[H&R] From the Business Pages
vroom at vroomjournal.com
Mon Jun 23 14:21:02 PDT 2008
Google, Microsoft worry ad agencies
The growing advertising ambitions of technology powerhouses like
Google and Microsoft are creating alarm at ad agencies. At an annual
By ERIC PFANNER
The New York Times
CANNES, France — The growing advertising ambitions of technology
powerhouses like Google and Microsoft are creating alarm at ad agencies.
At an annual gathering here, executives harshly criticized Google's
recent agreement to place ads next to Yahoo search results. The move
could strengthen Google's dominance over the most lucrative portion
of the fast-growing online ad field.
The executives worry that Google and Microsoft, which is moving to
bolster its capabilities in search and other areas of online
advertising, will not stop there. They fear the companies want to
extend their reach into traditional advertising — transforming, as
they see it, a business built on creativity to one controlled by the
sterile algorithms of computer programmers.
Google "clearly wants to replace the advertising industry in its
totality," said Cindy Gallop, a former chief executive of the New
York office of the ad agency BBH. She added, however, she thought
Google would be "fundamentally undermined" by what she saw as its
antipathy toward traditional advertising.
Despite the alarm, ad agencies are eager to take advantage of the
technology companies' new tools. WPP Group, the second-largest
advertising company, spends $900 million a year of clients' money on
Google search ads, CEO Martin Sorrell said.
Microsoft paid for 550 people — its own employees and those of
clients — to attend last week's Cannes conference, roughly 5 percent
of the total number of attendees.
Its advertising ambitions, and the tensions raised, were demonstrated
when Microsoft said at the festival it had acquired Navic Networks,
whose software helps direct cable-TV ads to demographically desirably
Sorrell said ad agencies were being priced out in the quest to
acquire companies like Navic and upgrade their own digital capabilities.
While advertising companies have bought a number of digital ad
specialists, the biggest prizes have gone to the new entrants, with
Google spending $3.1 billion for DoubleClick and Microsoft paying $6
billion for Seattle-based aQuantive.
-------------- next part --------------
An HTML attachment was scrubbed...
More information about the HRAC