Major Internet sites are showing a strong and growing interest in the advertising business and traditional ad firms are starting to get worried.
Google has been leading the way, building on its online ad strength by striking deals to sell advertising in traditional media like newspapers and radio. Meanwhile, eBay is developing an ad-buying system for TV spots for a group of large advertisers like Wal-Mart. And Monday, Yahoo announced a deal with 176 newspapers that did not include offline ad sales, but newspaper executives left that option open.
Ad executives say it is hard to know where Google and the other Internet giants will stop.
"The fox is in the henhouse and it's going to gobble a good part of this business up before anybody realizes they're history," said Gene DeWitt, president of DeWitt Media Solutions.
Google's push into the offline world of advertising comes as traditional media companies have increasingly linking up with the online giants that have been stealing their customers and advertisers.
The traditional media companies -- like newspapers, magazines and television and radio networks -- are hoping they can reverse their fortunes and share in some of the success of the Internet instead.
The offline ad market, in the meantime, provides the kind of growth opportunity that Internet companies like Google are looking for, stock analysts said.
"What these enterprises clearly need is to identify new marketplaces to expand into to justify their valuations," said Youssef Squali, the Internet analyst at Jefferies & Co. "And that's exactly what Google and Yahoo are doing."
Google executives have made no secret of their ambitions in the area of traditional ad sales, saying they can save marketers money on print, radio and TV spots, while taking a commission in the process.
Google is testing ad sales for more than 50 newspapers and plans to make newspaper ad sales a permanent offering sometime next year.
Next month, Google plans to sell radio ads through the online auction system it uses to sell Internet ads. And it has indicated to analysts that it is considering moving into TV and direct-mail ads.
Consumer brand companies have turned to advertising agencies for decades to design their ads and negotiate where and when those ads run. Media buyers at ad firms plan and negotiate ad placement with publications, TV and radio stations and, more recently, Web sites. Placing ads is big business for the media buyers at agencies, because often they are paid based on how much the ads cost.
Ad sales in traditional media totaled nearly US$150 billion last year. The entire US ad market, which also includes direct mail, outdoor ads, yellow pages ads and online ads, is worth about US$286 billion, according to Robert Coen, chief forecaster for Universal McCann, part of the Interpublic Group.
Internet ad revenues have been growing by more than 30 percent a year and this year about US$16 billion will be spent online.
But, as Google pointed out in its annual report last year, large advertisers would likely continue to focus most of their ad budgets on traditional media.
To advertising executives, Google is the "frien-emy," both the friend and the enemy, said Martin Sorrell, chief executive of the WPP Group ad company, at a recent industry gathering.
Agency executives said Google, the friend, could provide agencies and media companies with the technical systems they sorely need to modernize ad purchases.
Media buyers said better systems could allow them to spend more of their time planning how to better grab consumer attention.
But Google, the enemy, could end up automating so much of the ad-buying process that companies no longer see the need to pay much to media buyers.
Several big advertisers are looking for alternatives. Companies including Wal-Mart, Microsoft, Philips Electronics, Home Depot and Hewlett-Packard hired eBay in May to develop an online marketplace where they can buy offline ads.
The advertisers -- who at one point considered working with Google instead -- expect to spend about US$50 billion on cable network ads to test eBay's system early next year. They will test other media next year.
Monday's announcement from Yahoo that it would sell online ads with 176 newspapers opened the door to offline cooperation as well.
Newspapers, in theory, could sell all of their ads through Yahoo's automated system. In a conference call, one newspaper executive said such an arrangement was a "very real possibility."
Newspaper executives emphasized that Yahoo is now the "partner of choice" for their companies, which they acknowledged could mean the newspapers would change relationships they have with companies like Google and MSN.
Ad executives are not sitting idly by while these tests roll out. Media buying agencies from each of the five largest ad companies have become partners with Hewlett-Packard and the other companies involved in eBay's test. And agencies, through an industry group, are working to modernize their ad-buying systems so they can purchase, track and bill clients for ads as efficiently as the large online companies.
Media companies, too, are working to streamline ad sales. The Newspaper Association of America, for example, is discussing providing advertisers with a method of buying ads in different newspapers by building a centralized buying system.
Some media buyers said they would welcome a comprehensive bidding system built by Google or eBay if it brought more transparency to ad-buying.
TV networks and publications and networks "are the only ones who know what is going on," said Steven Farella, chief executive of TargetCast TCM, a media agency.
Greater transparency in media buying, of course, is not desired by all. Some media buyers have long-term relationships with media companies, giving them a competitive advantage that they would rather not lose. Their clients presumably also like the advantage.
But many advertisers want more transparency, said Bob Liodice, chief executive of the Association of National Advertisers, which is supporting eBay's auction system.
"The ability to get prices out in the open will allow companies to develop an automated process that cuts away the lack of transparency that exists in media buying today," he said.
Large advertisers have approached Google and Yahoo several times asking that the companies expand their systems to sell traditional advertising, said Martin Pyykkonen, senior analyst at Global Crown Capital. "As you look down the road, you can look at them as being advertising agencies of a sort, doing media buying," Pyykkonen said.
eBay would not explain how its ad auction would work or say whether buyers and sellers would be able to know how much others were bidding. Hani Durzy, an eBay spokesman, said the company would build the auction site to fit its new clients' specifications. "Media buys are a commodity," Durzy said. "They felt that there are some efficiencies that could be wrung out of the existing system."
Just what Google or eBay's systems will save advertisers is the question. Google hopes to one day provide a place where advertisers can buy ads in all media, said Tim Armstrong, Google's vice president for ad sales.
But Google's vision, he said, does not involve cutting agencies' media buyers out of the system.
Armstrong said the system Google envisions would enable advertisers to target consumers so specifically and in so many complicated forms that media buyers would be needed to navigate the process for advertisers.
Google, in fact, has been holding regular seminars all year to update media buyers on changes in the digital world. Google will work directly with any companies that want to use Google's systems without an agency, but Armstrong said he doubted that would occur.
Publications and ad agencies are less afraid of Yahoo than Google, Squali said.
Yahoo considers itself a media company, which gives traditional agencies and media companies a sense of ease, whereas Google has stated a more disruptive goal of making ad buying and selling more efficient, he said.
Google's name in the ad community frequently brings up doomsday scenarios. At an ad design and production conference last month, ad executives mused about how advertising would be different in 2010.
Paul Lavoie, chief creative officer of Taxi, an ad and design agency, predicted that Google would be the largest advertising agency by then.
The audience laughed, but Lavoie, reached later, said he was serious.
"Let's look at the facts: They have the best data to understand consumer habits, they can track your search, they know how much time you spend on certain sites," Lavoie said. "They're doing much more powerful work than some of the work being done by some of the more traditional agencies."
Recently, China launched another diplomatic offensive against Taiwan, improperly linking its “one China principle” with UN General Assembly Resolution 2758 to constrain Taiwan’s diplomatic space. After Taiwan’s presidential election on Jan. 13, China persuaded Nauru to sever diplomatic ties with Taiwan. Nauru cited Resolution 2758 in its declaration of the diplomatic break. Subsequently, during the WHO Executive Board meeting that month, Beijing rallied countries including Venezuela, Zimbabwe, Belarus, Egypt, Nicaragua, Sri Lanka, Laos, Russia, Syria and Pakistan to reiterate the “one China principle” in their statements, and assert that “Resolution 2758 has settled the status of Taiwan” to hinder Taiwan’s
Singaporean Prime Minister Lee Hsien Loong’s (李顯龍) decision to step down after 19 years and hand power to his deputy, Lawrence Wong (黃循財), on May 15 was expected — though, perhaps, not so soon. Most political analysts had been eyeing an end-of-year handover, to ensure more time for Wong to study and shadow the role, ahead of general elections that must be called by November next year. Wong — who is currently both deputy prime minister and minister of finance — would need a combination of fresh ideas, wisdom and experience as he writes the nation’s next chapter. The world that
The past few months have seen tremendous strides in India’s journey to develop a vibrant semiconductor and electronics ecosystem. The nation’s established prowess in information technology (IT) has earned it much-needed revenue and prestige across the globe. Now, through the convergence of engineering talent, supportive government policies, an expanding market and technologically adaptive entrepreneurship, India is striving to become part of global electronics and semiconductor supply chains. Indian Prime Minister Narendra Modi’s Vision of “Make in India” and “Design in India” has been the guiding force behind the government’s incentive schemes that span skilling, design, fabrication, assembly, testing and packaging, and
As former president Ma Ying-jeou (馬英九) wrapped up his visit to the People’s Republic of China, he received his share of attention. Certainly, the trip must be seen within the full context of Ma’s life, that is, his eight-year presidency, the Sunflower movement and his failed Economic Cooperation Framework Agreement, as well as his eight years as Taipei mayor with its posturing, accusations of money laundering, and ups and downs. Through all that, basic questions stand out: “What drives Ma? What is his end game?” Having observed and commented on Ma for decades, it is all ironically reminiscent of former US president Harry