Google gets cozy with an uneasy friendBy Stephanie Clifford
Published: September 2008
On a July day in Chicago, Google employees swarmed a conference room at the advertising agency Leo Burnett, carrying in couches and beanbag chairs to create a lounge. They gave away candy and showed off Google's advertising technology. Throughout the day, they emphasized a single message: Google is a friend to ad agencies.
Advertisers are grappling with the idea of Google, which spent many of its early years avoiding — and infuriating — advertising agencies, now shifting to embrace them.
During the last year, Google has built a 40-person group that is charged with courting agencies, trying to persuade them that their clients should buy ads on Google sites and use the search engine's tools. The Google team — like any ad team — is visiting agencies to show off the company's products, like video ads on YouTube and display ads from DoubleClick. Its representatives are even making regular visits to ad agencies, soliciting suggestions and fielding questions.
"We understand that maybe we haven't been the best partner over the years," said Erin Clift, the director of agency relations at Google.
Google could avoid ad agencies when it sold only search advertising, where it is dominant. But now that it has a wider set of products in more areas — including social media and virtual reality — it finds that it must work harder to drum up business, particularly because of the lingering hard feelings.
Google is "definitely a must-buy in search, but in other things it's not a must-buy," said Jeff Ratner, managing partner and digital director at MindShare North America. "As they start moving more into ad networks and other mediums, they need the agency to help make it a reality."
The most visible part of the new Google strategy is an event called Campus@, which started up in the spring. So far the Campus@ team, which has a core of six employees, has held six events, including one for Leo Burnett, which is part of the Publicis Groupe.
"We essentially take Google — our people, our products, our food, our tchotchkes — roll into the lobbies and give people the chance to interact with Google," Clift said. The events are "a fantastic way to ingratiate ourselves," she said.
Despite all the happy talk, there is still a good deal of skepticism. As Google begins trying to sell television, radio and print advertising and creates tools for buying and planning media campaigns, some advertising executives and academics say that the company is working with the agencies in order to eventually displace them.
Peter Fader, a professor of marketing at the Wharton School at the University of Pennsylvania, sees the Google approach as part of a master plan to get its corporate hooks into more of the agencies' business.
"If Google were to just set up a shingle and say 'Google ad agency,' the traditional agencies will find a way to keep them out of clients' offices," Professor Fader said.
Instead, he said, "they're almost like a virus, going to work their way into specific agencies and replace the DNA of those agencies with a more analytic orientation while trying to maintain some of the client relationships."
Penry Price, Google's vice president for advertising sales for North America, dismissed this view, saying Google had no desire to replace agencies or to take their clients.
"I don't see how we would be able to actually provide a better customer experience to an individual client than an agency can today," he said. "There's no way we could actually line up behind one customer and offer the services and information that an agency can today."
Agencies are not so sure, and they are having mixed reactions to Google's overtures. Some welcome the company enthusiastically. Others say they are unimpressed with Google's products outside of search and nervous about the company's intent.
"I think they're great at pushing and pulling together what suits their agenda," said Peter Gardiner, the chief media officer at the ad agency Deutsch. "I would not necessarily put them on the same level as other media companies in terms of their partnering attitude."
A lot of the mistrust stems from Google's having built a sales force of several hundred people who court large advertisers. While many of Google's sales to small advertisers are automated, the bigger clients get personal attention.
This prompts accusations from ad agencies that Google is courting their clients behind their backs. Agency executives are traditionally the people who decide where their clients should spend their marketing dollars, and while most media companies and technology providers must go through an agency to get onto the client's radar, Google — with its cool-kid aura — had an easy time obtaining meetings directly with clients.
But Google also knows it needs the cooperation of the advertisers' agencies. As Price put it, "we saw that if we had higher hopes and aspirations of getting larger budgets and being a part of these larger marketers' decisions, a lot of decision-making was done at the agencies."
The balance of power is not entirely clear. Google and the agencies behave a bit like "frenemies": as much as the agencies might like to ignore Google, they cannot (indeed, the WPP Group's chief executive, Martin Sorrell, called Google a frenemy, which he later amended to a "froe").
The perks of Google's power are on display at the Campus@ events. When Google visits agencies, it typically brings in a gelato cart or a coffee bar. It has even built a replica of Google's office kitchens. It offers free food and prizes of iPod Touches.
At Leo Burnett's headquarters, there were about 20 Google employees, almost all of them young, bright-eyed and peppy. They wore royal blue Campus@ T-shirts, some of the women with loose cotton skirts and flip-flops and the men with khakis or jeans.
Lisa Green, a senior agency-relations manager who was explaining a Google analytical product, told members of the Leo Burnett staff, "It's very natural, as a human, to hear something and want more information, and Google just makes that easier."
The Leo Burnett executives sounded appreciative. Speaking about the Google people, John Condon, chief creative officer of Leo Burnett America, told his employees, "You've got some of the best and brightest people in the industry here. Don't hold anything back. Milk 'em."
The dialogue was indeed two-way. For instance, in June, Google introduced a tool called Ad Planner that shows media buyers sites their likely audiences might visit, based on criteria like demographics. Google previewed Ad Planner with some agency executives and is now seeking more feedback. (The day the product was announced, the share price of a competitor, comScore, dropped 22.5 percent.)
Ad Planner is one element of a bigger product called a media dashboard that Google is working on. It would offer media planners a data-rich screen that would tell them where all the ads for a campaign were running, how they were doing and how much they had cost.
Some agency executives are excited about what Google has to offer. "You can see them as a threat, and we don't at all," said Ashley Vinson, an executive at the agency DDB, which recently held a Campus@ event. "It's a complete opportunity. It's like working with a world-class director or production company."
Rob Norman, the chief executive of GroupM Interaction, a large media-buying firm, said he had some problems with Google but did not feel particularly threatened by it.
"I think there still may be at least one human media planner left, other than the one that pulls the handle on the Google machine," he said.