The challenges facing Google’s diversification

This week’s news that Google’s stock price had cleared $600 was quickly justified by analysts, who said that diversification into other media would provide continued growth for years.

“Our goal with print, audio and TV advertising is to create measurable, accountable ways for both large and small advertisers and agencies to reach their target audiences,” said Brandon McCormick, a spokesperson for Google.

However, a closer look at the past two years of beta tests and product launches suggest that achieving success with traditional media is a more difficult task than previously believed.

Print ads, Google’s first foray into traditional media, did not go as smoothly as planned. In the fall of 2005, Google resold portions of glossy magazine pages on an auction basis. The program’s perceived failure left many skeptical, but provided Google with a list of mistakes to avoid in future endeavors. A year later, Google scored success with its newspaper ads beta test, and fully launched the program this July.

Google tackled radio with the January 2006 acquisition of dMarc, an ad-management platform that connects advertisers with stations. Within six months, the company was testing radio ads and, by this year, a product was on the market. The team moved on to television this April, when the beta testing cycle for TV ads began.

Ted Moon, di rector of media innovations for Sprint, is open to hearing what the Google TV ads team has to say.

“Our appetite for testing is strong. Sprint has a long history of innovation and we are always looking for ways to reach our customers,” he said.

Given Google’s previous success with bringing search ads to the masses, most assumed that other advertisers would flock to the tech giant for traditional media formats. So far, this has not happened. Critics have suggested that Google should stick to search. Google, on the other hand, emphasizes that the early days of any product are far more about getting the model right than turning a quick profit.

The truth is somewhere in between, with success contingent upon search marketing managers needing to win control of traditional budgets, or traditional marketers needing to become proficient with online management platforms. In a deft move, Google is marketing traditional media to small and midsize firms. Like the early adopters of search, these firms enjoy the do-it-yourself model and value adds such as the Google Print Ad creation tool.

As for the Fortune 1,000, the disconnect between those who control traditional media spending and those in control of the Google login is the greatest challenge of all. While most Internet players hold that the Google magic will forever alter how traditional media is sold and measured, traditional marketers’ territorial budgeting planning and fear of accountability will determine the speed at which it occurs.

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