Google Readies Top Guns for a Shoot-Out over Targeted Local Advertising

Following its failed $6 billion acquisition bid for GroupOn, the fast-growing social shopping and coupon provider, search engine giant Google remains committed to boost its footprint in the online and mobile local ad markets. Post-GroupOn. Susan Wojciki, Google’s senior vice president of advertising, told the Wall Street Journal that, “cracking the local ad market is her biggest priority.”

This assertion and the appointment of Marissa Mayer, one of Google’s key executives, “to head up a new business focused on location services,” are, the WSJ notes, “are the latest sign(s) that Google sees location as a key driver of its core business of providing Internet ads.”

Some analysts have dubbed the spread of the web onto a variety of new platforms (most notably smart phones), and the dissemination of its content, particularly user-generated content, over a spectrum of social media and specialized sites, the “Splinternet.” In a so-called Splinternet, one of Google’s key business objectives will be to capture a healthy portion of the location-specific advertising market, as it has the local search market.

Despite its failure, thus far, to make a significant breakout in the local ad market, Ms. Wojcicki assured the WSJ that Google’s mobile ads business is thriving, with “(s)earch ads, display ads and advertising within wireless applications . . . all growing.” “In addition,” she said, “Google processes four times the number of mobile searches it did one year ago.”

With no success courting GroupOn, developing and marketing its own local advertising service – with simple functionality built-in so that it is readily usable by time-strapped small business – will be a key objective for Google, if it is to leverage its local search capabilities with targeted local ads directed at an ever-growing mobile market. “Mobile will enable us to do things we’ve never done before,” Ms. Wojcicki observed. “Being able to close the loop will be a huge opportunity.”

As the Wall Street notes: “Google has succeeded by connecting consumers with advertisers over the Web. Now, the next frontier is in connecting consumers to stores through offers and advertising on their mobile devices.”

The acquisition of GroupOn would have given Google the largest grub-stake on that “next frontier.” Now. It will have to settle for developing its own locale-specific advertising and discounting service; or, it can buy a stake in a GroupOn competitor – as Amazon has done with LivingSocial –building out its location-specific advertising capabilities and marketshare from there.

How to proceed – post-GroupOn – will be a critical business decision for Google. Borrell Associates forecasts that “the local sector, anything targeted, and everything involving social media” will be the fastest growing sectors of 2011’s online advertising market; a market expected to expand by more than 14 percent.

Knowing this, Google – as outlined in the WSJ piece – has assigned its top guns to take on the challenges of cracking this “new frontier.” Groupon, meanwhile, has gone “all-in” Texas Hold’em-style, and is likely see if it can raise enough capital to shoot it out with Google by going public with an IPO sometime in 2011.

James Barry covers online marketing and related topics for Wolf21.com, a Toronto-based firm offering a full line of SEO services.

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