as further entrench AdSense as the new ad medium for the next decade, if it's not there already.

Brian White has worked in various executive positions in technology and telecommunications and now focuses on editing and writing.

I'm very pleased to see that Google is installing a new feature alongside the AdWords console that hundreds of thousands of advertisers use to display relevant textual advertising next to Google search queries. What is that feature? It's "the truth", as it were. Google will be listing possibly fraudulent clicks next to all keywords in the AdWords console for each advertiser in an attempt to settle fears that click fraud is growing rampantly without being adequately policed by the search giant.

This is great news and it's about time Google did something like this. With all the programming talent it has, it's surely been able to keep up with the propensity for massive click fraud and abuse for quite some time, but it's done a horrible job of communicating those efforts and marketing to the world that click fraud is under control. Sure, you have to trust that Google is doing all it can to police and catch click fraudsters, but this is still a lot more than what it was doing before -- next to nothing in terms of public action.

Will this new feature allay fears from the hundreds of thousands of Google AdWords advertisers who have been fearing that fraudulent clicks have been chipping away at their advertising budgets? More than likely, yes. It lets Google advertising partners know that Google is keeping tabs on the problem. With Google advertisers providing almost all of Google's revenue right now, that is the customer segment Google needs to be concentrating on in a huge way. This is a great first step here.

With Google's seemingly unending advertising success continuing to march forward unabated, can this superior performance continue into the wild blue yonder? Well, if Google continues to serve up products supported by advertising that's unobtrusive and actually works for the consumer (hint: great relevancy), I say it's got quite a bit of life left. If industry analysts are to be trusted, then "Many industry executives expect sales growth of online brand advertising to outpace advertising related to Web search in the coming years". Ok, fine -- but what are you basing this opinion on?

Brand advertising is the bane of the television and radio experience right now more than anything. This is in part why the TiVoer's of the world and the XM Radio subscribers don't want incessant and annoying ads in their faces (and ears) any longer. Highly-targeted advertising and highly-relevant served marketing has, I think, worked wonders for Google search recently. If Google can parlay that success into other product offerings outside search -- and help companies with brand advertising that's highly-relevant to the consumer's immediate needs and tastes -- it will not only grow, but dominate the advertising industry.

What these industry "experts" tend to forget is that brand advertising works (agreed) -- but it's also shunned aside if not targeted correctly and relevantly -- at the right time, no less -- to the intended recipient. If you're into investing in advertising companies and agencies that are late to this change, what will you do? Drop us a comment and post your thoughts.

Can small businesses get a fair shake when advertising on Google's now-ubiquitous AdSense platform? Ask many of them, and you'll receive a resounding "no". Robert Cringely points in his PBS blog that there are many details and this-n-that specifics that can go over the head of the small business owner, giving them a disadvantage to the larger advertisers who use Google's AdSense platform. While many businesses can't simply stop using AdSense, what's a business owner to do?

Although I have no solid evidence to back me up, my feeling is that small advertisers on the Google AdSense network are the lifeblood of Google's advertising. Larger advertisers have simply shifted more dollars online from offline mediums, and many customers are familiar with larger brands anyway. Why is eBay, for example, one of the largest keyword buyers on Google's AdSense platform?

I've touched on the click fraud subject before, and how this wary scenario could damage Google and the Google brand by un-fostering trust in internet search over the long-term. When I say long-term, I mean in the next five years or so -- that's a lifetime in the internet space. Why do high-profile folks like Henry Blodgett and Mark Cuban bring up the subject of click fraud so often? Because it's a real and highly-underestimated problem facing the entire pay-per-click advertising industry. You know, the one currently dominated by, oh, what's the name -- oh yeah, Google?

Cuban points out several examples of splogs and other click-farm type of scenarios that are happening -- right this second. There are so many forms that online fraudsters can use to bilk ad dollars into their pockets that it's unreal this is not a more alarming situation than everyone in the press makes it out to be. And, Cuban's just not talking about fraudulent clicks by click farms. He's talking fake blobs (splogs) and other methods meant to get real clicks from real people (not fraud).

This happens by having automatically-created venues of Google AdSense ads created at will that customers will eventually land on from somewhere. The law of averages says that some customers will click on ads on these splogs, and then the rest is history. Genuine income is generated here, but it's not really derived from traditional click fraud.

There is a lot of work to do here, and I agree with you here Mark. I just hope the industry doesn't stay hunkered in the shadows while customer trust is betrayed, because some may not come back if they are slighted. Could this problem damage Google's brand? Should GOOG investors be skittish or serious? If I held Google shares, I would be demanding an action plan from the Google folks.

 

Google closed up today at $375.58, an increase of $4.63 or 1.25%, with trading volume up to nearly nine million shares. In a market that sometimes doesn't respond to great quarterly earnings but does respond to product launches, this might have happened today, as Google was set to launch a rather intriguing product -- video ads. This new video advertising service would be similar to its highly-successful AdSense program (those text-only ads at the side of the screen when a Google search is performed), but would be "clickable" video ads with similar placement to current text ads. The new video ads would only play when clicked -- not automatically.

It will be interesting to see how consumers respond to this. Google has shown that customers will watch and respond to highly-relevant advertising, which most television and radio ads still don't get to this day. It's a new world out there, and if anyone can make video advertising work wonders again in this age of TiVo commercial skipping, it'll be the Google folks. The big meat here is that the ads will play only when clicked on. That gives the consumer control, not the advertiser. Perhaps the DVD publishers should take a note from this instead of forcing DVD customers to watch advertising at the start of a commercial movie DVD, eh?

MySpace site publishers who run text ads through the Yahoo Publishing Network got a shock  last week when many of their accounts were suspended due to "poor traffic quality," reports text advertising guru JenSense (and referring to this Digital Point forum). The major problem, it seems, is that MySpace clickthrough rates are low and not very profitable for either Yahoo! or Google, which currently offers its AdSense service to MySpace users.

At only $0.10 CPM according to a recent NY Times article, MySpace users might not be all that attractive for Google, either. The question remains: who will monetize MySpace users, if not Google and Yahoo!? Surely there is some way of creating profit off the millions of MySpace addicts. Evidently, it was too costly for Yahoo.

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