Has Google become too ad powerful?
By Mark Sweney / Advertising/ Internet/ Television 02:40pm
That Google is set to make £900m in the UK this year - or put another way, almost £1 of every £2 spent by advertisers online - raises some serious questions about its market dominance.
Channel 4 chief executive Andy Duncan made the comment to highlight that the "structural change" in the ad industry means that Google will make more money than his corporation (£800m estimate).
However, an equally important question is just how comfortable is the UK ad industry that Google is so all-powerful when it comes to digital advertising?
In TV land there is a huge furore over ITV controlling around 45% of the ad market - and it has the regulatory mechanism of contracts rights renewal to keep it in check.
If you want dominance take a look at Google.
According to the Internet Advertising Bureau the UK online ad market will crack £2bn this year.
Search marketing consultancy Greenlight estimates that search advertising accounts for around 60% or more of total online ad spend (maybe around £1.3bn this year).
And Google takes the lions share (60% to 70%) of that, completely dominating next closest rival Yahoo!, with MSN much further down the search advertising revenue food chain.
As one consultant put it: "the others are fighting for scraps".
And it has exercised its muscle. Last year, Google scrapped the 15% gross discount it traditionally offered agencies using its advertising auction system and replaced it with a new net pricing system.
This caused a furore among many agencies.
Damian Burns, Google's head of agency relations for Europe Middle East and Africa, argues that the new system created "more transparency and put everyone on a level playing field using the auction system".
Microsoft has run into trouble in the US and Europe over market dominance and Apple too has its share of potential legal wrangles over opening its music platform.
But not much, so far, has been said about Google's position. For example, can it even be regulated, and, more to the point if it has such a great model and has taken full advantage of it over competitors why should it?
http://blogs.guardian.co.uk/organgrinder/2006/11/google_making_more_than_channe.html
By Mark Sweney / Advertising/ Internet/ Television 02:40pm
That Google is set to make £900m in the UK this year - or put another way, almost £1 of every £2 spent by advertisers online - raises some serious questions about its market dominance.
Channel 4 chief executive Andy Duncan made the comment to highlight that the "structural change" in the ad industry means that Google will make more money than his corporation (£800m estimate).
However, an equally important question is just how comfortable is the UK ad industry that Google is so all-powerful when it comes to digital advertising?
In TV land there is a huge furore over ITV controlling around 45% of the ad market - and it has the regulatory mechanism of contracts rights renewal to keep it in check.
If you want dominance take a look at Google.
According to the Internet Advertising Bureau the UK online ad market will crack £2bn this year.
Search marketing consultancy Greenlight estimates that search advertising accounts for around 60% or more of total online ad spend (maybe around £1.3bn this year).
And Google takes the lions share (60% to 70%) of that, completely dominating next closest rival Yahoo!, with MSN much further down the search advertising revenue food chain.
As one consultant put it: "the others are fighting for scraps".
And it has exercised its muscle. Last year, Google scrapped the 15% gross discount it traditionally offered agencies using its advertising auction system and replaced it with a new net pricing system.
This caused a furore among many agencies.
Damian Burns, Google's head of agency relations for Europe Middle East and Africa, argues that the new system created "more transparency and put everyone on a level playing field using the auction system".
Microsoft has run into trouble in the US and Europe over market dominance and Apple too has its share of potential legal wrangles over opening its music platform.
But not much, so far, has been said about Google's position. For example, can it even be regulated, and, more to the point if it has such a great model and has taken full advantage of it over competitors why should it?
http://blogs.guardian.co.uk/organgrinder/2006/11/google_making_more_than_channe.html
posted by Balinder's Blog at 4:22 AM
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