Ben Thompson is a good strategic thinker in the mold of some of the really great tech strategy academics out here. Here’s his case for why the future for Google’s business is dim: the rise of native ads. If you’re a long time reader here, it’s the same debate we’ve been having for years. The more aggressive questioning these days is whether brand management has a future in a connected, info symmeetric, real time future. Maybe the concept of brand management looks entirely different in ten years from now.
However, over the last few years a new type of advertising has emerged: native advertising. I’ve already made my defense of native advertising here, but just to be clear, I classify any sort of “in-stream” advertising as native advertising. Thus, for a news site, native advertising is advertising in article format; for Twitter, native advertising is a promoted tweet; for Facebook, native advertising is ads in your news feed; for Pinterest a future giant a promoted pin. These sorts of ads are proving to be massively more effective and engaging than banner advertisements – as they should be! In every medium except, arguably, newspapers, which had geographic monopolies native advertising is the norm simply because it’s more effective for advertisers and a better experience for users: TV commercials are 30 or 60 second fully produced dramas, magazine ads are highly refined visual experiences, radio ads are jingles, etc. And so it will inevitably go with digital advertising, at least when it comes to brand advertising.
The problem for Google is that there is no obvious reason why they should win this category. Yes, they’re an ad company, but the key to native advertising on the Internet is the capability of producing immersive content within which to place the ad, such as Facebook’s newsfeed, Twitter’s stream, a Pinterest board, or even your typical news site’s home page.