Google Predicts Advertising's Future

Top 15 Google Apps For Business

Cost-per-click advertising may be the foundation of Google's online empire, but display advertising appears to be central to the company's future.

Google advertising executives on Tuesday delivered a keynote address about the future of advertising at the Interactive Advertising Bureau’s MIXX Conference in New York City. In a recap of the event posted to the Official Google Blog, Google VP of product management Neal Mohan and managing director of media and platforms Barry Salzman state that display advertising is about to experience the most significant revolution in its history.

Google signaled its intention to move into the display advertising business in April, 2007, when it announced its plan to acquire DoubleClick, a leading display advertising network. The deal wasn't completed until almost a year later, due to regulatory scrutiny, and Google didn't completely integrate DoubleClick's ad platform with its own until September, 2009.

A year later, display advertising is where the action is. Ninety-nine percent of Google's top 1000 advertising clients are currently running campaigns on the Google Display Network. Last year, those clients increased their display spending by more than 75%.

Google's CEO Eric Schmidt said in an interview with The Wall Street Journal in July that display advertising had the potential to be Google's next $10-plus billion-dollar business. Google could use another one of those given that its current $20-plus billion-dollar business, search advertising, could become less significant in terms of the total online ad market. Advertising research firm eMarketer expects search advertising's share of the online advertising market to decline from 49.3% this year to 46.14% in 2014 while display's market share rises from 34.1% this year to 40.5% of the market in 2014.

Mohan and Salzman made seven predictions about where they expect online advertising to be in 2015. They believe half of all online ad campaigns will include video display ads and half of all targeted ads will be bought using real-time technology. They anticipate a world where mobile ads will represent advertisers first choice for driving engagement with brands. And they foresee ad metrics moving from clicks to the measurement of other things like brand awareness or brand recall.

Underscoring the reason that Google has been deepening its commitment to social networking technology through acquisitions, Mohan and Salzman believe 75% of ads in 2015 will be social and 50% of display ads will rely on rich media formats, up from 6% today.

They predict display advertising will be a $50 billion-per-year business in 2015. eMarketer estimates display advertising will generate $8.6 billion in revenue this year, up from $7.6 billion in 2009.

Part of predicting the future is developing tomorrow's technology and Google provided a preview of what's in store for advertising. Thanks to technology acquired from Teracent, Google advertisers can expect to deploy ads with creative elements that can be changed dynamically, in real-time, to serve different markets or convey localized messages. And the company is looking into ways to make its Google Goggles image recognition technology useful for advertisers by doing what QR codes do today without actually using any QR codes.