Marketing, 2nd Edition
Electronic Marketing
The Google Advertising Model
Summary
Richard Kimber, the Managing Director of Google Australia and South East Asia, discusses
the Google advertising model.
Transcript
Alan Kohler: As the media barons saddle up for another joust, a new world of media seems to
be offering some exciting alternatives, especially the rapidly growing Google empire. In a bit
over two years since listing in the US Google's share price has gone from $85 to more than
500, valuing the company at more than IBM, Apple and Intel. So what are its plans here in
Australia and is it a threat to the revenues of existing media players? I caught up with
Google's new MD for Australia and south east Asia, Richard Kimber, at his base in Sydney.
Well, Richard Kimber, the Google share price went above US $500 this week. Do you find
that a bit scary, or is that an affirmation of what the company is doing?
Richard Kimber, MD Operations, Google, SE Asia: Well, I think it's just one of those things
that happens along the way. Google has had great growth over the last little while and we
don't particularly look at the share price as a measure ourselves, but we continue to focus on
building on our services both here in Australia as well as throughout the region.
Alan Kohler: But is there a bit of a sense, perhaps, that we are getting back to the heady days
of the internet boom in terms of valuations?
Richard Kimber: We look at the overall usage of the internet and there's just over 1 billion
people globally now online. We're looking in Australia and we've seen quite good growth on
the internet. But in terms of media viewership, internet consumption is up around 35 per cent,
yet in terms of advertising and the monetisation of the internet it's still well below 10 per cent
of media spend. So I don't think you could say that the end is nigh or anything like that.
Alan Kohler: In fact Google used to be a geeky search engine which turned itself, or became
an giant advertising machine, and then you went and bought 'YouTube' and seem, now, to be
moving into videos and TV. So perhaps you could tell us what is Google in your mind?
Richard Kimber: Google is several things. First and foremost it's a service to users. The most
important community to us is our users and we focus very much on giving the most relevant,
accurate and timely responses to search queries. So we are, first and foremost, a search
company. Secondly, we also offer a great service to our advertisers. Google has a very large
advertising network and that is where we get most of our revenue from, through advertising.
Thirdly, we have a very big business around partnerships, so we actually partner with a lot of
websites out there and we power the advertising on their sites. So Google really has these
different facets to it and all of those come together to make up what is a very innovative and
technology-led company.
Marketing, 2nd Edition
Alan Kohler: What's your brief for Asia Pacific, and in particular in Australia? What have
they told you to do?
Richard Kimber: The key brief really is to build up the business. In Australia we've now set
up Australia as a research and development centre. We're continuing to invest in local
engineering here in Australia, so we're looking to attract the best talent and recruit them
locally, here in Australia. We're going to continue build out our business here, broaden the
range of services that we have and leverage off the leading position that we have in this
market, where we account for about 80 per cent of the search traffic and we're the number
one website in Australia. When you turn to Asia, we're looking to build out our franchise
within the Asia Pacific region. So within Asia there's still a long way to go on the internet and
lots and lots of countries to explore.
Alan Kohler: Do you regard yourself as a media company?
Richard Kimber: No, we are essentially a technology company, and as I said before we are
really focused on advertising and using technology as a way of bringing information to all
participants in the internet. So our global mission is to organise the world's information and
so we see ourselves very much as the organiser of the information and that's our role.
Alan Kohler: But you compete with media companies; you take advertising off them, don't
you?
Richard Kimber: We certainly work with a lot of media companies and we look to
supplement the advertising dollar that happens in all different kinds of media. So we see the
internet as very much an integral part of an overall marketing campaign, so we see ourselves
working with a lot of different media companies and partnering with them as well.
Alan Kohler: But surely in video, clips on 'YouTube' is just the beginning of that? Surely
there is a fairly well-developed plan, I presume, in terms of video?
Richard Kimber: There is in terms of video. As you know, the 'YouTube' acquisition has
gone through recently and that is a phenomenal network of user-generated content, but it is
also supplemented with a lot of content partnerships with our content partners. So Google is
working very actively with owners of content so that we can be the distribution mechanism.
So we see ourselves playing a very important role in distributing video content and rich
media both through the internet as well as through other IP devices. The partnership then
comes to the fore where we can actually help our content partners to monetise that content
through sharing advertising revenue.
Alan Kohler: But do you see Google eventually becoming a sort of a free-pay TV network,
showing, effectively, TV channels on Google?
Richard Kimber: There could be that sort of evolution. I think really what will happen is that
the media lends itself to short bursts of content, so rather than being a full TV channel it
generally will be used for teasers. Typically, people are watching shorter clips and then they
will still go to TV to watch the full show. We're seeing that in the US, with shows like the
Letterman Show using it as a way of promoting activity on the TV channel. So for us we
don't see it as cannibalising the TV, but more as an adjunct to it.
Marketing, 2nd Edition
Alan Kohler: Do you see Google participating in any way in the consolidation in the media in
Australia that's clearly coming up with the media reforms going on here?
Richard Kimber: No, we don't. We see Google being a key facilitating agent in the media
industry. We see ourselves very much acting as a distribution point. Clearly we'd like to work
with all the Australian partners, as we have done through a number of relationships with
Google video that we've established, including the ABC, Channel 10 and a range of other
video partners in Australia already.
Alan Kohler: The advertising that appears on Google is a sort of an evolution of the
advertising, in that advertisers pay by the click, so it's more analogous, I guess, to direct mail
or direct marketing. How far can that model of advertising go, do you think?
Richard Kimber: It can go a long way. I think one of the great things about our advertising
model is that it is very much based around the relevance to the user. So it's not an interruption
form of media marketing, so basically what we're talking about is the way Google ads work is,
and the sponsored links people only see the ads when they are searching for a particular topic
or product, and that, as a model, has a long way to go.
Alan Kohler: But does it limit Google to only that sort of advertising and mean that you are
going to be always excluded from the brand campaigns that companies spend a lot of money
on?
Richard Kimber: We're seeing a lot of our customers, in the US particularly, exploring
branding. One of the great things about the internet is the amount of eye-balls that you get. So
in terms of the research we've seen, we've seen a lot of the traditional consumer packaged
goods companies now starting to go on the internet.
Alan Kohler: What about classified advertising?
Richard Kimber: Absolutely. Already we're seeing people searching for products and services
in terms of through retail stores, but definitely that will Alan Kohler: But do you plan to take on the classified sites, like realestate.com and
carsales.com and seek.com.au?
Richard Kimber: Many of those customers that you mention work with Google right now.
We drive traffic to their sites. There are variations of classifieds in the US through a product
called Google Base, where people, users will put in their own content and advertise through
Google. But in this market we are looking to work with the partners that we have.
Alan Kohler: Thanks very much for joining us, Richard Kimber.
Richard Kimber: Thank you.