Monday, July 12, 2010

Google, Groupon pitch benefits of targeted ads

SUN VALLEY, Idaho (Source: WSJ) —As media companies voice doubts about whether they can build their digital businesses on advertising alone, technology companies gathered in Sun Valley this week are trying hard to convince them to think more creatively.

In a range of interviews on the sidelines of the conference, Internet companies from ad juggernaut Google Inc. to small upstarts have pumped the promise of new formats that are more effective than banner and search ads, the staples of the digital ad industry to date.

Andrew Mason, chief executive and founder of Groupon Inc., said in an interview that his company—a fast-growing startup that distributes daily deal newsletters—is here talking to media companies about reinventing local advertising.Google Chief Executive Eric Schmidt said in an interview late Thursday that a new killer ad format—which he dubbed "interactive video ads"—is coming. Such ads, which could appear anywhere on a Web page not just inside a video, would allow users to interact with the ads in new and more engaging ways, such as asking users to click on a video to learn more about a product. He said he has encouraged Google's ad teams to think along those lines, but didn't comment on any specific plans.

The pitch: offering customers a daily deal, and packaging it with related reviews written by a group of 70 writers, is a more compelling marketing vehicle for businesses than traditional banner ads, which are forgettable and don't help a business generate loyalty, he said. "We look at Groupon as the evolution of the ad unit," said Mr. Mason, who has secured a coveted spot to present to conference attendees on Saturday.

Others are focusing on convincing media companies to change how they buy ads, hoping to grow the market for digital advertising that way.

Ad-tech company Quantcast Corp.'s Chief Executive Konrad Feldman said in an interview Friday that the media bosses in attendance here are accustomed to buying ads through a broadcast model, purchasing blocks of television shows or websites. But Quantcast is one of a number of companies trying to convince marketers they can get a better return by buying online, mobile and even eventually television ads targeted at certain types of people, such as people who have bought certain products or visited certain websites.

"Everyone sees the promise," he said. "They realize that the traditional ways don't scale."

Media executives say they are intrigued by the offerings. But they still seem reluctant to put all their faith in advertising. In a discussion late Thursday over whether YouTube should serve as a media store to help content owners sell their content to consumers once and have it accessible across a range of devices, Mr. Schmidt said that the company had looked at that model carefully but determined it would have to cut big checks to media owners, which it won't do, since it prefers to help them earn money through ads.

"There is a revenue valley from the old model to the new model," he said, describing how content owners would risk losing revenue through such a system. "We could bridge that model by writing very large checks, but we have chosen not to do that."