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Google-AOL Deal Benefits Advertisers

Search advertisers are expected to benefit from Google's purchase of a 5 percent stake in America Online. Google pays $1 billion, which includes giving AOL special placement on Google.com and garnering some AOL rich media content for Google's site.

The deal also gives AOL more control over its ad sales — Google currently pays AOL part of the ad revenue generated from search. Time Warner's board approved the investment Tuesday despite last-minute opposition by billionaire Carl Icahn and other investors, which collectively own 3 percent in Time Warner. Icahn did not want the alliance to prevent Time Warner from teaming with Microsoft, Yahoo, IAC/Interactive or other Internet media companies down the road.

Microsoft was vying for the same 5 percent stake in AOL, which would have tied the AOL ad network in with MSN's AdCenter pilot paid search program.

As part of the deal, AOL will sell search advertising directly to advertisers on AOL-owned property using Google's technology. The new ad program, AOL Marketplace, may expand internationally, the two companies said. In addition, Google Talk and AOL's AIM instant messaging users will be able to communicate with each other.

Google advertisers and search agencies said they are excited by the prospect of using AOL's strong consumer base and rich media assets in their Google search advertising.

“AOL has a rich user profile in all of its properties,” said Samir Patel, president of paid search marketing firm SearchForce, Santa Clara, CA. “It also knows more about their customers than Google knows about its customers.”

AOL's consumer base complements Google's base, which Danielle Leitch, vice president of marketing and analytics at search marketing firm More Visibility, Boca Raton, FL, said is split roughly evenly between business and consumer users.

Another boon for advertisers is Google's probable use of AOL's rich media content in search ads. Though Google has had limited distribution of ads with graphical images, it is expected to use more of AOL's rich media content.

“This is going to allow Google to incorporate more into the media side of the business,” Leitch said. “MSN and Yahoo … both have a large media presence.”

Kevin Lee, executive chairman of search marketing firm Did-it.com, New York, said Google may integrate pay-per-view video content with AOL's content.

And Google advertisers will be able to segment their ads between both Google users and AOL's customer base.

“It will give [advertisers] transparency into the performance of [their] advertising,” said Bryan Wiener, president/CEO of search and performance marketing firm 360i, New York.

AOL content also will be shown in Google results. When a user searches on Google, a special section at the bottom of some results pages will include AOL's logo and links to the AOL content, according to news reports. This would be the first time Google carved out space in its search results for another engine.

Some marketers were surprised that it was Google teaming with AOL, thinking that MSN and AOL audiences might match more closely.

“The demographic data provided on MSN [show that] AOL has the same opportunity … a large registered user base. It could have given them a larger user base. Now it gives Google that opportunity,” said Joshua Stylman, managing partner of search marketing firm Reprise Media, New York.

In related news, AOL's ad network, Advertising.com, Baltimore, recently launched an automated network for rich media ads. The new network comprises rich media inventory from more than 55 leading online publishers and expands the company's rich media serving capabilities beyond user-initiated formats to include automatic formats such as floating, auto-expandable and sound-enabled creatives.

Christine Blank covers online marketing and advertising, including e-mail marketing and paid search, for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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