Wednesday, September 10, 2008

Is Google Chrome killing display advertising?

Curious to know how Google chrome works, I downloaded the free version of it yesterday. As soon as I opened my default home page, I was shocked. The ads on the right side were hardly getting displayed. Then some experts told me that the Customization options will have to be tweaked to see these dynamic ads.

However, Google doesn't do anything without a central objective in mind. Since Google's business model primarily rests on search-based text advertising, the world-view of Google is that display advertising is basically annoying to users and hence un-necessary. This has prompted them to restrict the default display of banner advertising on Chrome. Many users might have found this very comforting and easy on eyes and as such may continue to use Chrome.

However, from the agency's and to some extent the advertiser's perspective, this is not a good news. IAMAI has just now predicted that online banner ads will grow by 40% in 08-09 and that SEM will double in size to $225 million by 09-10. If Chrome becomes popular, the advertisers will be forced to recognise the change in online consumer's behaviour towards minimalist approach to ad consumption. This will push their online spending to search based ads that will find its way to Google and other search engines.

It is difficult to say if it is intended. Apparently Microsoft seems to be the first victim. But Google has the history of bringing revolution to Internet usage and its various products support the growth of its primary business that is search based text ads. First they took away the heat out of display advertising. Next, the Gmail advertising took away the heat out of e-Marketing. The Google Local may take away from local display ads. Even though all these segments have grown despite search based ads, the real effect it might have had on their growth is only one's speculation.

It will be interesting to see whether and how Google Chrome can revolutionize the online user behaviour in the long run to eventually alter the dynamics of online advertising industry.
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