It's undeniable that Google has a large influence on internet ad revenue, so every move that it makes is closely monitored. Google's feature called Knowledge Graph, was rolled out last year in May, and offered a condensed "card" containing information on what Google assumed you were looking for. The search giant has been using knowledge graph on more and more searches, and has now been spotted testing ads on it. This could greatly impact pay per click advertising, and local search ads. Watch today's Daily Brown Bag to learn more about Google's space in pay per click advertising, and why Google testing ads in Knowledge Graph could be a big deal.
Hello, and welcome to the Daily Brown Bag. Today, we’re going to be talking about Google testing ads in its knowledge graph. I’m Chad Hill, and I’m joined by Adam Stetzer.
Yeah, good morning, Chad. Thanks, everybody, for joining our Brown Bag. We’ve been talking about Google as they test different advertising formats for quite a while. More and more space on Google has been taken up by ads over the years, and that’s been well-covered. We talked about this, Chad, in a Brown Bag last month, about them testing banner ads on branded search results, and today we have some new news in this continuing saga, which is that Barry Schwartz, and this is via Search Engine Land, is reporting that Google is now testing ads in the knowledge graph. So again, another evolution, another step forward. We think this is an indication that they’re going to try some new things. These things don’t always stay with us, but they’re definitely playing around, once again.
So, here’s a few high-level stats to kick off the discussion this morning. An astounding amount of advertising dollars, Chad, go to Google. It’s about a third of all dollars online go to Google, which is pretty amazing. eMarketer is predicting that Google ad revenue worldwide will top $38 billion this year, and we also know that the mobile market is really heating up. Google is expecting to bring in half of the $16 billion mobile ad market this year, so were definitely seeing shifts in where the dollars are coming from. These are very, very large numbers. But, we also are seeing that the growth of PPC ad revenue seems to be slowing down, which has kind of been the traditional breadwinner for Google, and according to comScore, Google’s market share has been pretty much stagnant, which sounds bad, but it’s been at 67%, so I guess, depending on how you look at that, it’s been flat, but it is still astronomically high. They’re obviously trying new things, they want to maintain their market share, if not grow it, and obviously they are shareholders, and they want to bring in more dollars. So, I guess the discussion this morning, Chad, is should we be surprised that Google is testing ads in their knowledge graph space?
No, no, I dont think so. Not at all. We have talked about this before, where we have seen the amount of vertical space being used by the top three ads growing, and then certainly with the knowledge graph, it is entrancing their testing. Although people thought that this was kind of sacred ground, and it was a place where Google was going to be pulling in these really trusted resources like Wikipedia and other trusted resources, and not really letting people put ads in there. But, Google’s a big company. They need to grow revenue, and they are facing some of the numbers you talked about. The knowledge graph is something they rolled out relatively recently, last year actually, and this is the next movement there. So, what we’re seeing, and I’m sure we’ll get a screenshot of that here as we produce the video, is that there will be the knowledge graph to the right, there will be a marked ad in the bottom, or contextually relevant to the knowledge graph, and Google is, at this point, just testing it. It’s not going to roll out across the board. But, I think that when you look at this, Adam, we know that Google obviously has to show return to their shareholders, they’re going to continue to press and push the limits of advertising, and this is just something that we should expect to see continue.
Yeah, I tend to agree with you, because we know their motive is ultimately for shareholder value and earnings per share, but we also know that they’ve been extremely vocal about this separation, about the sacred ground, and the difference between organic and advertising. It is interesting to wonder if these lines are blurring, and they seem to be. That seems to be what’s happening, and we’re covering this in a lot of different areas in the industry with native advertising. We did a webinar with 40 resellers yesterday talking about some of what we learned last week in San Francisco and how native advertising is also breaking down the barriers as print, radio, and other media outlets are looking to find new ways to bring revenue for shares that they’ve lost, largely to Google, over the last 10 years. This whole topic is very, very interesting. I can understand where some of the smaller players who have lost to Google are scrambling and the sacred ground that they might have might be giving way to advertising dollars. Google, though, has been so vocal. It does seem like there’s a bit of controversy here, potentially, and Chad, you and I were talking about this before.
You have to wonder what that internal dialogue at Google really is about. There’s the guys cheerleading the revenue and having pressures from Wall Street, and then, there’s sort of the purists who’ve been sort of evangelical about the separation of church and state, if you will, in their domains. This is going to be a fascinating one to watch, but I think we always caution that Google tries a lot of these things just as little beta pilot tests, and then sometimes they don’t come to fruition. So, we don’t want to jump the gun and make any overarching criticism at this point, but I do think it’s fascinating, and we should stay tuned. We would welcome your comments on it. What are your feelings on native advertising and them putting ads on these parts of the output that were before sacred? We’d like to know what you think in this evolution of the ad dollars, and we hope you’ll come back and see our Brown Bag--subscribe to our YouTube channel.