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October 7, 2008

SMXE Keynote — Tim Armstrong

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Welcome back to SMX East. I expect nothing less than awesome after yesterday’s great sessions and the rocking IMNY Charity Party. And we’re kicking it off strong with Google’s Tim Armstrong, President, Advertising and Commerce, North America, & Vice President – Google, Inc.

Danny Sullivan: We’re at the point where people are starting to wonder if Google is getting too big. Is Google a monopoly?

TA: Our answer is definitively no. When I started there eight years ago, Google had virtually no market share. But the core thing we focused on over time is getting information to people. Google’s also been very innovative in transparency. We’re doing anything in their power to make it open. We’re an important part of the industry environment, but we’re by no means a monopoly.

DS: The review by the DOJ was supposed to be a voluntary thing, but if they say don’t do it, will you follow them?

TA: One of the things that some of the larger advertisers haven’t like about it is that Google has allowed all sizes of companies to play on an even field. There are a lot of big companies that are used to having pricing power over the smaller competitors. So some people are making arguments in their best interest. In general, we’ll see what happens over the next few weeks.

DS: The ANA is opposing the Yahoo ad deal. Is the ANA like 30 big advertisers?

TA: Most of the ANA are customers of ours. There are different levels of understanding about what our advertising is. Overall, the vast majority of them have great relationships with both Yahoo and Google. One of the things we’ve been offering the ANA is an open town hall. We want to talk about the deal with people in public. In general, they’re great customers of ours and we’d like to have them understand the deal better, because I think overall they’ll support the deal if they understand it.

DS: There’s a concern with advertisers that you’re going to dictate the prices. Are you guys going to get together and decide that any ad is going to start at $10 per click?

TA: For us it’s really about user quality. From my past experience in media, the whole point is to help customers and sell ads. But the respect around end users is always in the conversation. It’s in many cases a way to make sure the highest quality bids show up. But whether it’s landing page quality or loading time, it’s all about the end user. Google wouldn’t set bid pricing because our focus is on user quality.

DS: What else are you doing to aid transparency?

TA: From Google Analytics to Google Trends to setting your own bid price, the planning stage of what you’re going to buy from Google through the delivery stage of what you get – it all has transparency. Transparency slices through the auction, and the Google model is probably more transparent than traditional media. As we try to define what quality is for advertising, there’s a responsibility on Google’s side to make things more transparent. A big help is listening to customers. We don’t have a specific plan for transparency, but I think people will see it over time.

DS: What’s behind the idea that you’re both working with and competing with ad agencies?

TA: I think there’s no conflict because we work with them. If you’re a big agency and you have a big client and you don’t know what you’re doing in search marketing, you may want to start to call us names. I think the market has really reset and Google’s got a growing number of relationships with agencies. As the search market becomes bigger and more sophisticated and starts to bleed into other areas, search marketers are the only people to be able to connect all the changes together for their clients. The notion that Google is a frenemy or a froe is outdated and I think many of our clients would say that we’re a great partner and have helped agencies grow to an extent.

DS: When clients go directly to you and bypass their agency, it has led people to ask “Who owns the client?”

TA: I think the clients own themselves. I don’t think that Google owns the clients. I think agencies are the best people to connect clients to Google, eBay, Amazon — they’re the only people that can help companies connect all the dots together. They can figure out how to optimize across the board. When you look at the examples of what people are saying when they make this point, it’s usually because the client had a specific question or were trying to solve a specific issue.

DS: What’s the relationship between Google and Publicis?

TA: We started talking to them about a year ago. The Publicis clients were looking to Google and together we decided to get closer together. There are a few basic principles behind how we work together. First, people need to understand what the other company is doing, so we’ve been swapping employees. On the systems front, Publicis has a tremendous amount of information and they want to mix their data with Google’s data, so we need to figure out the format to do that. The other question is how does Publicis add the most efficient value to their clients. We’re working on all these things and I would expect us to work with more agencies in the future. Email me at tim[at]google.com if you’re interested in working together.

DS: Is there anyone left that doesn’t get search?

TA: The good news for us is that there are still many people that don’t understand search. When we start showing people statistics about how many divisions of a company are taking advantage of search marketing versus how many are signed up for Google Analytics and trying to understand search traffic, it’s sometimes a shock to them because there are people in the company hungry to understand how to get more traffic and people to their site.

DS: Are their big areas that are still going to blow up in search? It’s been the year for mobile for the last five years.

TA: If you look back five years, there’s a lot more available online now. But local is still a big opportunity. Mobile 1) works really well and 2) is sometimes more important than online search. It’s going to happen but the question is when. We tested mobile in Japan and it was a big business success. I don’t know when the year of mobile is, but it’s coming. The other area is video. Search on video has the potential to be like AdWords in its long term value. It’s important now, from a traffic perspective.

DS: Sometimes it’s hard to keep track of everything Google’s doing in video.

TA: Video is a few different markets. There’s the traditional model (banners), there’s version 2.0 (overlays) and also version 3.0 (promotion for what people are searching for). Engagement level is probably going to be very high considering the opportunities available on YouTube.

DS: Is AdWords for video still running?

TA: Going back to user quality, when an ad comes up in search results we try to deliver the best available ad at the time. We’re testing to find out when is the right time to serve videos as ads. We don’t have any findings to report, but it’s what we’re looking at.

DS: There was an honest to goodness banner ad on Google images. What’s going on?

TA: We decided to finally test serving banner ads and we figured Google image search was the best place to try that.

DS: You’ve got Yahoo doing banner ads across the Web that are influenced by search profiles. Then Google is saying “we’re not doing that”, other than maybe not showing the same ad twice.

TA: We’ve thought about behavioral targeting for a long time. It’s beneficial for both advertisers and end users. But we’d want to watch the area carefully before we do that, if we do that. We’re watching BT be successful and it’s on our radar, though we don’t expect to do anything with that now.

DS: Audience, how many are worried about the Google Yahoo deal?

[Just a few people (I can see about five hands) are and most aren't (more like 50 hands), although many think it will cost more for advertising. Tim's glad to get the feedback.]

Audience member: It looks like you’ve tried to purge some poorly performing advertisers. Do you think you got everyone off you wanted to and is this a process that needs to be repeated every so often?

TA: We’ve never targeted specific advertisers and as we’ve grown, we’ve had to look at how to scale quality controls. But quality is not something we’re ever going to stop addressing. Are we done? Have we reached the pinnacle of quality? No. I think you should expect us to keep ratcheting quality up over time and on a daily basis. You can expect us to continue to do more quality-based changes to the system. There are also times when we’ve done a bad job of letting more ads into the system, so you’ve seen us do both, but there’s constantly a back and forth.

Audience member: What happens if the DOJ investigation takes a number of months?

TA: We’ll patiently wait, I think. We’re committed to seeing the right outcome so we’re working with them to figure out what they’re figuring out. I don’t want to comment for the DOJ because they’re on their own time table.

Tim wants to know if anyone has anything they’d like to see.

  • Business search options (as opposed to consumer search)
  • Grand Central
  • Purging Maps spam

DS: You’ve been at Google since 2000. What’s the most significant thing you’ve seen happen to the company?

TA: Some things haven’t changed at all, so the biggest surprise is that I’d expect more change in the fundamentals we concentrate on. But one thing that’s been surprising is that I thought search quality and ad quality would be something we’d master overtime, but it’s actually an ongoing task. Also, it’s surprising that the rest of the market hasn’t caught onto ad quality. We treat ads like information, and a lot of the markets haven’t adopted that, which is really surprising. Targeting criteria and ads targeting hasn’t bled into the rest of the market and I think that’s a huge advantage for us in general. Those early hard choices we made about letting end users choose the best ads are something we’re proud of. The general culture hasn’t changed. We’ve got great people and great projects. It’s still exciting to go to work and that hasn’t changed.

[ Awww ;) ]

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